Partial tangent. Lightenin' the mood.

vix86 Wrote:I saw an article the other day that stated that they wanted to start raising prices of goods.

The Japanese government does not control the prices of goods (well, most goods, they do control the prices of health care services for instance, which will have to be raised as a response to these inflationary measures- otherwise, there will be shortages).

But, in general, he's creating inflation, which will lead to higher prices of goods. He isn't working backwards. He can't work backwards, doesn't have that power. Thank God.

nadiatims Wrote:That's what happen's when you devalue the currency. Prices go up. The devaluation of the yen is just a dishonest and round about way of cutting worker's wages and help Japan's export industries compete. Sure a worker's minimum wage may not change but if the value of each yen is halved, it's the same as a 50% pay cut.

Reducing the cost of labor is a direct way to improve productivity.

Yes, the same government which mandates minimum wage and a myriad of other labor rules that drive up the cost of labor then creating inflation to lessen the impact of its own policies (and thus allow them to compete with countries that don't have those policies in the first place, like China) is inefficient. It also has unintended, harmful effects in other areas, like the ones you identified.

But even an inefficient (and harmful in other areas) way of achieving a good result is going to achieve that result. This will in fact make Japan's labor market more competitive. It will stimulate exports and hiring. It will come at a cost to Japanese workers and Japan's standing as a debtor (the latter of which could've been avoided by directly loosening the populist wage controls and labor regulations instead, to achieve this same exact goal), but it will achieve its intended goal.

Compared to the solution I'm suggesting, this one has more harmful effects, but, because it's dishonest, it's more politically feasible. This is the sad state of political culture today: voters don't want honesty, they want pragmatic solutions like this one. If Abe instead ran on a platform that advocated reducing minimum wage, labor regulations and mandated benefits (and, even more importantly, reducing public sector wages and benefits, which would then allow for tax cuts, which will then further increase productivity), he would've never become PM, and not even this pragmatic, dishonest solution which will achieve the same results, would've been implemented.

I love the cutting minimum wage talk, like people expect that one evening everything was Min. Wage and then the next morning theres no min. wage and everything has changed price to match that. Like do people honestly think it'd work like that? Because if so we have a ton of crazy people out there.

Compete with China you say? Do you even realize how far the salaries would have to be cut to do that? I just did a google for manufacturing salaries world wide link. IN 2005 Japan's average monthly salary was $2,800, probably a bit lower now. China's at this time was $134 a month. Even if you take the monthly average salary in Beijing in 2011, which was just shy of 70,000 yen, that' still huge. Incidentally the average salary in Tokyo happens to be 600万 a year, about $5,000 a month in 2008 ($1:100). China's salaries have been climbing since 2008 too. So to go from 5,000 to China's 700 a month, that's nearly a 85% cut in pay. If we go back to that manufactoring stat above 2.8k to 134, was a 95% drop in salary for Japanese.

People would become literal paupers overnight and MAYBE the market in Japan might react and actually bring stuff down in price. But this is assuming anyone even bothered to try something so ridiculous.

And for shits and giggles. Taking the highest min. wage in Japan which was 837yen/hr or about 130,000yen a month. Putting that against the 70,000 in BEIJING, the most urban part of China, min wage would have to fall almost 50% to match that level of pay in a month.

Unless you want to reduce large portions of your country to paupers on the street, you cannot compete with a third world country. The notion is completely absurd.

I had no idea I would find this thread so interesting.

So who wants to be the first person to cut their own wages and work below minimum wage for the "greater good" of the economy?

qwertyytrewq Wrote:So who wants to be the first person to cut their own wages and work below minimum wage for the "greater good" of the economy?

That would not help the economy. What would help the economy is allowing each participant to set their own terms, for their own benefit. Not for any greater good.

That's how things get done: people acting for their own benefit. That's why people build cars, that's why they get oil out of the ground, that's why they create software,etc. That's why in countries where people aren't allowed to work for their own benefit, on their own terms, nothing ever gets done.

The people acting for the "greater good" are the ones trying to centrally engineer the economy by telling everyone else what is good for them. Minimum wage laws are a way to tell entry level workers that they must first spend years working for free (studying, interning, practicing at home, volunteering etc.), until they finally qualify to work for the wage the politicians have deemed "the minimum" someone is allowed to hire them for.

The people who would volunteer to work for less than the minimum wage, in the case of Japan, belong in two categories:

1. highschool or college age kids who didn't quite get into a good school, or aren't interested in living off their parents and would prefer to earn their own pocket money, but would still like to follow their dreams and get into a profession of their choosing, but can't, because they don't yet have the skills to provide an employer with enough value to justify paying them above minimum wage. So, instead, they end up either unemployed (as many young people in Japan, and most young people in continental Europe, are), or working in a field they hate.

