Minimum wage going up

[Doctor_K]

There comes a point, to me, when ridiculous, huge profits are enough and I don't need to be driven by making even more money, I need to be drived by actually doing waht is good for my country.

I'll respect that.   And on some level of which I have yet to consciously identify, I think I even might agree with it, at least to a degree.

Unfortunately, this is also where politics generally come into play.  What do you (not you specifically, Eazy, but in general) determine is 'too much' in terms of profits and profitibility?  How do you determine that?  Where is such a hypothetical line drawn?  Why *there*?  To whom does the responsibility of drawing said line fall?

This is also the point where we tread into the ongoing discussion and debate about free-market-, planned-, and hybrid-economies.  Each has their merit, each their peril (and here's my memory and History degree coming into play - I don't have fancy charts, so let the slaughter begin) :

1)  Strictly planned central economies don't work, as was (at least partially) proven in the old Soviet Union.  As with every economy, the USSR's went through cycles.  But the economic performance of that alliance was not often spectacular.  Now that it's just Russia and the CIS, the markets are open at least to a degree more.  Russia is flush with cash thanks to oil and natural gas pipelines.  The markets and the theory of supply and demand are a work in progress there.   The energy companies are mostly (if not all) state-owned, but my point is that the government is not outwardly dictating supply, therefore prices and demand.

2)  The People's Republic of China was another example of a strictly-controlled, centrally-planned economy.  It too had its ups and downs over the decades.  China is now moving towards more of a hybrid/mixed economy and away from the previous mentality -again, slowly and only to a degree - and their economic growth has been in the double digits for several years now.  BUT: they peg their currency artificially low to several other currencies (mainly the US Dollar) and there are plenty of other mitigating factors at play.

3)  The U.S. and several Western countries (UK, Germany, and Ireland come readily to mind) have typically enjoyed longer and/or more abundant prosperity because they've tended more towards free-market and mixed economies.  Some nudging along from the government was done, to be sure (hence 'mixed'), but government was typically more hands-off (laissez-faire?) and let the market chart its own course.  This is an oversimplification, of course; but generally speaking, that's the main difference.

Now we're living in a time that sees the result of the unbridled and mostly free-market capitalist system, several decades later.  From a purely economic standpoint, it's much more powerful an example than any attempted central-planned system has been to date. 

From a more humanitarian standpoint, especially from where you're voicing your concern, the answer is not quite as clear.  Is any one system hands-down better than the others?  Well, it depends on what you're basing your argument and outcome on.

[RiversideGator]

or (3) the company will eat the difference by adjusting to a lower level of profit.

When did this happen before?   

[willydenn]

The short is answer is no. 

The somewhat long answer is that labor costs are typically set by the market and people are paid based on the difficulty of the work and the ease of substituting in other workers.  For example, very few people are qualified and have the skill to perform brain surgery.  So, because these people are very rare and their services are highly desirable, they earn more money.  On the contrary, it is very easy to flip a burger and most anyone who is physically fit can do it. So, because this job is one which anyone can do and there is a large pool of potential workers, burger flippers do not get paid very much. 

With the minimum wage, you have government arbitrarily raising the costs of burger flippers and other entry level workers.  In response, businesses will do one of two things (or both).  They will (1) cut some positions and increase the workload on the remaining employees in an attempt to hold the line on prices or (2) they will raise prices and pass the new cost onto customers.  If they do (1) some of the intended recipients of the government largess will actually lose their job thereby harming them.  If they do (2), which is what will ultimately happen in the long run, prices will go up to reflect the new base cost of labor.  So, minimum wage causes job losses for its supposed beneficiaries and cause inflation generally.  It really is nothing more than a political ploy to attract the votes of the economically illiterate among us.
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Well put.  Has anyone passed this explanation to the resident "progressive?"