Economics

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Economics isn't just about theoretical impacts to money, though many get caught up in that. It's about social engineering or understanding. You can't argue a policy change (or any change) intelligently if you don't think about the consequences of your actions -- and not just to the people you care about, but all people and the system as a whole. How will people react, how can the solution be gamed, sure you helped a few -- but what happened to the rest (and does the help outweigh the costs). Micro-economics is looking at one system, Macro-economics is looking at how that system impacts all the others.

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Does minimum wage impact employment?

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This is of course hotly contested, but it breaks down into two camps: (1) "No" (2) Those who have a clue as to what they're talking about.

The problem is (of course) that it doesn't always, and doesn't always immediately impact it. So there's some plausible deniability for the economics deniers out there to find edge cases and say, "see". But as soon as you look deeper than the surface, you find that it does suppress growth, or increase a decline, sometimes ahead of the law and sometimes well behind it but it happens, and it especially hits certain segments and groups of people harder than others (like teens, starting out, part time work, and so on). Let's dive into the evidence.

Livable Wage

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Ignoring the stupidity that there's one magic "livable wage" that would be equally fair on both sides of the same city, let alone country, the left tries to sell the gullible that setting a salary minimum will set a salary minimum, but it doesn’t.

Progressives often see the choice as: (a) A livable minimum wage (b) A lower minimum wage.
But that's a fantasy. The real choice is: (a) What the market will bear (b) Unemployment ($0/hour).

The choice isn't pulling people out of poverty or not, it's about what value an opportunity is worth to an employer, before they skip the job, automate, outsource, or just give up.

Main article: Livable Wage

Minimum Wage

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The minimum wage and living wage warriors seem reluctant to accept the economic realities: price and wage controls almost never work. There are extremely rare cases where they can work (or do minimal damage) in one small location for short amounts of time, but there's no magic wage that's right for everywhere and everywhen at once. Thus wage controls start out bad and get worse over time.

I like to use thought experiments and the socratic method to try to get min-wage supporters to think:

  • What's a fair wage for both NYC and B.F. Idaho?
  • If $15/hr is good, why not $150/hr? (Every answer why $150 is bad also applies to $15)
  • If I raised your salary by 5%, but the cost of everything you buy by 10%, would you come out ahead?
  • If I’m willing to pay someone $10 to do something, and they’re willing to take $10 to do it, what business is it of the government or voters?
  • Who knows more what's a fair labor value for a job, in every market in the U.S.: the employer and employee involved, or a bureaucrat in D.C. or voter in Barstow? Why?

And so on. To understand minimum wage arguments, read on.

Main article: Minimum Wage

Minimum Wage: Cost basis

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I hear all the time, that McDonald’s can afford to pay a “livable wage” without raising costs, or "it’s just a few cents a burger", by people that don’t understand basic economics, or business.

Here’s some notables taken from the average McDonald's balance sheet:

  • The average McDonald's generate about $2.5 million in gross revenue, but then they have a lot of expenses like rent/mortgage, taxes, utilities, food, taxes, and labor (and their taxes).
  • The average McD's Employs 61 people in operations and restaurant management positions, and spend nearly $507,595 on wages (about $800K or 32% of gross revenue, when you factor in benefits, tax liability, and other costs around employment).
  • A McDonald's ends up with an average net profit after those expenses of 6%. Or about $150K/year in net revenue (for about $2M in initial investment/risk).
  • A jump from $7.25->$15/hour means $264K in increase wage costs, on profits of about $150K…. so they’re now losing $114,000.00 on each store per year. How many new McDonald’s will open with that as their forecast, how many will close because of it?

The store (and chain) must respond, or the average store will go out of business. They must: raise prices, trim staff, automate (or some balance of these), or shut down.


Bay Bridge Boondoggle

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The bay bridge is a metaphor for San Francisco. The Golden Gate was built privately and under budget for $35M ($1.2B in today's dollars), one span of the Bay Bridge needed a retrofit, that was run by the city and came in late, and over budget at $6.4B, and has withmetallurgy issues (per the spec). For that cost we could have built 4 other bridges. But it looks nice, so everyone wins.... except the taxpayers
Main article: Bay Bridge Boondoggle


Memes:Econ

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Economics is largely comparing seen to unseen outcomes, and looking for the bigger picture or consequences.
Main article: Memes:Econ

Memes:Econ:Keynes

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These Meme's just mock Keynesian macro-economic theories. While Keynes was brilliant micro-economist, his macro-economic ideas are all mock-worthy and disproven time and time again, by history.
Main article: Memes:Econ:Keynes

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