[QUOTE=Ond kaja;30428066]The production of a product has to be at the same level as the demand for a product, and because of this hiring more workers isn't necessarily good because it can lead to overproduction. So, reducing minimal wages doesn't necessarily mean that companies will employ more people. And if they are at the same time lowering the workers' wages, it leads to a reduction in aggregate demand, since the people can't buy as much, and that is directly harmful for the economy.[/QUOTE]
Well I never intended to imply that for 100% of cases, a lower minimum wage results in more jobs. Every single business is effected by the level of demand, so yes, demand also effects what I was talking about, as does many other factors such as many expenses of the employer, the local infrastructure etc. But for many businesses in Haiti, the employers may be able to meet demand because they need to pay their workers X amount, but if they had to pay their workers Y amount, they would not be able to meet that demand because of the extra cost of workers.
Think about it another way, if a company has enough employees to comfortably run their operations, do you really think they'll hire any more just because minimum wage drops?
No, they'll just reap the benefits of paying less whilst running their business as usual.
[QUOTE=Mr. Bleak;30428257]Think about it another way, if a company has enough employees to comfortably run their operations, do you really think they'll hire any more just because minimum wage drops?
No, they'll just reap the benefits of paying less whilst running their business as usual.[/QUOTE]
Or they could expand.
But let's assume that all of the businesses in Haiti were exactly like that, comfortably functioning with a certain number of employees and then the minimum wage is dropped by $1. There are many negative effects for the employees, but also many positive effects for the economy. The business would now post larger profits, as their expenses would be less, their shareholders would receive higher dividends which could be used for higher disposable incomes, or the business could spend that extra cash on aquiring a larger premises or reonvations, which the Government would get a nice tax cut out of.
And besides, that is just an example of a hypothetical company that does not want to expand. In reality, I would say that most businesses would higher more workers if the minimum wage was dropped. But then again, I am not a professional economist or businessman, nor do I claim to be.
[QUOTE=Caesar;30428211]Well I never intended to imply that for 100% of cases, a lower minimum wage results in more jobs. Every single business is effected by the level of demand, so yes, demand also effects what I was talking about, as does many other factors such as many expenses of the employer, the local infrastructure etc. But for many businesses in Haiti, the employers may be able to meet demand because they need to pay their workers X amount, but if they had to pay their workers Y amount, they would not be able to meet that demand because of the extra cost of workers.[/QUOTE]
But then the extra income for the workers would increase their purchase power, thus being able to make investments beyond the basic necessities, which can create jobs as well.
[QUOTE=Ond kaja;30428721]But then the extra income for the workers would increase their purchase power, thus being able to make investments beyond the basic necessities, which can create jobs as well.[/QUOTE]
Yeah I'd agree with that. But ontop of that, those would-be workers who have no money and are relying on social welfare to survive have virtually no purchase power at all, and aswell as that, are a liability to the Government and the taxpayer.
I'm not saying that raising the minimum wage would only bring negative effects, or vice versa, but that resisting a rise in the minimum wage isn't [b]just[/b] a bad thing.
[QUOTE=Caesar;30429490]Yeah I'd agree with that. But ontop of that, those would-be workers who have no money and are relying on social welfare to survive have virtually no purchase power at all, and aswell as that, are a liability to the Government and the taxpayer. [/quote] They aren't a liability to either the tax payer or the government; the point of giving out welfare is to effectivise the economy, by taking money from people that don't need it and are more likely to save beyond planned investments, and giving it to people who need it so they can retain their purchasing power even when unemployed. Or, to be more precise, they would be more of a liability for the economy if they hadn't received welfare.
[quote]
I'm not saying that raising the minimum wage would only bring negative effects, or vice versa, but that resisting a rise in the minimum wage isn't [b]just[/b] a bad thing.[/QUOTE]
Maybe, maybe not. The point is that the U.S. should let other countries mind their own business on matters like these. I'm almost certain that it was private interests that drove them into opposing Haiti's raise of minimum wages, and not that they really care about their economy.
