Friday, I had the pleasure of attending the NBER Economic Fluctuations and Growth meeting at the San Francisco Fed, organized by Luigi Bocola and Linda Tesar.
Love reading your articles. Truth be told, much of the material is beyond my understanding but, I am trying to understand the world of economics. In my humble opinion, all students should be required to take courses in economics. Just the rambling thoughts of an old hermit.
Very, very helpful overview. I wanna dig into the minimum wage stuff more.
Let me say something about something I know about: "With “tariffs and lump-sum transfers”, China becoming more productive is a benefit to the US (0.008). With “Laissez-faire,” no transfers and tariffs, it is bad for the US (-0.235)"
Bad model or a misuse of language! Laissez-faire must be good for the US. There will be winners and losers, but the winners win more than the losers lose. Of course you can compensate the losers, and as you say, we already do to some degree.
I don't have the time to really dig into the graphs and math of your points, but it made me think back to when I was a bank CEO and how we priced various products or services. It was usually as simple as, "If we lower our price to stay competitive and not lose customers, do we get a sufficient return. My banks were very small, and we didn't have sophisticated modeling, but it worked. Having said that, your article is fascinating.
Yes, and as someone who pounds his fist on the table that "inflation" only describes the overall price level, I should be leery of such things. But the government does construct such numbers, and "inflation" does describe percent growth in a price.
As the great Thomas Sowell wrote, the real minimum wage is $0. That Germany did not impose a formal minimum wage does NOT indicate people worked "voluntarily". They were already being paid sufficiently to desire to maintain their jobs. The MW was merely a point of reference. As Sowell and the late great Walter Williams have also written, very few people stay at MW for long: they gain skills and experience and move to higher wages, or to another employer who will pay higher wages.
In the US, baristas and waitstaff gain income through tips; skilled waitstaff at high-end restaurants can often make $100,000 in tips, while a nice pizzeria or barbecue restaurant waiter/waitress will make $50,000 or better. You mention automation, which replaces many thousands of employees (making their wage $0) at fast-food establishments in particular. An order kiosk now costs less than a single full-time employee at an MW of $15. Increases in MW consistently trigger job losses, particularly among entry-level positions.
An episode in the first season of The Outer Limits was "The Human Factor". So many economic studies do not seem to include the human factor, though Sowell and Williams have done with such great insight.
regarding markdown paper: The idea of using a production function seems to be more applicable for a "simple" industry like agriculture. For example, measuring the Marginal product of people collecting asparagus might be straightforward. Then you probably look at companies with low market power either to employees or to customers (?), and hence little markdowns. Why not just looking at revenues and profits in time then?
Love reading your articles. Truth be told, much of the material is beyond my understanding but, I am trying to understand the world of economics. In my humble opinion, all students should be required to take courses in economics. Just the rambling thoughts of an old hermit.
Very, very helpful overview. I wanna dig into the minimum wage stuff more.
Let me say something about something I know about: "With “tariffs and lump-sum transfers”, China becoming more productive is a benefit to the US (0.008). With “Laissez-faire,” no transfers and tariffs, it is bad for the US (-0.235)"
Bad model or a misuse of language! Laissez-faire must be good for the US. There will be winners and losers, but the winners win more than the losers lose. Of course you can compensate the losers, and as you say, we already do to some degree.
I don't have the time to really dig into the graphs and math of your points, but it made me think back to when I was a bank CEO and how we priced various products or services. It was usually as simple as, "If we lower our price to stay competitive and not lose customers, do we get a sufficient return. My banks were very small, and we didn't have sophisticated modeling, but it worked. Having said that, your article is fascinating.
Sorry, you say "Clearly, firms stop paying more than minimum wage."?
Less. Thanks. Typo fixed.
Oh god, "rice inflation" ? I think we've hit a new low on abuse of the word inflation!
Yes, and as someone who pounds his fist on the table that "inflation" only describes the overall price level, I should be leery of such things. But the government does construct such numbers, and "inflation" does describe percent growth in a price.
As the great Thomas Sowell wrote, the real minimum wage is $0. That Germany did not impose a formal minimum wage does NOT indicate people worked "voluntarily". They were already being paid sufficiently to desire to maintain their jobs. The MW was merely a point of reference. As Sowell and the late great Walter Williams have also written, very few people stay at MW for long: they gain skills and experience and move to higher wages, or to another employer who will pay higher wages.
In the US, baristas and waitstaff gain income through tips; skilled waitstaff at high-end restaurants can often make $100,000 in tips, while a nice pizzeria or barbecue restaurant waiter/waitress will make $50,000 or better. You mention automation, which replaces many thousands of employees (making their wage $0) at fast-food establishments in particular. An order kiosk now costs less than a single full-time employee at an MW of $15. Increases in MW consistently trigger job losses, particularly among entry-level positions.
An episode in the first season of The Outer Limits was "The Human Factor". So many economic studies do not seem to include the human factor, though Sowell and Williams have done with such great insight.
regarding markdown paper: The idea of using a production function seems to be more applicable for a "simple" industry like agriculture. For example, measuring the Marginal product of people collecting asparagus might be straightforward. Then you probably look at companies with low market power either to employees or to customers (?), and hence little markdowns. Why not just looking at revenues and profits in time then?