2. unskilled immigrants, for whom working below minimum wage is a step up from staying in their home countries, towards eventually integrating into a new society and being able to earn more.

Minimum wage laws don't affect anyone else, except these people, by denying them jobs. The government can't suspend the law of supply and demand, which drives the price of labor. They can't magically create jobs that pay above minimum wage. All they can do is ban jobs that pay below, and create a class of unemployed outsiders, who cannot break into the job market.

I would bet that, if minimum wage was dropped, very few people would see their salaries reduced, and even those few, only temporarily. Instead, the only significant effect would be the creation of new, entry level jobs. Again, the alternative isn't people being doomed to working for less than minimum wage their whole lives: the alternative is people being allowed to break into a field of their choice for less than minimum wage, and work their way up. Right now, those people are just sitting and doing nothing, or resorting to drugs and petty crime as a way of subsisting.

Obviously, this is less of a problem in Japan than it is in Europe, because Japan is more prosperous, with stronger families, and is closed to unskilled immigrants (which, however, is a problem in itself, for Japan; a different problem: a demographic problem). Western Europe is at or around 50% of unemployed/"unemployable" (unemployable because the government doesn't let them get employed on terms that would make economic sense given their skills) among young people. But it is still a massive problem in Japan as well, and it's a problem that will only grow as the economy (starved of resources, capital, and workers by government interference) continues to stall.

Think about that, for a second: half of a country's young population, in the case of Spain and France for instance, is being thrown aside as useless waste, all in the name of the dumbest notion on Earth: that wages and employment contracts in a marketplace are dictated by whatever politicians say they should be. Just by the failure of voters to understand the most basic concepts of Economics.

[RawToast]

Stansfield123 Wrote:Minimum wage laws don't affect anyone else, except these people, by denying them jobs. The government can't suspend the law of supply and demand, which drives the price of labor. They can't magically create jobs that pay above minimum wage. All they can do is ban jobs that pay below, and create a class of unemployed outsiders, who cannot break into the job market.

...

Obviously, this is less of a problem in Japan than it is in Europe, because Japan is more prosperous, with stronger families, and is closed to unskilled immigrants (which, however, is a problem in itself, for Japan; a different problem: a demographic problem). Western Europe is at or around 50% of unemployed/"unemployable" (unemployable because the government doesn't let them get employed on terms that would make economic sense given their skills) among young people. But it is still a massive problem in Japan as well, and it's a problem that will only grow as the economy (starved of resources, capital, and workers by government interference) continues to stall.

Think about that, for a second: half of a country's young population is being thrown aside as useless waste, all in the name of the dumbest notion on Earth: that wages in a marketplace are dictated by whatever politicians say they should be. Just by the failure of voters to understand the most basic concepts of Economics.

We have a similar problem in the UK ~15% unemployment for under 24s (50% is only Spain and Greece, the EU average is ~25% -- still awful).

Our politicians got around the minimum wage (~£6.30/$8) by forcing those on unemployment benefits to complete 'work-schemes'. On these schemes they basically worked for a company for a few months and still only received their unemployment benefit. This basically resulted in them being paid £2.

The companies that used this scheme flourished until it was revealed and people began boycotting them. The idea was they were meant to employ some of the people, but instead they just got a fresh new set. One company "Poundland" (basically a dollar store) had stores which fired most of the workers and replaced them with people on benefits...

qwertyytrewq Wrote:So who wants to be the first person to cut their own wages and work below minimum wage for the "greater good" of the economy?

Does it count if I work 60-100 hours of unpaid overtime per month and still earn less and take less paid holiday than my Western counterparts?

Javizy Wrote:

qwertyytrewq Wrote:So who wants to be the first person to cut their own wages and work below minimum wage for the "greater good" of the economy?

Does it count if I work 60-100 hours of unpaid overtime per month and still earn less and take less paid holiday than my Western counterparts?

If you're still above minimum wage then that means you still have room to go down so it doesn't count. Chinese people work for a dollar a day and they work overtime AND they don't waste time going home, they just sleep at their workplace. Because of that, China is the best economy in the world with low unemployment. Competition is good and if you're not working like a Chinese person, then you have no right to complain.

Your poor company is struggling. Help your corporate overlords and take a pay cut. Taking a pay cut means that your company can hire another person AND that extra person can also work 60-100 hours of unpaid overtime. This means that your company will be more productive and efficient and they will pass the financial savings onto their employees and customers instead of storing them away in tax-haven Swiss bank accounts.

Come on, do it for the libertarian greater good.

@Stansfield123 Very good point!
We have minimum wage here, but it's not really enforced, and young people don't complain, because, as you said, they are breaking into the market.
I have three friends who used to work for a company that pays really bad, but they got experience and eventually quit to better jobs. They at least earned the money they need to live and got some work experience. I hear many stories about guys who work in a company as trainees, i.e. for free, just to have some experience, which is frightening to say the least.

