Minimum wage has the side effect of leaving unemployed, the people who do not possess the requisite skill to command the minimum wage in the market. This follows from basic micro-economic theory and here is nice short video of Milton Friedman, the renowned United States economist arguing against minimum wage...
I would strongly advise you to look at the short review on Thomas Schelling's Strategy of Conflict posted on Less Wrong some time back. The idea that deliberately constraining one's own choices can actually leave a person better off in a negotiation is a very interesting one. The most classic...
I spent a bit of time looking at the details of Negative income tax. It is possible that I am not understanding the subtleties of Negative income tax but it appears that what I proposed is different and better than Negative Income tax. The reason for this is the following. In my scheme if a person is making wage y which is less than some threshold wage x, the state pays him (y-x)/2 which satisfied two objectives (1) People who are poorer get more state aid (2) People are still incentivized to work harder and make more money since their total payout (wages + government aid) is an increasing function of their... (read more)
| perhaps you have the good habit of translating the general thoughts in your mind into |exemplary exemplary (sic) words,
Yes I do and it has served me very well with regard to being a clearer communicator. It's all the more helpful when communicating with people less used to talking abstractly. I strongly suggest you try it. You'll save time and be more clear 95% of the time unless the people you are communicating with are some really biased sample.
| in which case you wouldn't have had this specific hint that this post was fairly off topic by its narrowness.
I have no idea what you are saying here :)
I am amused at this comment more than anything else. Of course it should have been (x-y)/r where 1<r<infinity. And of course correspondingly there is no reason to set x to exactly current minimum_wage* 1.5. Your preferred method of writing and talking reminds me a lot of what I tended to do as a Computer Science undergraduate who studied discrete mathematics and formal logic and liked to make statements unambiguously in first order logic. This was all the more because I was doing a bunch of courses that involved mathematical proofs which obviously lended themselves to that format.
The reason why this kind of writing is sub-optimal is the following:
That kind of precise
Thanks, orthonormal! Yes I had not heard of it and the idea seems very similar.
Agreed. But does this problem not exist in even bigger measure when you have min wage and social security for those unemployed as a result of minimum wage. The social security cannot be equal to the min wage, since otherwise no one would work at min wage. However the social security would presumably be something like 2/3 of min wage to ensure that those who are unemployed are able to have some decent standard of living. And this per your argument would put the implicit tax rate of those earning minimum wage at 67%!
Minimum wage has the side effect of leaving unemployed, the people who do not possess the requisite skill to command the minimum wage in the market. This follows from basic micro-economic theory and here is nice short video of Milton Friedman, the renowned United States economist arguing against minimum wage laws. To offset this problem, it is essential to have some kind of social security safety net for the unemployed.
Instead, I would like to propose the following scheme which seems to me as more efficient (please let me know in the comments if you know of any country that tried this or something close): Set x= 1.5 * min_wage. Have no minimum wage laws. And... (read 389 more words →)
It's not obvious that it's a subsidy. This would be a subsidy only if an employer would have to pay a person less here compared to a market with no minimum wage laws and no social security. For example, imagine that in such a market a person's wage is $4 per hour (who is currently almost certainly unemployed in California due to the $8/hr min wage). Now let's analyze what happens to the prevailing wage of a person of similar skill with the above scheme where the government ensures that a person makes at least $6 an hour. The marginal utility of money is lower for the aforesaid person given that he... (read more)
This seems to be a good idea. But the only problem with it is that the labor market is not as liquid as a financial market. It is in principle quite possible for a person in a free market to be commanding 1.5 * minimum_wage in a part time job or for part of the year, but unable to find work for the rest of the year or rest of the free time, which would push his annual salary below minimum wage. Theoretically there should be absolutely zero unemployment with no minimum wage laws. However in practice it would still be a couple of percent due to liquidity holes in the market,... (read more)
The ridiculous amount of activity by the untrained and uninformed on the stock markets seems to suggest that people could use a significantly higher amount of "zero sum" bias there. There are tons of people who would not peg their investment skill in the top 1%, who nonetheless think they have a good chance of making money in short term trades. There certainly seems to be the thinking that the stock market is a source of profits for one and all, regardless of investment skill and understanding.
This bias however is most prevalent in the idea that getting rich cannot possibly be a noble act, a point extensively addressed in Paul Graham's essays.
You are right about competition serving quite a useful purpose in the real world. However the real world is not like financial markets where you have liquidity by the milli second with regard to competing offers. If competition did a great job of providing an alternative in real time, they would be no need to do the following in pretty much any negotiation
I would strongly advise you to look at the short review on Thomas Schelling's Strategy of Conflict posted on Less Wrong some time back. The idea that deliberately constraining one's own choices can actually leave a person better off in a negotiation is a very interesting one. The most classic game theoretic example of this is the game of Chicken. In the game of Chicken, two people drive toward each other on a wide freeway. If neither of them swerve, they both stand to lose by way of substantial financial damage and possible loss of lives. If not, the first one to swerve is the proverbial "chicken" and stands to lose face against... (read 992 more words →)
My bad. Friedman's NIT implementation seems to be the exact same thing I wrote. NIT seems like a really lousy name for it though, given that it naturally lends itself to the interpretation in my previous comment ; as a fixed percentage bonus added to your salary by the government within some wage band.