[QUOTE=Ond kaja;30429950]They aren't a liability to either the tax payer or the government; the point of giving out welfare is to effectivise the economy, by taking money from people that don't need it and are more likely to save beyond planned investments, and giving it to people who need it so they can retain their purchasing power even when unemployed. Or, to be more precise, they would be more of a liability for the economy if they hadn't received welfare.[/QUOTE]
"Taking money from people who don't need it" is a very relative term, what do you mean by that? People who buy new cars? Social welfare is paid for by the Government, which is funded by the taxpayer. That means that money that could have been spent encouraging business growth with business grants, or money that could have been invested in the infrastructure of a country (which is very important for business growth and thus the economy) is now handed out to the unemployed.
If the unemployed hadn't received welfare, the Government could now spend that money on all of those things I mentioned. The benefits to the Government of paying social welfare (economically)
is very, very small compared to the benefits to the Government of not paying social welfare.
I wholeheartedly disagree with your comment about:[i]"the point of giving out welfare is to effectivise the economy"[/i]. Social welfare is given out to look after the unemployed, not for any "benefits" to the economy. People who save their unneeded money (as you put it), do spend it, just not instantly. People saving and investing money is good for an economy.
[QUOTE=Ond kaja;30429950]Maybe, maybe not. The point is that the U.S. should let other countries mind their own business on matters like these. I'm almost certain that it was private interests that drove them into opposing Haiti's raise of minimum wages, and not that they really care about their economy. [/quote]
Yes, I agree with that.
As much as I dislike foreign involvement, I believe the US is trying to stop Haiti from completely screwing itself. There has been many examples of other countries doing something similar, and they go right into poverty. I posted a video somewhere above that goes into detail about that, and there are many other sources you can look at to confirm this.
[QUOTE=Ultra Violence;30426827]But if we raised their wages, we wouldn't be able to outsource anymore.
Then we'd be forced to build the factories here and pay American wages--a nightmare by any measure.[/QUOTE]
As I've already pointed out, raising the minimum wage in Haiti would not affect any of the foreign companies because they pay well above minimum wage. Sweatshop jobs are the highest paying jobs over there. Raising the minimum wage in Haiti would destroy the economy there and not at all affect the rates foreign companies have to pay. This is difficult to get through people's heads because factor jobs here pay very little, but over there they are the best job when compared to the alternatives. If we want to kill any chance of third world countries coming out of poverty, then yes, we should bring all these jobs to America.
[QUOTE=Vaught;30426857]In all honesty, free market is a bitch sometimes. :frown:[/QUOTE]
How could anyone suggest that an economy with price controls on labor is a free market? I certainly know how, and it is that people don't know what they are talking about.
[QUOTE=Ultra Violence;30427490]ONLY reason the US is opposed to a raise in minimum wage is because outsourcing needs to be cheap to be viable. That [i]is[/i] the economic argument, at least from the US. Sure, Haiti cares about their economy, but the US doesn't care beyond getting product as cheap as possible.
Clearly you do not understand how this country operates in regards to outsourcing.[/QUOTE]
Most of what you said was filler, so I reduced it to the parts where you actually try to make a point. Your arguments assumes that the US does not want to a raised minimum wage there because it would increase the outsourcing cost. So, all I would need to do to prove this wrong is to show that raising the minimum wage in Haiti would not affect any foreign companies who outsourced to them. So here is the chart I posted before, and this describes entry level wages.
[img]http://www.independent.org/images/article_images/charts/040927_6.gif[/img]
As you can see, sweatshop labor is Haiti would not be affected by it, so it makes no sense to argue that companies that would no be affected by such a measure would push for a raise. The only argument I could see being made is that they are pushing for it to draw more people to the sweatshops, but that ignores that sweatshops labor is at such a high demand that it can't be met. There are already many people trying to jobs in these factories because the alternatives are so much worse, and these jobs are hard to get because everyone wants them.
