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Thread: 5 Nobel Prize Winners Back Minimum Wage Hike

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    Default 5 Nobel Prize Winners Back Minimum Wage Hike

    NEW YORK (Oct. 12)- More than 650 economists, including five winners of the Nobel Prize for economics, called Wednesday for an increase in the minimum wage, saying the value of the last increase, in 1997, has been "fully eroded."

    Economists including Nobel prize winners Kenneth Arrow of Stanford University, Lawrence Klein of the University of Pennsylvania, Robert Solow of the Massachusetts Institute of Technology, Joseph Stiglitz at Columbia University and Clive Granger of the University of California, San Diego said in a statement released Wednesday that the real value of today's federal minimum wage is less than it has been at any time since 1951.

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    Yekhefah
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    Default Re: 5 Nobel Prize Winners Back Minimum Wage Hike

    What for? No one's going to let profits dip because of it. They'll just increase prices even more to even it out, and everyone takes a harder hit in the long run.

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    Default Re: 5 Nobel Prize Winners Back Minimum Wage Hike

    Evil Employer #1: "The minimum wage went up. What do we do?"
    Evil Employer #2: "Well, I know some guys in India and China who are willing to do this work dirt cheap, and they aren't getting a minimum wage hike."
    Evil Employer #1: "Maybe, we could give the jobs to them."
    Evil Employer #2: "You think?"
    Former SCJ now in rehab.

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    Default Re: 5 Nobel Prize Winners Back Minimum Wage Hike

    Quote Originally Posted by Yekhefah
    What for? No one's going to let profits dip because of it. They'll just increase prices even more to even it out, and everyone takes a harder hit in the long run.
    they may increase prices, but those earning the the minimum wage would get slightly higher percentage. to me the real risk is that some of those low paying jobs may no longer exist. I may be off here but in some scandavian country the minimum wage is much higher, $30,000 or something and there are trade-offs. the restaurant industry is much smaller as people eat out only for special occassions, becuase it is more expensive. there may be higher unemployment.

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    Default Re: 5 Nobel Prize Winners Back Minimum Wage Hike

    Quote Originally Posted by doc-catfish
    Evil Employer #1: "The minimum wage went up. What do we do?"
    Evil Employer #2: "Well, I know some guys in India and China who are willing to do this work dirt cheap, and they aren't getting a minimum wage hike."
    Evil Employer #1: "Maybe, we could give the jobs to them."
    Evil Employer #2: "You think?"
    Like anything has been stopping them from doing that anyhow!

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    Default Re: 5 Nobel Prize Winners Back Minimum Wage Hike

    Quote Originally Posted by Yekhefah
    What for? No one's going to let profits dip because of it. They'll just increase prices even more to even it out, and everyone takes a harder hit in the long run.
    I have seen numbers, that for most businesses, a mere 10 cent increase in price of the products will more than pay for the increase.

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    Sitri
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    Default Re: 5 Nobel Prize Winners Back Minimum Wage Hike

    CEO: There is no way I am going to take a pay cut from my $79,000,000 bonus so that those assholes can make a living wage.

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    Default Re: 5 Nobel Prize Winners Back Minimum Wage Hike

    hey why not ! I say raise the minimum wage enough to make minimum wage earners ineligible for medicaid, subsidized rent, subsidized utilities etc. Thus every extra dollar that 'middle class' US customers will be charged by merchants / employers to offset their increased minimum wage labor costs will be offset by a $2 reduction in gov't spending on social welfare benefits ! Of course the minimum wage earners might not be so happy that their weekly paycheck that was increased by $100 now must be used to pay for things that their 'middle class' neighbors formerly subsidized through taxes and they received for free !

    All rhetoric aside, in today's economy a gov't mandate that any warm body must be paid $7-$8 an hour minimum wage regardless of the amount of 'value added' they are capable of generating is pretty much guaranteed to have the following real world effects.

    A. the employer's incentive to simply outsource such that they can not only avoid a labor cost increase of say $6 to $8 an hour due to new minimum wage laws, but achieve a labor cost savings by paying $1 or $2 an hour to a foreign source, becomes very strong. The next time you call a company for help/customer service and you hear an Indian accent ...

