Remedial Econ

February 12th, 2007 | by Craig |

It’s called the demand curve, kids.

As prices go up, demand goes down.

Who’da guessed?

Well, I mean besides me, of course.

  1. 14 Responses to “Remedial Econ”

  2. By Dave Budge on Feb 12, 2007 | Reply

    Yup. No rocket science there. My daughter, who works as a waitress, informed me that her boss just reduced everyone’s hours by 20%. Figuring the loss of hourly pay as well as the reduced tips she sees (due to a lousy service level from too few workers,) she figures the higher Montana minimum wage will cost her about $100 a week.

    Nice. With this kind of do-goodery maybe she’ll qualify for some form of public assistance.

  3. By Dani on Feb 12, 2007 | Reply

    That comment section is pretty eye-opening. One item in the article that I never thought about, and that probably isn’t included in all of the impact statements done on this issue, is the ripple effect on other’s wages.

    In a small shop, it only makes sense that everyone else is going to get a little boost, too, because otherwise they think their seniority or improved skill set isn’t appreciated as it should be. So the impact on the small business is going to be pretty big, and it will then be transferred to the customer. Bigger operations might get away with not trying to keep the peace among higher-wage staff- management can always shift the “blame” to invisible or distant higher-ups. That won’t fly in a small workplace where the owner is present most of the time.

    I also never thought about the impact on those making just above the new target- their real standard of living will decline quite a bit. What a mess.

  4. By darkman on Feb 12, 2007 | Reply

    dani;

    Don’t forget the ripple effect it will have on consumer prices too. Pretty soon everthing will start rising in cost and before too long the low income and retired folks will be asking for more money to pay the higher costs.

    It will just be a vicious circle like a dog trying to catch it’s tail.

  5. By Matt Singer on Feb 12, 2007 | Reply

    It’s actually quantity demand, not demand, that changes in the Econ 101 models.

  6. By Mark Tokarski on Feb 13, 2007 | Reply

    “For years, economists have debated how minimum-wage increases impact the teenage workforce.”

    They studiously ignore results, not wanting to bite the hand that feeds them. There have been twenty or so laboratories where MW has been increased, and none of the anticipated fallout happens, so the economist trot back to their masters and deliberate some more.

    The article is nothing more than anecdotes. I do hope you follow up on this - post a year from now with actual results rather than those anticipated by people who like paying low wages.

    And that’s all that’s going on - low-wage work is something that is harvested - it doesn’t matter that a job can’t support a family - workers don’t matter. All that matters is that people using low-wage work make their bucks on the backs of the peons. Somehow, that is supposed to trickle down to the workers, at least in Econ-101 fantasy land, but it never does.

    The market doesn’t always give us good results - I thank you for your justification of sweatshops, which is what we would have without MW, and trust you understand that the laws will continue to work and be effective, with or without anecdotes.

  7. By Gman on Feb 13, 2007 | Reply

    So, Matt, still defending minimum wage mandates? I try not to get angry (just very frustrated) when left-wing policies that purport to help the poor actually wind up hurting. Feels great, but such public policy sucks. I’ll wait for Matt to justify it, or the Progressive States Network. Amazing!

  8. By Steve on Feb 13, 2007 | Reply

    Don’t you understand? Feeling good about doing something is more important than actually doing something good. Intentions are the only measure.

  9. By Matt Singer on Feb 13, 2007 | Reply

    Sorry, Gman, I’m not going with one newspaper article loaded with quotes from rightwingers over a fair amount of social science. The field of econ is pretty up in the air over the negative implications of the minimum wage.

    I try not to get angry when the right uses Econ 101 models to explain complex markets — which labor markets are. I try not to get angry when people claim that market interventions exist in an economy that, for all of its faults, is no doubt fairer than the one we had in the late 19th Century.

    Yeah, I still defend minimum wage mandates. I do so with a fair number of econ Nobel laureates and the vast, vast majority of the American public on my side.

  10. By Craig on Feb 13, 2007 | Reply

    I love the smell of the “appeal to the masses” in the morning evening.

    Smells like victory.

    And I do believe that there are a fair number of Nobel Laureates who would argue against the minimum wage as well.

  11. By Mark Tokarski on Feb 14, 2007 | Reply

    Victory? Please - put up one study of actual outcomes that support you and your Laureates - one thing to hoist your beer glass to. One. Victory, my ass.

  12. By Craig on Feb 14, 2007 | Reply

    Mark, m’man, you need to brush up on:

    a.) Logical fallacies and;
    b.) Not-all-that-obscure movie references.

    Then get back to me.

    Oh, and I’m going to go ahead and have you bring up Card-Krueger. Would you do that for me please? That’d be great. Thanks.

    Besides that, it doesn’t matter what study I cite, you would no doubt scream bloody murder about the source, so why would I even bother?

  13. By Matt Singer on Feb 14, 2007 | Reply

    So, Craig, you agree that there is no economic consensus that small increases in the minimum wage do more harm than good in general to low-income individuals?

    If so, I rest my case.

  14. By Craig on Feb 15, 2007 | Reply

    If consensus in social sciences had any meaning, then you might have a case.

    In the meantime, I guess I’ll take my chances deciding between papers written by professors in ivory towers or my lying eyes.

  15. By Dave Budge on Feb 15, 2007 | Reply

    I’m still chuckling over the “vast majority of the American public on my side” thing following the “I try not to get angry when the right uses Econ 101 models to explain complex markets” thing.

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