Take note of China and you'll see the pay amount doesn't stack up that well. This is what economists call coming out of poverty, and it is the reason why China is becoming a new super power. China's economy years ago was terrible, but because of sweatshops such an economic benefit came out that now their economy is thriving and sweatshops do not pay the most. There are so many historical examples of this kind of stuff happening, take the industrial revolution.
[QUOTE=Mr. Bleak;30428257]Think about it another way, if a company has enough employees to comfortably run their operations, do you really think they'll hire any more just because minimum wage drops?
No, they'll just reap the benefits of paying less whilst running their business as usual.[/QUOTE]
The whole basis of that argument is that companies will never make investments. Yes, companies will reap the benefits, save, and then make an investment to raise their earnings. So their business may continue as usual, and when they make enough capital they may decide to start up a second chain somewhere else which would create more jobs. In order for your argument to make sense, you'd have to assume that nobody would be willing to make investments, and that businessmen never want to try to make a bigger profit through expansion.
[QUOTE=Ond kaja;30428721]But then the extra income for the workers would increase their purchase power, thus being able to make investments beyond the basic necessities, which can create jobs as well.[/QUOTE]
Which assumes that people at the bottom are the main ones making investments, and it also assumes that there won't be a loss of jobs from businesses that aren't able to support the new wage. Most everyone's argument here is that foreign companies are rich and therefore they can afford it, but as I keep saying, this would not affect foreign companies but rather it would affect the local businesses that clearly have not developed enough to support such wages. The opposing argument could have merit if it affected foreign companies, but it doesn't.
I suggest taking some time to study China and India and why China is so rich and India is so poor. Many economists have make quite the argument about the differences and why China is successful, but I suggest doing to research yourself and coming to your own conclusion.
[QUOTE=Caesar;30432232]"Taking money from people who don't need it" is a very relative term, what do you mean by that? People who buy new cars? Social welfare is paid for by the Government, which is funded by the taxpayer. That means that money that could have been spent encouraging business growth with business grants, or money that could have been invested in the infrastructure of a country (which is very important for business growth and thus the economy) is now handed out to the unemployed. [/quote]
Taxes should be progressive, the people with the highest income should pay proportionally more than the people with the lowest income. Obviously because the richest don't need that extra percent of money to survive, unlike the unemployed. Besides, the richest might save beyond planned investments (which is bad, I'll come back to that later), where the unemployed is unable to because then he wouldn't be able to survive. Besides, I like the ideal of redistribution of wealth to decrease income gaps, because it prevents the society from creating social classes.
That being said, handing out welfare to the unemployed should ALWAYS be priorotised ahead of business grants. The unemployed can potentially be utilised as labour when the market is in need of it, so the economy would miss out so much if we just let unemployed people die in favour of giving rich people tax cuts. Besides, poverty leads to criminality, so the unemployed are more likely to resort to illegal activities if they are unable to provide for themselves in a scenario where the State refuses to take care of its population.
[quote]
If the unemployed hadn't received welfare, the Government could now spend that money on all of those things I mentioned. The benefits to the Government of paying social welfare (economically)
is very, very small compared to the benefits to the Government of not paying social welfare. [/quote] It's hard to compare different states like that because they all handle their economy differently, and they all have different economical conditions. But I still would like to question that, because failing to feed the market with labour in case they need it can't be that good for the economy either.
[quote]
I wholeheartedly disagree with your comment about:[i]"the point of giving out welfare is to effectivise the economy"[/i]. Social welfare is given out to look after the unemployed, not for any "benefits" to the economy. People who save their unneeded money (as you put it), do spend it, just not instantly. People saving and investing money is good for an economy.
[/QUOTE]
All people who save their money don't necessarily spend it, that's why we have people with millions after millions of money in their bank accounts. It's called [I]saving beyond planned investments[/I]. It leads to undercomsumption, which reduces the aggregate demand, and that in turn reduces the production and income of companies. So by taking money from people who are more likely to save beyond planned investments and giving it to people who can't do that, we are able to increase the aggregate demand.
