The problem though, if the existing businesses were more efficient (lower prices and/or better customer service) they would have gained the new customers through natural market forces. Once the costs are increased through a higher minimum wage where the marginal businesses can no longer compete then this will lead to higher prices for everyone.and everyone will lose for the exact same reason it is not good for the overall economy if someone were to bust out my window.
Not to mention, as was discussed earlier, that the marginal workers who lose their jobs would have, given half a chance, gotten higher paying jobs if they were qualified. They are now no longer wealth builders but drains on society by living off their family/government which in turns creates the same effect as the broken window fallacy.
So it would seem, contrary to his theory, that a higher minimum leads to less overall consumption and if he is correct that consumption drives an economy it would have the exact opposite effect of what was intended. Little surprise there…
The guy I am arguing with is skeptic about the happenings during the great depression. he doubts that article I was given from the FFF. He wants “raw data.” He is basically saying the article is “analysis” and says that I haven’t seen the true data. I haven’t seen raw data, but I have seen many sources saying the same thing that this article is saying.
Secondly, he said this about price:
Price is made up of labor and profit. It is all collected by the business and distributed to the employees and to other businesses that distribute to their employees and retain their own profit. Profit does not contribute to wages. Sales do. The business does not pay for the employees. The customer does.
Nothing changed anything? Please re-write that sentence. That doesn’t even make sense. And yes, the trend remained steady from 29-32. Yes, things were getting worse.<
When a trend changes, that is the time to ask why. When the trend is not changing, it means that the measures are not having any effect. You cannot look at measures from 30-32 to figure out why everything turned sour in 29. The economy tends to be insidious. Profits encourage growth that encourage profit. Losses encourage shrinkage that encourage losses. A turn of a trend is spectacular, and it is only in carefully examining these monumental events that you can gain any understanding of how the economy works.
Prices were dropping, yes. But prices were dropping FASTER than wages were.<
Data please? If that was the case, why was the ‘evidence’ you gave me carefully carved out of 30-32.
Logic can’t prove shit…you already said that. I need the correlation. You bring me the data that validates your theory.<
I don’t need to prove it to me. I don’t know what is going to smarten you up. I know that if you look, you will find the validation you need, but if you don’t want to know, you’re not going to believe me even if I brought you the data on stone tablets off of Sinai.
That is where the guy found that data.<
Saying that consumer industries were less hit is not data; it is analysis. So there is no data that YOU have looked at? You just take this guys word for it.
That assumes banks own the business.<
You still think money has value beyond the expectation.
Please re-write this response<
Price is made up of labor and profit. It is all collected by the business and distributed to the employees and to other businesses that distribute to their employees and retain their own profit. Profit does not contribute to wages. Sales do. The business does not pay for the employees. The customer does.
You complained about that earlier, which is why I left out the solution. <
I bitched because you left out the problem.
Tell me, if Amtrak falls under, who will gain from that business?<
Greyhound. Airlines.
It also assumes wealth is fixed. That not everyone can succeed. It also assumes there is only one market to be had. Only one market to target.<
Consumer dollars are limited by wages. We are talking macro economics. There is only one market.
But is it on an equal level? Is the loss balanced by the gain?<
No. But the realignment will not change the trend. If the trend is growth, the profits and losses by various companies all come out in the wash. If the trend is to shrinkage, the various gains one company gets off another’s destruction won’t be sufficient to turn the economy as a whole.
Any comments on any of the particular points he gave here?
This guy is clueless. Prices are not ‘labour and profit’ (that is Marxian tripe.) That is wrong on so many levels. Business-owners are rewarded in two ways: 1) pure entrepreneurial profits and 2) interest on capital for abstaining from present consumption (the latter is what is referred to as ‘normal profits’ usually, if not fallaciously.) Greater employment of capital most definitely contributes to higher wages. Goods do not simply sell themselves. A huge amount of effort and coordination is needed to produce, market, sell them etc.
Reisman refutes the idiocy this guy bases his ‘arguments’ on here:
I am not sure why you are debating him; he seems to be pulling these assertions out of nowhere.
Prices are arbitrary. The payments a company receives are distributed towards the different cost it needs to carry to stay in operation. Profit is what they is left over after all deduction. Profit does contribute to wages in two ways:
Firstly the hope for profit is a reason an entrepreneur/wages is going to pay wages and continue with payments in the first place
Profits are not kept in the vault, they are spent contributing to other wages and profits again.
Of course businesses do pay for employees. They also pay for them even, if they don’t do any sales. Whether they sell or not doesn’t matter, wages are a liability they are going to have.
One can of course now ask how wealth is created. But then we would first have to explain what constitutes wealth.