    B. for employers that are geographically bound (i.e. service providers / retailers), an increase from say $6 to $8 an hour means firing every fourth employee and making the remaining three employees work harder to take up the slack. Granted there will be exceptions where the body count simply can't be cut such that labor costs and sale prices will increase in direct proportion. Ironically, these sort of businesses (like MacDonalds and WalMart) will wind up passing on their higher labor costs to a customer base which in large part consists of minimum wage earners, rather than the 'rich' or the 'middle class' !

    C. for employers who are looking at a cost equation to justify automation / consolidation, an increase from say $6 to $8 an hour obviously increases that incentive. One typical result is the closure of two small convenience stores and the subsequent construction of one very large convenience store, which requires half as much minimum wage staff to serve twice as many customers (but forcing most customers to drive farther and staff to work twice as hard). Another typical example is the purchase of very large commercial lawnmowers, firing half the groundskeeping staff, and requiring the remaining half of minimum wage groundskeepers to mow the same total acreage.

    Bottom line is that a higher minimum wage causes the elimination of minimum wage jobs, turning many low paid current minimum wage employees into unemployed higher minimum wage ex-employees. The type of minimum wage employees most likely to be affected by this are the very young who have no work experience ... essentially preventing them from getting any work experience unless they first increase their skills via obtaining a college degree etc ! Western Europe has already gone down this road, and as a result has incredibly high unemployment rates among their non-college educated young people (especially minorities) as well as a rapidly growing 'social unrest' problem within the very same group. Europe compounds their problem by making it extremely difficult for employers to 'fire' any employee once they have been hired, but many US states have fairly strict laws (or high 'separation costs') which also make employers gunshy about 'taking a chance' on a new employee without previous work experience.

    If your socio-economic goal is to create a permanently 'unemployable' underclass who is totally dependent on gov't social welfare programs (and totally loyal to the politicians who tout those social welfare programs), raising the minimum wage by a large percentage is a very good first step.
    ~
    Last edited by Melonie; 10-12-2006 at 10:16 PM.

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    Default Re: 5 Nobel Prize Winners Back Minimum Wage Hike

    It should be interesting to see what happens in Cali - in 2007, the minimum wage rises to $7.50/hour, and in 2008, the minimum wage rises to $8.00/hour. Yet, I hear California expects to add six million more residents within the state borders by 2020, while I continually hear an ad on the radio now that "one in six ERs have closed at Californis hospitals over the last ten years." With more expected to close in the future, of course.

    The information about the bill can be found at this link, if you either scroll down a bit or do a "find" command in your browser

    http://www.callaborlaw.com/archives/cat-new-laws-legislation.html


    they also discuss the raising of the minimum salary for exempt state-employees in this blog, which is tied to the increase in the minimum wage.

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    Default Re: 5 Nobel Prize Winners Back Minimum Wage Hike

    ... well, the key statistic will be how those 6 million new 'residents' work out ... is this 6 million new taxpaying workers, or is this 10 million new 'unemployable' welfare recipients moving in but offset by 4 million taxpaying 'middle class' workers leaving the state. If it's the latter, things could get REAL ugly !

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    Default Re: 5 Nobel Prize Winners Back Minimum Wage Hike

    Quote Originally Posted by Melonie
    ...If it's the latter, things could get REAL ugly !
    I don't really know which it will be, but I'm going to relax and listen to some music now...gotta see if I can find my mp3 of "South of the Border" on the ol' Mac.

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    Sitri
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    Default Re: 5 Nobel Prize Winners Back Minimum Wage Hike

    Quote Originally Posted by Melonie
    hey why not ! I say raise the minimum wage enough to make minimum wage earners ineligible for medicaid, subsidized rent, subsidized utilities etc. Thus every extra dollar that 'middle class' US customers will be charged by merchants / employers to offset their increased minimum wage labor costs will be offset by a $2 reduction in gov't spending on social welfare benefits ! Of course the minimum wage earners might not be so happy that their weekly paycheck that was increased by $100 now must be used to pay for things that their 'middle class' neighbors formerly subsidized through taxes and they received for free !