[quote=Pepin]Which assumes that people at the bottom are the main ones making investments, and it also assumes that there won't be a loss of jobs from businesses that aren't able to support the new wage. Most everyone's argument here is that foreign companies are rich and therefore they can afford it, but as I keep saying, this would not affect foreign companies but rather it would affect the local businesses that clearly have not developed enough to support such wages. The opposing argument could have merit if it affected foreign companies, but it doesn't.[/quote] My argument didn't assume that the people on the bottom are the main investors, but they are the main consumers of basic necessities. If they can afford to buy stuff beyond this then the potentials of the furniture industry, the shoe industry etc. would rise, which would lead to investments in these industries, and new jobs would be created that way.
[quote]
I suggest taking some time to study China and India and why China is so rich and India is so poor. Many economists have make quite the argument about the differences and why China is successful, but I suggest doing to research yourself and coming to your own conclusion. [/quote]
China is successful because they have managed to keep their currency undervalued, which makes production extremely cheap in China. This has attracted foreign investors who keep pumping in funds in China, so they are able to produce cheap products on a large scale and then export them to other countries.
[QUOTE=Ond kaja;30448093]Taxes should be progressive, the people with the highest income should pay proportionally more than the people with the lowest income. Obviously because the richest don't need that extra percent of money to survive, unlike the unemployed. Besides, the richest might save beyond planned investments (which is bad, I'll come back to that later), where the unemployed is unable to because then he wouldn't be able to survive. Besides, I like the ideal of redistribution of wealth to decrease income gaps, because it prevents the society from creating social classes.
That being said, handing out welfare to the unemployed should ALWAYS be priorotised ahead of business grants. The unemployed can potentially be utilised as labour when the market is in need of it, so the economy would miss out so much if we just let unemployed people die in favour of giving rich people tax cuts. Besides, poverty leads to criminality, so the unemployed are more likely to resort to illegal activities if they are unable to provide for themselves in a scenario where the State refuses to take care of its population.
All people who save their money don't necessarily spend it, that's why we have people with millions after millions of money in their bank accounts. It's called [I]saving beyond planned investments[/I]. It leads to undercomsumption, which reduces the aggregate demand, and that in turn reduces the production and income of companies. So by taking money from people who are more likely to save beyond planned investments and giving it to people who can't do that, we are able to increase the aggregate demand.
My argument didn't assume that the people on the bottom are the main investors, but they are the main consumers of basic necessities. If they can afford to buy stuff beyond this then the potentials of the furniture industry, the shoe industry etc. would rise, which would lead to investments in these industries, and new jobs would be created that way.
China is successful because they have managed to keep their currency undervalued, which makes production extremely cheap in China. This has attracted foreign investors who keep pumping in funds in China, so they are able to produce cheap products on a large scale and then export them to other countries.[/QUOTE]
Progressive taxes encourage unequal stealing. It assumes that the government has a right to 100% of your wealth, but they'll let you keep 35% because they are nice. There are the typical arguments about distributing the wealth, but when has this shown to be effective? Hasn't our system actually caused outsourcing? What are the possible problems with it? There is a lot more to the taxation issues than you think.
There have been many studies that show welfare doesn't at all work. You can look those up if you want. The rest of the paragraph I can't dissect because logically it doesn't work. I think your argument that people can live on welfare until there is enough of a job market to come off it? You're highlighting why employment is bad, but if the studies show that welfare prolongs unemployment, then wouldn't it make sense to support new businesses as a means of lessening unemployment rather than supporting a program that prolongs it?
The argument here is that saving is bad? Aren't savings needed for any investment? Oh wait, now it makes sense. Instead we should force people to spend regardless if they want to or not because we know what is best for them. They don't know how to use their money. You know what would really stimulate spending? An inflation rate that would make your money worthless within 20 years.
