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High interest rates encourage saving (because savings accounts will earn more interest). Low interest rates encourage investment (because investing your extra money becomes more profitable compared to saving it) and borrowing(because it's cheaper to take on debt). Thus low interest rates encourage inflation (more people and companies buying things increases demand and therefore prices), and high interest rates encourage the opposite effect. A smart central bank will use interest rates to balance the extremes of economic growth. If the economy is going strong and inflation is rising, the central bank will raise interest rates to slow growth and lower inflation before bubbles form, pop, and crash the economy. If the economy is poo poo and there's not enough demand, the central bank will lower interest rates to ward off deflation and accelerate the recovery. That's what the federal reserve has been doing since 2008. So insofar as raising interest rates is a tool a central bank can use to keep the economy on track, it can lower unemployment in the long run. But right now high interest rates would be counterproductive.
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Oct 1, 2015 05:11
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Alan Kreuger (author, with Card, of widely cited study showing no unemployment from a minimum wage hike) weighing in on a $15 dollar minimum wage. The Minimum Wage: How Much Is Too Much? By ALAN B. KRUEGER OCT. 9, 2015 THE federal minimum wage has been stuck at $7.25 an hour since 2009. While Congress has refused to take action, Democratic politicians have been engaged in something of a bidding war to propose raising the minimum wage ever higher: first to $10.10, then to $12, and now some are pushing for $15 an hour. Research suggests that a minimum wage set as high as $12 an hour will do more good than harm for low-wage workers, but a $15-an-hour national minimum wage would put us in uncharted waters, and risk undesirable and unintended consequences. When Congress delays raising the minimum wage, states and cities typically step in and raise their own minimum wages. That is exactly what is happening now. More than half of the states, representing 60 percent of the United States population, now have minimum wages that exceed the federal level. The fact that voters in four “red” states — Alaska, Arkansas, Nebraska and South Dakota — voted overwhelmingly last year to raise their states’ minimum wages to as high as $9.75 an hour is a testament to the support the minimum wage enjoys among the population at large. Some cities plan to raise their wage floors to $15 an hour. And Gov. Andrew M. Cuomo declared last month that “every working man and woman in the state of New York deserves $15 an hour as a minimum wage.” When I started studying the minimum wage 25 years ago, like most economists at that time I expected that the wage floor reduced employment for some groups of workers. But research that I and others have conducted convinced me that if the minimum wage is set at a moderate level it does not necessarily reduce employment. While some employers cut jobs in response to a minimum-wage increase, others find that a higher wage floor enables them to fill their vacancies and reduce turnover, which raises employment, even though it eats into their profits. The net effect of all this, as has been found in most studies of the minimum wage over the last quarter-century, is that when it is set at a moderate level, the minimum wage has little or no effect on employment. For example, David Card of the University of California, Berkeley, and I found that when New Jersey raised its minimum wage from $4.25 to $5.05 an hour in 1992 (or from about $7.25 to $8.60 in today’s dollars), job growth at fast-food restaurants in the state was just as strong as it was at restaurants across the border in Pennsylvania, where the minimum wage remained $4.25 an hour. Equally important — but less well known — within New Jersey, job growth was just as strong at low-wage restaurants that were constrained by the law to raise pay as it was at higher-wage restaurants that were not directly affected by the increase since their workers already earned more than the new minimum. I am frequently asked, “How high can the minimum wage go without jeopardizing employment of low-wage workers? And at what level would further minimum wage increases result in more job losses than wage gains, lowering the earnings of low-wage workers as a whole?” Although available research cannot precisely answer these questions, I am confident that a federal minimum wage that rises to around $12 an hour over the next five years or so would not have a meaningful negative effect on United States employment. One reason for this judgment is that around 140 research projects commissioned by Britain’s independent Low Pay Commission have found that the minimum wage “has led to higher than average wage increases for the lowest paid, with little evidence of adverse effects on employment or the economy.” A $12-per-hour minimum wage in the United States phased in over several years would be in the same ballpark as Britain’s minimum wage today. But $15 an hour is beyond international experience, and could well be counterproductive. Although some high-wage cities and states could probably absorb a $15-an-hour minimum wage with little or no job loss, it is far from clear that the same could be said for every state, city and town in the United States. More logical is the proposed legislation from Senator Patty Murray, Democrat of Washington, and Robert C. Scott, Democrat of Virginia, calling for raising the federal minimum wage to $12 an hour by 2020. Their bill is co-sponsored by 32 senators, and supported by President Obama and Hillary Clinton. High-wage cities and states could raise their minimums to $15. Although the plight of low-wage workers is a national tragedy, the push for a nationwide $15 minimum wage strikes me as a risk not worth taking, especially because other tools, such as the earned-income tax credit, can be used in combination with a higher minimum wage to improve the livelihoods of low-wage workers. Economics is all about understanding trade-offs and risks. The trade-off is likely to become more severe, and the risk greater, if the minimum wage is set beyond the range studied in past research. http://www.nytimes.com/2015/10/11/opinion/sunday/the-minimum-wage-how-much-is-too-much.html?_r=0
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Oct 9, 2015 19:51
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Responding how? By raising their own minimums? I don't think so.