It's not necessarily that they are incompetent, but the economy is bad and the competition is high.

Stansfield123 Wrote:Minimum wage laws are a way to tell entry level workers that they must first spend years working for free (studying, interning, practicing at home, volunteering etc.), until they finally qualify to work for the wage the politicians have deemed "the minimum" someone is allowed to hire them for.

Have we all forgotten that the point of minimum wage was to set a level where in a person could make a livable pay without having to go to extremes to survive. But even this has been lost in recent years. You can't live on a minimum wage in some places in the US.

Yeah... I don't buy that excuse for using unpaid labor.

It's nothing to do "qualifying". There's just a surplus of workers compared to jobs.

vix86 Wrote:Have we all forgotten that the point of minimum wage was to set a level where in a person could make a livable pay without having to go to extremes to survive. But even this has been lost in recent years. You can't live on a minimum wage in some places in the US.

Unfortunately, wishing something to have the desired effect won't make it so.

The correct method of establishing what the desired outcome of an action is would be to look at the relevant laws of science. In this case, the laws of Economics, specifically the law of supply and demand.

It states that prices are set by supply and demand, not people's desires or warped sense of entitlement. It states that the consequence of artificially raising prices is a drop in demand for a service or good, just as artificially lowering prices results in a drop in supply. In this case, raising the price of labor lowers demand for it, to a point where supply is greater than demand (in other words, not everyone can get a job). That is the effect of that action, just as surely as the effect of kicking a ball is that it will be sent flying. No amount of wishing that were not so will change that. No amount of sanctimonious preaching about how a person SHOULD live will change that fact of reality.

If all it took to make everybody well fed, well clothed, housed and living in comfort was politicians declaring it to be so, it would've happened already. I would instead suggest you set a realistic goal on what people ought to earn in exchange for a task performed: one that follows the laws of economics (and an even more basic fact of reality than supply and demand: that we have only what we produce; nothing more - nothing of value comes from anywhere else - if you don't produce it, you don't have it; if you don't let each individual keep what he produced, people will stop producing anything, and you have North Korea), rather than the childish whims of whoever buys into the latest politician's promises of milk and honey flowing in the streets if he gets elected.

dizmox Wrote:Yeah... I don't buy that excuse for using unpaid labor.

It's nothing to do "qualifying". There's just a surplus of workers compared to jobs.

Yes, at the artificial price of labor the government sets (and by price I don't just mean an employee's wage, btw., I mean the full cost of employing someone - several times higher than just the wage) there's a higher supply of labor than there is demand.

As per the laws of economics, the only way to increase demand for labor to match the supply, would be by lowering the price. That does not have to mean lowering an employee's wages (it can mean lowering taxes on those wages, eliminating a costly regulation associated with his employment, or eliminating the threat of some types of lawsuits against employers, etc. ).

That said: in this case, the main benefits of lowering those costs, and creating enough demand for labor to match the supply, are not the low pay jobs which would be created, or the higher salaries which would result from the government lowering the cost of labor on its end. The main benefit would be the opportunity people who are currently excluded from the job market would get to increase their skill levels and productivity exponentially, through on the job training.

It is a statistical fact that, if a person of any skin color, gender, sexual orientation, in his early or mid twenties in the United States is able to get a job, and hold it for at least one year (any job whatsoever), he is virtually assured to become a member of the middle class. I repeat: people who have just one year doing one job during their early to mid twenties will, in the vast majority of cases, become members of the middle class. That is what is being taken away by denying low skilled, entry level workers their opportunity at a job, by artificially lowering demand for labor in the marketplace: : their eventual rise to the middle class. That is what's killing the middle class.

Stansfield123 Wrote:The correct method of establishing what the desired outcome of an action is would be to look at the relevant laws of science. In this case, the laws of Economics, specifically the law of supply and demand.

Comedy gold right here folks. Economics = Science.

I'm sorry but economics (whichever school it is) is more akin to a religion with its proponents trying to convince that their school is more right than the other schools.

Unless you meant that economics is a social science hence not real science, in that case, carry on.

qwertyytrewq Wrote:Comedy gold right here folks. Economics = Science.

I'm sorry but economics (whichever school it is) is more akin to a religion with its proponents trying to convince that their school is more right than the other schools.

Unless you meant that economics is a social science hence not real science, in that case, carry on.

That's the same "argument" creationists have against evolution.

Please note that, just like in their case, that's not an actual logical argument. Your statement does not constitute evidence against the law of supply and demand. You have not even tried to address the scientific proof of the law of supply and demand. You simply bypassed the need to address it, by making an arbitrary assertion.

So, I will treat you the same way I would treat a creationist telling me that the claim that God created the Earth is just as valid as the theory of evolution, by ignoring any further replies you make.