So now you're making a capitalistic argument? Or are you? So if we up the wages and a large number of people get laid of and are unable to find jobs, surely the people will have more money to buy stuff.
It seems like any extremely poor nation is able to keep their currency undervalued, What is up with that anyway?
[QUOTE=Ond kaja;30448093]Taxes should be progressive, the people with the highest income should pay proportionally more than the people with the lowest income. Obviously because the richest don't need that extra percent of money to survive, unlike the unemployed. Besides, the richest might save beyond planned investments (which is bad, I'll come back to that later), where the unemployed is unable to because then he wouldn't be able to survive. Besides, I like the ideal of redistribution of wealth to decrease income gaps, because it prevents the society from creating social classes. [/QUOTE]
I believe that all people under a certain salary should pay X% of income tax. However, I don't agree with the rich being heavily taxed. Anything more than 50% is excessive to me, and honestly I would understand if anybody being taxed that rate would move their operations to a country with a lower tax rate. I definitely do not agree with taxing the rich higher amounts "incase" they save beyond planned investments.
[QUOTE=Ond kaja;30448093]
That being said, handing out welfare to the unemployed should ALWAYS be priorotised ahead of business grants. The unemployed can potentially be utilised as labour when the market is in need of it, so the economy would miss out so much if we just let unemployed people die in favour of giving rich people tax cuts. Besides, poverty leads to criminality, so the unemployed are more likely to resort to illegal activities if they are unable to provide for themselves in a scenario where the State refuses to take care of its population. [/QUOTE]
Social welfare should absolutely take priority of business grants, to a certain limit (for each person). I was referring to the fact that the Government would not have to lose a certain amount of money which would be paid towards social welfare, if more jobs were created as a result of a lower minimum wage, and would instead be able to spend that money on other things. Of course unemployed people may turn to crime in Third World countries (if social welfare is not a standard), but in any developed country, no unemployed person has the excuse to turn to crime, and if they do, they should be tried in court. Unemployment gives virtually no benefits. This is why emigration is quite good economically for countries with failing economies and/or high unemployment.
I'm not sure what you mean by "taking money from people who [...]". If you are referring to something like an 80% tax for wealthy people, I strongly disagree with you. Those who earn that kind of money should not be taxed significantly more than those who earn the minimum wage. Taxing the upper class heavily, just dissuades people from studying for those high-paying jobs and it discourages potential professionals from immigrating into the country. Fair enough, some people who are unemployed were just laid off, and need social welfare for a few months until they can find a new job. But the upper class should not have to pay for long time spongers who turn down jobs.
[QUOTE=Ond kaja;30448093]It's hard to compare different states like that because they all handle their economy differently, and they all have different economical conditions. But I still would like to question that, because failing to feed the market with labour in case they need it can't be that good for the economy either.[/QUOTE]
Almost all states have budgets for each department/ministry, and if the social welfare budget is quite high, that means other budgets are suffering. It doesn't matter what the state of the economy is. Even if there was only one person receiving social welfare; if that person was not receiving social welfare, that money could be spent on something else.
[QUOTE=Ond kaja;30448093]All people who save their money don't necessarily spend it, that's why we have people with millions after millions of money in their bank accounts. It's called [I]saving beyond planned investments[/I]. It leads to undercomsumption, which reduces the aggregate demand, and that in turn reduces the production and income of companies. So by taking money from people who are more likely to save beyond planned investments and giving it to people who can't do that, we are able to increase the aggregate demand.[/QUOTE]
Well, I'd imagine that people saving beyond planned investments doesn't have much of an impact, as the occurence of it happening is probably very low and probably effects a very, very small portion of wealth, but I've no facts or figures on that at all, it's purely just what I think.
I guess this is where we differ politically. I feel that it is fundamentally and morally wrong to tax wealthy people significantly higher than lower-earners, because lower-earners "need it more", but I'm not trying to change your views. :smile:
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