    ~
    Seriously, all rhetoric aside, this is the true cost. To the extent that the businesses don't pay enough, the people who work have to pay more in taxes to subsize healthcare, housing, etc. etc.

    And, there are fewer and fewer people working to subsidize the more and more people who are getting less and less money for service jobs.

    While I like the stock market, the attitude in America is becoming one of "invest to make money" not "work to make money". The fast money attitude is here. Our whole work ethic is going because there is really no respect for the middle class worker.

    I would rather see a country where you can make a reasonable return on investments and see more money go to the employees and less to management and investment banks. ..

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    Default Re: 5 Nobel Prize Winners Back Minimum Wage Hike

    Seriously, all rhetoric aside, this is the true cost. To the extent that the businesses don't pay enough, the people who work have to pay more in taxes to subsize healthcare, housing, etc. etc.
    true on the surface, but subject to huge variation from state to state. Not meaning to get overly political, but a certain handful of 'blue' states have established their own criteria in regard to what 'officially legislated minimum standard of living' level should apply to low income residents of their states, and what sort of corresponding income / sales / property tax levels should be leveed on higher income residents of their states in order to pay for the social welfare benefits needed to maintain that minimum standard of living. However, many other states have determined that their own 'officially legislated minimum standard of living' levels can and will be much lower that that of 'blue' states, and have leveed correspondingly lower income / sales / property tax levels on higher income residents of their states.

    Absent a national 'harmonization' of social welfare benefits (which ain't gonna happen), as the US economy is subjected to ever increasing global pressures, those states which have chosen to pay out social welfare benefits at levels which are very high (on a national average basis) tend to attract more and more social welfare benefit recipients. The corresponding necessary tax increases tend to drive out higher income residents, businesses etc. This already existing trend of increasing numbers of social welfare recipients -> ever increasing costs of providing those gov't benefits -> ever increasing tax rates to fund those gov't social welfare expenditures -> ever shrinking higher income tax base over which to collect those tax dollars -> even higher tax rates being enacted to recover the same amount of dollars from fewer remaining higher income residents - has the potential for an out an out 'economic meltdown'.

    Ultimately, the 'officially legislated minimum standard of living' which exists in states which choose to provide 'generous' social welfare benefits is economically unsustainable in light of world competition and competition from other US states. The logical conclusion of such an 'economic meltdown' is a large underclass of poor people who are dependent on social welfare benefits and the 'system' that provides those benefits, a 'public sector' based state economy, and a small but extremely influential minority of 'uber-rich' residents who can afford to provide the necessary tax revenue ... in other words a 'third world' economy.

    As has already happened in New York and California, eventually the state in question goes 'broke'. So far two techniques have been utilized to avoid bankruptcy. #1 the state attempts to go to Washington DC with a request that taxpayers of other states which are not 'broke' send some of their federal tax to the state that is 'broke' even though they don't reside there. This flew 20 years ago because, with a much better 'co-ordinated' national media and a much more co-operative majority party in Washington few people were aware of the actual details or consequences of the state to state transfer. It is doubtful that it could similarly fly today (alternative media would undoubtedly trumpet the money transfer implications). On the contrary, recent trends have tended towards equal treatment of taxpayers from states with high social spending and and high state tax rates versus taxpayers from states with low social spending and low state tax rates (i.e. the legislative change to allow deduction from federal income taxes for sales taxes paid in states that do not have a state income tax)

    #2 the state attempts to go to private 'lenders' to borrow money with which to continue to pay for its social welfare benefits and 'public sector' based economy (via issuing state Bonds which commit the next generation of state taxpayers to pay for both past spending and current spending !). This was the alternative employed by California a few years ago. However, this is also contingent on the state's ability to offer reasonable reassurance to private 'lenders' that future bond payments will actually be made by future state taxpayers. In an 'economic meltdown' scenario, states that have few high earning taxpayers in relation to social welfare benefit recipients will face the same sort of 'creditworthiness problems' as private borrowers whose financial obligations greatly exceed their incomes.

