Posted on 05/15/2016 8:59:32 PM PDT by Jim W N
I could not agree more. The question is, who is cutting off the bottom (and middle) rungs?
Walt Disney understood, money must circulate.
“I’m not the richest duck because I just stuck my money away.”
There are too many Freepers who buy into socialism, an economic system ruled by the government, without even knowing it. My ping to JR was in good faith. A lot of FReepers need some serious economic remedial education.
You directed the Moveon.org bull sh*t to me.
Do you have issues with companies developing ways to make production/services more efficient and cost effective so they can pass saving off on their customers?
Are you suggesting they should increase prices since they're going to save a fortune in labor costs?
What the hell is up with you?
At a glance, it seems they are talking about mathematical (nowadays - computer) simulations.
I did computer simulations for a living. One has great latitude in the selection of parameters, coefficient values, etc. In practice this means that with a abundance of ingenuity and a shortage of integrity, one can (within limits) come up with the answer you want.
Computer simulations are fun. They have the potential to generate insights. They may even me necessary sometimes. Sometimes they should be taken with a healthy dose of salt. They in no way supplant an understanding of theory.
I remember a comment from one economist about an economist who won the Nobel prize for economics for his computerized models. He said it was good timing, a year later (after modeling limitations became known) he would have had to apply for the prize in Mythology instead of Economics.
Relying upon a computerized model of the economy is on a par with relying on a computerized model of the climate. Oh yea, man-made global warming has been proven with climate models (with the appropriate assumptions.). It is better to understand that there were ice ages and countless other variations in climate that had nothing to do with human activity, than to credulously believe claims because they came from a computer.
Maybe I misread your post. Weren’t you the one who was pointing to the problem being the Carl’s Jr.’s CEO? That’s a MoveOn.org (socialist) argument.
If that wasn’t you and if you are not dissing Carl’s Jr.’s for doing what they must to stay viable, I apologize.
The focus on all of this and the point is that minimum wage stinks as does unconstitutional regulations, high taxes, and unions all perpetrated by the feds who are the real bad guys in all of this and who are THE cause of businesses and jobs going elsewhere.
I never said a word about the Carl’s CEO.
Fact is if they’re going to reduce labor costs substantially, which is their choice, it would be expected they would pass some of that savings on to their customers.
No?
My recommendation is to focus on ideas (and facts) rather than identity.
I think that reading a “minimum wage” law would show something like “one cannot pay less than X dollars per hour.” Literally, the law outlaws low paying jobs.
What would a law have to state in order to “raise the minimum wage.” I don’t think anyone knows.
Here’s a start. All workers currently making less than X dollars per hour, now make X dollars per hour. They cannot be let go. You must hire as many entry level workers annually as you hired last year.
If such a law has ever been written, it has not stood the test of time.
Government can claim to raise the minimum wage. Government can claim to repeal laws of supply and demand, or the law of gravity.
What can government really do? Well, they can outlaw low-paying jobs. I think of that as cutting off the bottom rung of the ladder of success.
Probably most politicians don’t realize the harm they are doing. Some kind of understand, but are in denial - it’s just good politics to “raise the minimum wage.” A few may realize the harm they are doing but do so out of political necessity or choice. Some vote against outlawing low-paying jobs, and are attacked as “heartless.”
“Computer simulations are fun. They have the potential to generate insights. They may even me necessary sometimes. Sometimes they should be taken with a healthy dose of salt. They in no way supplant an understanding of theory.”
I think the main takeaway is that all economic models have limitations that we need to keep in mind. Theoretical models as well as empirical.
It’s not physics where the variables are limited and known and behave themselves. We are dealing with inherently hard to predict human behavior. Hayek wrote a good little book on the folly of applying the predictive techniques of physical science to economics- ‘The Counter Revolution of Science: studies in the abuse of reason’. Short and well worth reading.
No, the “savings” are lost on the highers costs caused by gov’t’s forced hike in wages. That’s kinda the point of all of this.
“I remember a comment from one economist about an economist who won the Nobel prize for economics for his computerized models. He said it was good timing, a year later (after modeling limitations became known) he would have had to apply for the prize in Mythology instead of Economics.”
I like to read the older generation of economic writers, like Schumpeter and Hayek, who were working before mathematical models took over. Equation filled essays are better suited to engineering.
“If they’re going to reduce labor costs substantially, which is their choice, it would be expected they would pass some of that savings on to their customers.”
If no one automated and the minimum wage increased substantially, I would expect prices to go up, not stay the same. Also, you can’t forget the cost of automation. Furthermore, we don’t know what will happen to sales.
For the sake of argument, let’s assume something neutral on sales. For example, they remain unchanged, or they continue on trend, or market share remains unchanged. Nothing dramatic like introducing a new blockbuster product that everyone has to have.
So the business choice is between paying workers or automating. Certainly, the amount you pay your workers figures into this decision. I think that is the main thing, but that does not seem to be the focus of your question.