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Oct 9, 2015 21:31
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Effectronica posted:This presumes that the point at which the minimum wage becomes a drag on employment is necessarily a functional minimum wage, that is a "living wage", which is not obvious. Neither is the presumption that minimizing drag on employment should be the primary purpose of labor laws. A policy which increases wages without affecting employment is unambiguously good. A policy which trades increased wages for increased unemployment can actually make the poor worse-off, depending on the relative magnitude of the increases. Another way of reading krueger's piece is "don't use my research to argue a $15 minimum wage won't cause unemployment because it doesn't support your conclusion"
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Oct 10, 2015 22:08
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Effectronica posted:Sure, sure, we can reasonably say that once you reach the point of drag on employment, there's a sudden crash such that it's better to have 35 million people on the edge of desperation than not. This is certainly far more reasonable than suggesting a still-inadequate $15/hr minimum wage would have marginal effect on employment. Indeed, one might say infinitely so, if that weren't taken up by appealing to authority's halcyon place at the apex of reasonable. I think kreuger might suspect that a $15 minimum wage would make the poor better off, but doesn't support a $15 national minimum wage for a few reasons. 1). He's an empiricist and feels less comfortable than you in making faith-based predictions about economic policy. 2). He wants to prove with research that a higher minimum wage would help the poor, and doesn't want a national $15 wage because that would destroy the best natural experiments; contiguous state and city borders with a minimum wage differential. 3). He knows there's a lot of noise in economic data, and fears that factors exogenous to the minimum wage could cause an economic downturn that would then be attributed to the minimum wage. JeffersonClay fucked around with this message at 16:02 on Oct 12, 2015 |
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Oct 12, 2015 15:55
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Effectronica posted:You should learn what words like "empirical" mean so you don't end up saying silly things like "We can't implement this policy in the real world until we have data from its implementation in the real world." If economists engage in this kind of sloppy thinking regularly, that explains a lot. Unfortunately, you didn't respond to anything I actually said, so there's nothing else to say without repeating myself, which looks to be pretty pointless. So far in this thread you've described the conclusions of experts as appeals to authority and empiricism as sloppy thinking. What, then, informs your understanding of economics? Do you derive it from first principles?
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Oct 14, 2015 21:08
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Effectronica posted:I said that saying "this guy said it and he's smart" is an appeal to authority. I am right in that statement. quote:I said that empiricism is concluding based on observations, and I am right in that statement. I said that confusing empiricism with other forms of reasoning is sloppy thinking, and I am right in that statement. And kreuger is stating that we don't have sufficient observations of the effects of a $15 dollar minimum wage to conclude that a national $15 minimum wage would be positive. So you must be engaging in sloppy thinking to assert he's not engaged in empiricism. quote:The simple fact of the matter is that, if I take you as knowledgeable about economics, economics is nonsense. If I take you as an idiot, you're not worth talking to. If I take you as a monomaniac, discussion requires some prerequisites. Which of the three is true, JeffersonClay? Apparently your understanding of economics is based on a guilt by association fallacy? Effectronica posted:But that doesn't provide empirical data on a national implementation, because moving within national borders is easier than moving internationally and so the employment effects will be distinct from a national implementation. You could get relevant data to extrapolate from, but you can't actually get empirical data specifically on what you're looking to test. Economics, like many academic disciplines, doesn't jive very well with experimental methods. That's not a crime, but it is important for people to understand. The pills I take were never tested on my body. They were tested on animals that have some similarity with me, and then some other humans who have more similarity with me, and there were enough of these tests that medical researchers felt confident that I would be safe taking them, despite the fact that there was no direct empirical data about how the drug would affect me.