    The 'tin foil hat' crowd is of the opinion that eventually such states will be forced into bankruptcy due to lack of remaining private sector tax base and lack of creditworthines ... at which point the generous social welfare benefits and 'public sector' state economy will be brought to a screeching halt. In case this points needs to be made with extreme bluntness, this means no welfare checks for beneficiaries and also no paychecks for police ... a sure formula for potential 'social unrest'.
    ~
    Last edited by Melonie; 10-13-2006 at 07:44 AM.

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    Default Re: 5 Nobel Prize Winners Back Minimum Wage Hike

    How about more money for college? Why can't the richest nation in the world send it's children to college? I say keep minimum wage down, spend less on wars and prisons and spend more on education.

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    Default Re: 5 Nobel Prize Winners Back Minimum Wage Hike

    Quote Originally Posted by Melonie
    The 'tin foil hat' crowd is of the opinion that eventually such states will be forced into bankruptcy due to lack of remaining private sector tax base and lack of creditworthines ... at which point the generous social welfare benefits and 'public sector' state economy will be brought to a screeching halt. In case this points needs to be made with extreme bluntness, this means no welfare checks for beneficiaries and also no paychecks for police ... a sure formula for potential 'social unrest'.
    ~
    Social unrest comes from not being paid a fair livable wage too.

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    Default Re: 5 Nobel Prize Winners Back Minimum Wage Hike

    Quote Originally Posted by mblank
    How about more money for college? Why can't the richest nation in the world send it's children to college? I say keep minimum wage down, spend less on wars and prisons and spend more on education.
    Because that's called Socialism.

    On a different note, raising the minimum wage has an effect on other non-minimum wage employees too which creates an even bigger mess.

    Take for example my wife, who is a General Manager for a restaraunt. She has several minimum-wage employees working for her right now and, of course, several non mimimum-wage employees. So let's take a look at it like this:

    Employee A (dishwasher) Earns $5.15/hr.
    Employee B (supervisor) Earns $7.50/hr.

    Now, the minimum wage is increase to $7.50 an hour and the dishwasher is now earning the same amount that their supervisor is making. So of course the supervisor is pissed about this and demands a raise. So what winds up happening is you have to raise the hourly rate of other employees to compensate for this. It's not just a matter of raising the minimum wage for a few people, it has an impact on an entire staff, which, in turn, get's passed on to the consumer.

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    Jay Zeno
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    Default Re: 5 Nobel Prize Winners Back Minimum Wage Hike

    I know that a certain segment of "fiscal conservatives" see minimum wage as inherently evil.

    I know that numbers can be interpreted just about any way you want. Just depends on the time and temperature you want to cook them.

    BUT my grandparents lived and worked before the minimum wage. My parents and I have all worked during the minimum wage years. And I have to say that economically, we're better off with a minimum wage than without.

    I'm sure there's a number that's too high or too low to be reasonable, but I'm having trouble seeing, realistically, where the minimum wage concept is a bad thing.

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    Sitri
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    Default Re: 5 Nobel Prize Winners Back Minimum Wage Hike

    Hey, I've got a great concept. Let's do away with all wages and employees. We'll just call them independent contractors.

    We will let them keep a piece of the revenue we get for each night they work. And, for the right to work, we will MAKE THEM PAY US and other employees a percentage of what they earn.

    It's perfect, we as employers don't have to pay shit for work comp, soc sec, health insurance, or whatever.

    Oohh, Oohh, how about we only hire good looking women and make them walk around naked while they work..

    Has this been done before?

    Who needs minimum wage?

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    Default Re: 5 Nobel Prize Winners Back Minimum Wage Hike

    Wonderful idea, Sitri!

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    Default Re: 5 Nobel Prize Winners Back Minimum Wage Hike

    I know that a certain segment of "fiscal conservatives" see minimum wage as inherently evil.

    I know that numbers can be interpreted just about any way you want. Just depends on the time and temperature you want to cook them.

