If that what politics mean, then it is true.
But what he’s talking about is politics in a differenent sense. It mean the use of agressive force to effect change in civic society. It is the opposite of voluntarism.
Economics tells us the effect of increasing the minimum wage: increasing institutional unemployment. It does not say, “one ought not to seek to increase institutional unemployment”. Such a statement is an ethical one, and has nothing to do with economic theory.
Re J.Grayson, “things change” and “How is the allotted income different from a combination of a soaring minimum wage and a gigantic government unemployument ‘insurance’ scheme? How do you avoid all the problems widely known to be associated wiht both?”
Right. What was once necessary to the enterprise becomes superfluous. But your question was whether the employee could be laid off, and the answer is, absolutely. "No involuntary unemployment"means that everyone who wanted a job could have one, but it doesn’t mean there would be barriers to employers managing their workforce as they saw fit. (Government would act as an employer of last resort, putting people to work picking up trash, if nothing else, but those people would be paid the allotted income, too, meaning the money would come from the monetary agency, not from government’s revenue.)
The allotted income would in a sense form a minimum wage, but one that employersw would not have to pay. It isn’t a government program because government simply wouldn’t be involved. They monetary agency, which is totally separate from government, would be the paymaster for those designated by their employers to be paid the allotted income. Again, once set, the amount of that income would not increase.
You’re denying human action and logic. If we know that increasing minimum wage will lead to unemployment, and we don’t desire unemployment in anyway whatever, then economics will tell us not to increase the minimum wage rate.
Re Lilburne, about the difference between ethical considerations and economic theory with respect to the miminum wage and unemployment:
A very key point.
And how will they decide this entirely arbitrary rate?
Does this mean that capitalists and land owners share revenue without paying wages?
Stephen is obviously uninterested in a conversation.
Esuric, Lilburne is correct. Economics is not a normative science.
Who’s “we”? Economics doesn’t deal with any particular desires. Nicholas Biddle desired American unemployment as a means to undermine Andrew Jackson. In desiring unemployment, he can be said, in an ethical statement, to have been evil; but his desire can’t be said to have been contrary to economics.
RE Esuric, how would the amount of the allotted income be decided? and could capitalists and landowners share revenue wihtout paying wages?
The amount of the allotted income would be in a sense arbitrary. If the economy were a closed system, with no imports or exports, it could be set at any amount and prices would adjust. It would make most sense to set it at the average income at the time this system was insituted. That is one of the issues that would have to be decided in the political process in instituting this system.
They could do that if everyone in their employ earned the allotted income.
I believe your proposal would severely cripple the system of price signals in the market. Malinvestment would be rampant in such a situation.
The price system evolved to deal with uncertainty. Introducing a factor that has not been determined by the free market is introducing planned chaos.
Complex adaptive systems like free markets already adapt, harden, self-defend, and self heal at every level. There is no need for rudimentary quasi-central plans.
Well then he is evil, and that is an ethical judgment. But economics serves a function; saying that it’s neutral is obfuscation–it directs policy decisions and human action. I don’t agree with this distinction–it seems useless.
What do you mean prices would adjust? If this “authority” finances this portion of society with inflation then prices will continuously rise. Furthermore, if this arbitrary wage rate is too high, then such productions will draw labor away from more warranted economic activities, and if it’s too low, then workers will be uninterested in such a policy. Also, is this arbitrary wage rate fixed across the board for all productions?
Well economics is not a normative science but I remember Dr. Salerno making an insightful remark
‘No one is just an economist’
Every science serves a function. The study of physics can help propel a man to space, but it doesn’t tell us that we should.
If we’re trying to propel a man into space then we should apply what we know from physics.
No question about that. What we are arguing is that nowhere in physics does it say that you should build a rocket ship to the moon.
I like how one supposed benefit of this is that it abolishes government and central bank control of the economy whilst establishing a monetary authority with powers that make current central banks look like some sort of libertarian wet dream.
My point is that this distinction is barren. If you understand economics, and if you want prosperity and economic growth, then you should oppose minimum wage laws. If you don’t want prosperity and economic growth, then you are evil. Austrian economics reveals the negative effects of minimum wage laws and we should act upon this knowledge. Austrian economics, then, tells us what we should do.
The distinction is very momentous, not only for the sake of truth and clarity of thought, but for rhetorical purposes. To convince people, we need to show that Austrian Economics is not just libertarian apologia. To do that, we need to make perfectly clear that we recognize the distinction between economics and ethics.