In terms of free banking, without any government intervention whatsoever – which of course also assumes a 100% gold-backed currency – there is a built-in system of “regulation”: the depositors’ ability to demand to line up en masse and demand their deposits back. Banks that are unable to do so because they have issued fake warehouse receipts (i.e. counterfeit) will obviously be forced to close their doors. The honest banks that faithfully store their customers money for a fee, and only loan out those deposits which were made as a contractual, interest-bearing “time deposit” (as opposed to “demand deposits” such as a checking account), will eventually displace the banks that fail due to fraud and mismanagement. The magic of the free market.
The “moron” responded to this statement here. Here is what he said:
They have to pay people, illegally, under the table.<
People are not paid under the table to pay them cheap. This is done to avoid the very costly bookwork and employer contribution taxes. Shrink government bureaucracy to stop the black market. Abolishing the minimum wage would do nothing.
Wal-Mart advocates a higher minimum wage. They already pay their workers more than minimum wage.<
Bullshit. Entry level is minimum wage. All other wages are derived from the entry level.
How does raising the minimum wage produce more goods and services?<
Increased consumption breeds increased production. Increased labor cost breeds productivity innovation.
It doesn’t.<
That’s your theory, and this theory has no correlation for validation.
The statements in the <> are what he read. The statements not in the <> are his responses. Personally, I have no idea what to say about this. I told him about how it isn’t always true that the more consumption..there is more production. I gave examples of medical care, roads, oil, etc.
hrponimirski, this is how I learned it in my econ class. The reserve requirement means banks must keep a certain amount of money in a basically interest free deposit. That they can’t spend that money. Most banks do carry higher than 10% most of the time, because if they fall below, that bank will be screwed with doing any business with the feds. I mean, banks still create money, but I believe the federal government helps it along a lot.
If you have lots of labor why would you want “labor savings”? That is like living next to a spring but rationing yourself to one cup of water a day. Economizing means using the factors of production least highly valued for the most highly valued result. If labor is abundant (read that cheap) then it is false economy to build expensive machines to do the same thing.
Exactly right, Mr. Dean. This is a clear violation of the human right to freely contract. The fascist collectivists ( or communists if you prefer — either term is highly accurate) need minimum wage laws to ensure there is a permanent underclass of homeless people, whom those living off government pensions call “bums”. Why have they allocated $192 billion in foodstamps over the next 5 years for those who have home addresses, while allocating only $100million to aid homeless shelters and soup kitchens, a ratio of over 1900-to-1, if they care so much about “social justice”? Abolishing minimum wage laws would be of immeasurable benefit to the homeless, so that is why modern liberals (not the real kind like Mises) and the unions oppose it. In a free wage market, I think the typical starting wage would be a couple of bucks higher than the current minimum wage, while union wages would decline a comparable amount. Minimum wage laws are due to the unions institutionalized greed, and their hatred of the individual and human freedom. “Screw you Jack, I’m alright” as the British Trade Unionists used to say. (I’d recommend the British comedy classic, “I’m Alright Jack”(1961) for a humourous look at this phenomenon, or “The Angry Silence”(1954) for a less funny and more realistic view of the problem).
Pensioners too, whose purchasing power is constantly eroded by inflation, would also benefit greatly from the abolition of min. wage laws, as they often need casual physical labor to maintain their residences safely as they age. But the well-fed Democrats would never permit such a justice. They will insist on injustice. The American public, which we can see by this discussion, and by what we read every day on sites other than the Mises Institute, is so poorly educated on economics that they will cheer for the two sides of the collectivist football game, never realising the game is fixed in advance to make sure their side loses, whichever side it is. Mises Institute wisdom and clear capitalist thinking is virtually non-existent in this land of the fee and the home of the slave. But economics and collectivist cozenage are not that hard to understand when explained by brilliant minds like Rothbard and his Austrian predecessors. True statesmen like Ron Paul have the ability to educate the public as they courteously debate. Some day, our schools will place a lot more emphasis on true economic education — and not of the garbage that came out of Keynes and revisionist statists like Friedman and Buckley. (Though I did like a lot of Milton’s writings.)
The next round of statements:
Hmm…sounds very unlikely, since they already make well above the minimum wage.<
All wages are based on the minimum. Take the base away and everything will slide. And ‘very unlikely’??? You want that crap shoot again after they did it in the 20s and got the 30s??
All wages are multiples of the base. Sure the manager earns triple the cashiers wage, but it is still on the scale that starts with the trainee’s. You cannot drop the base without dropping the entire scale.
that is true, but more consumption does not create more production overall.<
Demand does not create, but influences. Production reacts to demand. Certainly some services are less responsive to consumer demand than others, but NOTHING is immune.
This isn’t true for certain companies, so this statement is false.<
Macro economics is not about certain companies. You allow that reduced demand will result in reduced consumption. That doesn’t mean trouble for all companies. Indeed, as some companies fail, other companies might well see an increase in sales. You cannot understand macro economics through looking at micro economics.
If it is true that a drop in demand will influence a drop in supply, how can you assert that the supply drives the demand?
Of september of this year, the change from the previous year has been an increase of .4%. The change from august to september has increased .1%.<
Firstly, that is seasonally adjusted figure, of which I always suspect. Secondly, I notice that the figures in your monthly report are ROUGHLY double the UI claims. That may well be true, but how do you COUNT the unemployed except by the people that claim that they are unemployed and get paid for their claim.
Thirdly, welfare roles would be another good way to assess the economic health of the state, and I see you neglected my question. Do you know a good source for exact welfare role numbers?
Fourthly, there is no uncertainty in the UI numbers, while the numbers you are throwing around are concocted.