Thoughts on unemployment

[nleseul]

Standard economic theory is that minimum wage laws result in unemployment, because they set an artificial floor on the price of labor, and therefore preclude people whose labor is worth less on the market than the minimum wage from finding a job

Comments

[evedestroys]

I have to admit this entry kind of depressed me because I never thought of things that way.

[nleseul]

It is kind of depressing to think about how many people's lives are controlled and terminated by money, when you realize how fundamentally arbitrary money as an idea actually is. But it's also kind of inspiring to realize that there's no metaphysical reason why the world has to be this way.

[mythrilwyrm]

Or, in other words, where that person's labor has no economic value. The economy doesn't need her.

This is a very interesting point, and one that conflicts with the idea that steady population growth is good.

[nleseul]

I don't think there's any problem with a growing population, at least not from this perspective. If there is a "problem," it has more to do with the increased productivity per capita made possible by technology than with the total size of the population.

But if the economy is genuinely capable of producing enough goods for everyone without everyone's labor being needed, then that's actually awesome, since it ought to mean that everyone can work less. It just doesn't work out that way in the economy as it exists, because the people whose labor isn't needed still need to somehow get money to buy the goods.

[ladyfelicity]

I lost you somewhere. First of all - isn't this "poverty line" kind of arbitrary? Who determines what you need to live? It varies *widely* by city, even within a state like California. Rent can be twice as much in one place as another

[lalato]

I don't think anyone making less than $11000 per year is too worried about Ferrari vs. basic transportation. Just sayin'.

--sam

[ladyfelicity]

That's true, but many people spend outside their means through borrowing.

[lalato]

I don't care how screwed up lending has been over the last few years... no one was giving truly poor people loans for Ferraris. ;)

--sam