    BUT my grandparents lived and worked before the minimum wage. My parents and I have all worked during the minimum wage years. And I have to say that economically, we're better off with a minimum wage than without.
    Ah, yes, but none of you have worked in a 'global economy' where other workers were willing / able / eager to do the same work for 1/10th the US minimum wage pay rate - because such a 'global economy' has only existed for the past decade or so ! That is the problem of attempting to apply US minimum wage 'recipes' from the past i.e. the 30's the 60's etc.

    Old time politicians will admit that the US minimum wage was used in earlier days as a mechanism of slowing the loss of manufacturing jobs from higher cost northern states to lower cost southern states ... by artificially reducing the labor cost differential. However, with globalization, today essentially all US manufacturing is already lost from the northern states, and the 'lowest cost' option is in most cases no longer under the same minimum wage jurisdiction !!!

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    Default Re: 5 Nobel Prize Winners Back Minimum Wage Hike

    Quote Originally Posted by Jay Zeno
    I know that a certain segment of "fiscal conservatives" see minimum wage as inherently evil.

    I know that numbers can be interpreted just about any way you want. Just depends on the time and temperature you want to cook them.

    BUT my grandparents lived and worked before the minimum wage. My parents and I have all worked during the minimum wage years. And I have to say that economically, we're better off with a minimum wage than without.

    I'm sure there's a number that's too high or too low to be reasonable, but I'm having trouble seeing, realistically, where the minimum wage concept is a bad thing.

    There are just a lot of people who don't want to pay for a functional society that doesn't look like Oliver Twist's neighborhood.

    In fact, not wanting to pay for shit is becoming more and more common in this society. "I will use someone else's money" they say. "I won't pay for work done by an american, I want to pay for work done by an Asian because it is cheaper," they say.

    Then they wonder why their neighborhoods go to shit and there is growing unrest in the streets (aka world trade organization riots.)


    But in the end, it is just people unwilling to pay for what it takes to make America function anymore and well, we are going to see how that turns out I guess.

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    Default Re: 5 Nobel Prize Winners Back Minimum Wage Hike

    Quote Originally Posted by Sitri
    Hey, I've got a great concept. Let's do away with all wages and employees. We'll just call them independent contractors.
    They happen to be a growing segment of our working population. Just ask Kelly's Temps and the like.


    We will let them keep a piece of the revenue we get for each night they work. And, for the right to work, we will MAKE THEM PAY US and other employees a percentage of what they earn.
    Having worked in "legitimate" theatre and concerts, I can say that "stage rental" is THE COMMON way of doing things. Do you think the circus owns the arena? Or are they renting it? Do you think the rock band owns the club? Or is the promoter renting it?

    I see your point, but this is business as usual in the rest of show business also.

    (The required "tips" to everyone and their brother is not common in showbiz although they do show up as "gifts.")

    It's perfect, we as employers don't have to pay shit for work comp, soc sec, health insurance, or whatever.
    See first comment - this is exactly the case for contracting. My customers receive an invoice. The only paperwork they need to do is write out a check.

    All this bubaloo companies are forced to deal with for "employees" is yet another thread - but there is a lot of BS involved with hiring employees.

    Oohh, Oohh, how about we only hire good looking women and make them walk around naked while they work..

    Has this been done before?
    I keep trying to do that, but get smacked with sexual harrassment lawsuits.

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    Default Re: 5 Nobel Prize Winners Back Minimum Wage Hike

    Quote Originally Posted by Melonie
    Ah, yes, but none of you have worked in a 'global economy' where other workers were willing / able / eager to do the same work for 1/10th the US minimum wage pay rate - because such a 'global economy' has only existed for the past decade or so ! That is the problem of attempting to apply US minimum wage 'recipes' from the past i.e. the 30's the 60's etc.

    Old time politicians will admit that the US minimum wage was used in earlier days as a mechanism of slowing the loss of manufacturing jobs from higher cost northern states to lower cost southern states ... by artificially reducing the labor cost differential. However, with globalization, today essentially all US manufacturing is already lost from the northern states, and the 'lowest cost' option is in most cases no longer under the same minimum wage jurisdiction !!!
    Another part of the global economy is that 70% of the population of the planet is at war with each other or run by corruption, communism, and war lords.