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Oct 14, 2015 22:18
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So now you're arguing that medical research isn't empirical? https://en.m.wikipedia.org/wiki/Natural_experiment quote:A natural experiment is an empirical study in which individuals (or clusters of individuals) exposed to the experimental and control conditions are determined by nature or by other factors outside the control of the investigators, yet the process governing the exposures arguably resembles random assignment. Thus, natural experiments are observational studies and are not controlled in the traditional sense of a randomized experiment. Natural experiments are most useful when there has been a clearly defined exposure involving a well defined subpopulation (and the absence of exposure in a similar subpopulation) such that changes in outcomes may be plausibly attributed to the exposure.[1][2] In this sense the difference between a natural experiment and a non-experimental observational study is that the former includes a comparison of conditions that pave the way for causal inference, while the latter does not. Natural experiments are employed as study designs when controlled experimentation is extremely difficult to implement or unethical, such as in several research areas addressed by epidemiology (e.g., evaluating the health impact of varying degrees of exposure to ionizing radiation in people living near Hiroshima at the time of the atomic blast[3]) and economics (e.g., estimating the economic return on amount of schooling in US adults[4]).[1][2] This is the third time someone has tried to explain this to you. Alan Kreuger has studied the natural experiments which occur when a state raises its minimum wage but a neighboring, comparable state does not. Those empirical studies demonstrated convincingly that small to moderate minimum wage increases did not cause employment losses, and caused only small increases in prices. But he also believes those studies are not sufficient to prefict the effects of a $15 national minimum wage. And a national $15 wage would destroy future natural experiments on the effects of that wage by eliminating all states and localities with a sub-15 minimum wage that could serve as a control.
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Oct 15, 2015 16:24
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Effectronica posted:You're too retarded for your condescension to be anything other than a sick farce. You're presenting, in biological terms, a study of foxes as a study of dogs, because the differences between international and international borders are substantial. You seem to not understand why I am making this distinction, pedantic as it may seem- it's because you're using the technical jargon as a magic spell, which is quite simply damaging to the rest of the academic world. I don't think you're being pedantic, I think you're being desperate. Kreuger does empirical research. You are wrong. quote:You are also dishonestly implying that it's obviously far more credible for a 15/hr minimum wage to be disastrous in employment effects than benign, but too cowardly to actually state this out loud. Screw your courage to the sticking place, the worst that can happen is words. Again, you're desperate for some shred of an argument where you haven't been proven wrong, and have been reduced to arguing with figments of your imagination rather than the words I or anyone else has posted.
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Oct 15, 2015 17:48
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Robert Reich and Paul Krugman both support a $15 dollar minimum. http://www.budget.senate.gov/democratic/public/_cache/files/89efe4b6-8934-4375-bc96-758fcc791622/minimum-wage-petition-july-21.pdf It's a minority of economists but not zero.
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Oct 16, 2015 07:59
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Carson: I'm going to balance the budget, lower taxes, build a missile defense system and buff out the military, and not cut any programs people like. Kai: umm that's impossible Carson: that's what they said about separating craniopagus twins  He has all the evangelical support because they think he can perform miracles.
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Oct 28, 2015 17:18
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Apparently he's really serious about ending deductions and loopholes and he intends to start taxing churches and hospitals at standard rates!
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Oct 29, 2015 18:13
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| # ¿ May 15, 2024 16:02 |
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I think the economist is better than any other large weekly news magazine, but that's not saying too much, necessarily.
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Oct 31, 2015 19:39
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