witzvo comments on On Walmart, And Who Bears Responsibility For the Poor - LessWrong

13 Post author: ChrisHallquist 27 November 2013 05:08AM

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Comment author: V_V 24 November 2013 04:23:44PM *  3 points [-]

Whatever your moral position is, government benefits to low-income workers are a subsidy to their employers.

If the government awarded benefits only to the unemployed, many low-income workers would find preferable to quit their jobs if their employers didn't increase their wage. Since employers need employees, employers would find preferable to increase their employees' wages enough that they don't need government benefits.
The net effect would be a redistribution of wealth from employers (especially those who use lots of low wage labour, like Walmart) to the government (and hence to taxpayers).
On the other hand, increasing government benefits to low-income workers would redistribute wealth in the opposite direction: from the government to Walmart-like employers.
Note that neither policy significantly affects the welfare of low-income workers, since their effective purchasing power remains approximately the same.

Therefore, if you think it is morally preferable to redistribute wealth from Walmart to the taxpayers, support unemployed-only benefits (and/or minimum wages), if you think it is morally preferable to redistribute wealth from the taxpayers to Walmart instead, support guaranteed basic income and/or other low-income workers benefits.

Comment author: witzvo 04 December 2013 07:09:16AM 2 points [-]

government benefits to low-income workers are a subsidy to their employers.

This isn't true, literally. Why do you think it's true figuratively? If you have in mind the counterfactual situation in which benefits to low-income workers were removed, well, I think the economic consequences of that are complicated -- much more complicated than a simple subsidy.

If the government awarded benefits only to the unemployed, many low-income workers would find preferable to quit their jobs if their employers didn't increase their wage. Since employers need employees, employers would find preferable to increase their employees' wages enough that they don't need government benefits.

None of this makes it a subsidy.