    I can hardly wait until our economy is forced by globalism to step down a few notches in order to "compete."

    No... fucking... thank you.

  24. #24
    Jay Zeno
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    Default Re: 5 Nobel Prize Winners Back Minimum Wage Hike

    Quote Originally Posted by Melonie
    Ah, yes, but none of you have worked in a 'global economy' where other workers were willing / able / eager to do the same work for 1/10th the US minimum wage pay rate - because such a 'global economy' has only existed for the past decade or so !
    So the minimum wage wasn't evil until the last decade or so of global economy? That's a new one on me- some "fiscal conservatives" were complaining about its evil nature long before that.

    I concur that globalization is changing things, but I would maintain that we don't truly know in what ways. I read gloom-and-doom scenarios, but I've been reading those for the last, oh, 30 years, through recessions, booms, global map changing and wars. We're at a crossroads where new segments of humanity are hitching rides on the economic wagon. We can guess where it'll take us. But I believe it's only guesses.


    Old time politicians will admit that the US minimum wage was used in earlier days as a mechanism of slowing the loss of manufacturing jobs from higher cost northern states to lower cost southern states
    Older politicians from 1938, when the first minimum wage was instituted? I'm also suspecting it was to try to stop a number of employed people from starving to death, but that's just a suspicion.

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    Default Re: 5 Nobel Prize Winners Back Minimum Wage Hike

    spend less on wars and prisons and spend more on education.
    well, by sheer coincidence, here is the latest 'education program' for California's poor ...




    So the minimum wage wasn't evil until the last decade or so of global economy? That's a new one on me- some "fiscal conservatives" were complaining about its evil nature long before that.
    I never called the minimum wage law evil. However, given the almost total lack of control over actual globally competitive labor costs still remaining to the US gov't, I will call raising the minimum wage shortsighted, counterproductive to it's supposed stated purpose, and ripe with all sorts of potential unintended consequences. To answer your related question, the political discussion re raising the minimum wage to slow down the migration of northern manufacturing jobs to lower cost sourthern states was coincident with LBJ's 'great society' years.

    In fact, not wanting to pay for shit is becoming more and more common in this society. "I will use someone else's money" they say. "I won't pay for work done by an american, I want to pay for work done by an Asian because it is cheaper," they say
    the basic concept isn't new ... as examples like slave labor and child labor amply illustrate, the vast majority of Americans are happy to purchase the lowest priced product / service possible without thinking too hard about the deeper implications of doing so. Very few Americans want to voluntarily pay higher prices than they have to, nor do they understand the deeper implications of buying the 'cheaper' product / service. What IS new is the US gov'ts present lack of effective control in keeping less expensive imported goods and services from reaching the US economy to easily compete with American products / services.

    When that effective control was in place (from say the Smoot-Hawley Act up until the 70's or so when the US dollar's value was totally decoupled from gold) Americans were faced with the choice of paying high prices for goods and services produced by American labor (with the extra costs of minimum wage labor and other mandatory taxes / benefit costs rolled in) or simply not buying that particular product or service. As US borders were increasingly opened up to foreign trade without tariffs and quotas (and ultimately capped off by the passage of NAFTA), Americans were faced with an actual choice of paying more for an American made product / service or paying less for an imported or outsourced product / service. In essence this isn't any different than Americans choosing to purchase low cost 'northern big city' textiles (low cost due to child labor) 100 years ago or Americans choosing to purchase 'southern' cotton 200 years ago (low cost due to slave labor).

    And in all probability if the gov't seriously wants to regain the necessary control in order to make programs like minimum / living wage fly, they'll have to use the same solutions which were necessary 100 and 200 years ago i.e. cut off the other lower cost options altogether by law or by force. Of course, with the current state of destruction re US manufacturing capabilities and US energy production, America's standard of living would take an immediate nosedive across the board if the US borders were locked down re foreign trade with foreign trading partners returning the favor.
    ~
    Last edited by Melonie; 10-14-2006 at 04:15 PM.

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