OK. Let’s assume that $15 per hour goes through. Companies who simply hoped the law would not pass are hurting, reducing hours, service, employment. Let’s say Carl’s Jr is way ahead of the pack on automation.
Automation and automation costs might have some start-up problems. Let’s optimistically assume it all goes like clockwork. Assume automation costs in the first year are less than the wage bill they would have without automation. Let’s even assume that automation costs are less than they would have had without automation and without an increase in the minimum wage. Automation is a HUGE, HUGE, HUGE success.
At this point, it seems to me, they have a choice. Cut prices and go for market share, or keep prices constant thereby increasing earnings. I’ll assume they keep prices constant in the first year - but one year is not the whole story.
McDonald’s, Burger King and others who are still in business scramble like crazy to catch up on automation. They may have been losing money. As they automate and save money, they move into the black. At some point Carl’s Jr starts to lower prices going for market share. Other large corporations follow suit. That is the answer to your question. It requires the (unlikely) assumption that automating is a huge success.
Let’s continue. Many smaller companies will not be able to afford to automate. There are fixed costs to automation (for example programming) and without a lot of franchise operations, average fixed costs are a killer. Nor can they pass along $15 labor to their customers. Mom and Pops and others just disappear.
Assuming an increase to $15/hour. Without automation, cost and prices go up. With automation, prices may go up, stay the same, or go down, depending on the cost of automation. Employment goes down. Mom and Pops go out of business or scale back to Mom and Pop only as they need not pay themselves a minimum wage.
It is hard to think of everything in advance - one of the problems with socialism. Perhaps new business models develop. If you can’t hire Bobby for $15/hour, maybe you pay Bobby Inc. for labor services. Maybe Bobby Inc. does not have to pay himself a fixed wage.
Just so we are clear, I agree it is not the best move, it is problematic. My point is that given all other circumstances, it is a consequence of a large problem. Corruption at the top causes a corruption of our system at the bottom, in favor of the bottom. If that does not make sense, let me know and I’ll try again.
Businesses in a Capitalistic Society are there to Provide a Good or Service in exchange for Monetary Compensation.
They are NOT in Business to Employ People, although Labor is required in differing degrees to meet Production Goals.
How many do not get that.
Famous quote from Adam Smith’s “Wealth of Nations” oft repeated by Milton Friedman:
“By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good.” An Inquiry into the Nature and Causes of the Wealth of Nations by Adam Smith, Book IV, Chapt II, IV.2.9.
http://www.econlib.org/library/Smith/smWN13.html
We both want to help people who want to help themselves through work.
I sense you think the system has been gamed for the advantage of some people. You want to game the system for others to compensate.
This sort of resembles the effort by some people to address historical wrongs.
I think these shortcut schemes fail to work for several reasons: a failure to understand that which could be understood, a failure to know things that could not reasonably be known, push back from others who see things very differently, reasons I can’t think of - even in the most general of terms.
I think a better approach is to advance valid principles. You will probably like some, not others, but valid principles remain valid either way.
People, and countries, have a right to doors, walls, and locks. It is to control entry, not exit. The problem with the Berlin wall was that it controlled exit, just like a prison. I believe in emigration rights - anyone is free to leave my house or my country. There is no right to immigration, to the US, France, any country, or into my house or yours. As simple as these principles are, some people don’t understand or accept them. They find ways to justify gaming, rather than accepting, the system.
The same applies to honest elections. Some people justify the manufacture of fraudulent votes because ...
It never seems to end. One group justifies cheating is some way, thinking that is the end of it. Others notice and cheat back to compensate, and then some.
We could go on and on. It’s been a pleasure conversing. Frankly FR is a habit that I’d like to break. Anything that is anti-Cruz can be posted. Nothing that is anti-Trump can be posted. It is not the free republic that I remember.
No, the “savings” are lost on the highers costs
LOL!
If no one automated and the minimum wage increased substantially, I would expect prices to go up, not stay the same.
That has nothing to do with my comment/question you evaded. So you're suggesting they'll be able to fire all their employee$ but since they had to automate, prices will stay the same or even increase?
Good grief.
Now they want to go automated which is fine and their choice. This will eventually eliminate most of their tens of thousands of employee$. Same with automated aircraft, trucks, virtual retail etc.
And now some are suggesting that in the slop joint industry after all this automation takes place, their prices might stay the same or even go up. This is laughable. I understand the biz owners don't want to take a profit hit, but what about the general population?
This is clearly all part of the same pattern where the little schmuck down the food chain is 100 percent screwed. These patterns here are very clear. And some folks wonder why they're now offering things like title loans for the poor schmucks used cars.
I live in SoCal, home of Carl’s. And their burgers are pretty good, as fast food joints go.
But their help is absolutely awful. Frowns, bad attitudes.
So if I could automate, in order to not encounter them, by all means bring it on.
I frequent a particular “El Pollo Loco” place. I know for sure, that ownership/management makes a huge difference.
The employees there, are courteous and cheerful, and I am pretty sure they get canned if they are not.
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