The problem with raising the Minimum Wage is that it will create higher unemployment. Those who do have jobs are able to live better, but less people would have jobs.. and everyone without a job would then load the system with welfare. That's the Republican position - that minimum wage is bad because it kills jobs. and they're undoubtedly right, it does. Minimum Wage ultimately means transferring wealth from those without jobs to those with. It's like musical chairs, and all of a sudden there are less chairs than people. Some assert that jobs will always reappear via the efforts of new entrepreneurs. And they say necessity is the mother of innovation. This has been largely true so far. But it's getting harder for the people standing to build new chairs when they have such a high threshold of risk to overcome including regulations and mandatory insurances, and of course they now have to pay employees $15 an hour. And also match half their employees' taxes! And pay self employment tax on themselves. Who can afford to create jobs in such a harsh environment. But yet new jobs do seem to have always manifested before, and supposedly they will always continue. (As long as the Luddite Fallacy remains a fallacy. Which in the long run is dubious, and sometime this century I think the Luddite Fallacy will become Luddite Reality.. but Republicans don't know that long story yet) But for now, the assumption remains valid that jobs will return, with the complication that there is inequality in the world where we have people in China willing to work for $2 an hour. I as a business owner in the US faced with $15 MW have a huge incentive to outsource my labor over there instead of paying $15 an hour here. Outsourcing and automation both look identical from our patriotic perspective. Republicans imagine both the extreme cases of very high and very low MW and interpolate. What if it was raised to $50 an hour? Jobs would be 90% gone domestically. Nobody would be working. Nobody would have any purchasing power except the elites. And no way could the elites cough up enough taxes to support a nation on welfare.. this would be an Atlas shrugging disaster. Then they imagine what if we could get rid of the MW entirely, then unemployment would approach zero, entrepreneurs could be expedited on the fast track to innovation, and the capitalist economy would boom and march forward, and that prosperity would in theory trickle down to the workers. The rich would get richer faster, but the poor would also get richer too than they were. It is unclear to me if the power-law distribution of wealth would get sharper or milder.. I suspect it might get sharper, but hey, at least everyone's getting wealthier.
But the Democrats are right too. Their position is that the problem with not having a minimum wage, or keeping it low, is that capitalism does indeed walk all over the employees. Competition in the economy between businesses forces all employers to squeeze wages as low as they can, not because they don't WANT to pay their employees well, as if the workers don't deserve it, but if you pay them well, you'll get out-competed by your competitors that do pay their employees shit, and then you go out of business.. resulting in a whole economy everywhere that pays workers shit. You get things like work riots at Carnegie Steel. So Democrats say that without any minimum wage, or if it's allowed to expire and not keep up with inflation, that will eventually result in the 99% living below the poverty line. This doesn't make Walmart evil, or mean all the big capitalists are all colluding together in a giant evil conspiracy to squish the little guy. It doesn't necessarily even mean that they're all greedy, or that we have a failure of capitalism. Big corporations are just responding to their own level of market forces, and if we want to change how the system works we have to remain calm and re-engineer the whole system of incentives. (Alternatively, we can also get mad and point our fingers around at each other.) Democrats recognize that the raw dog-eat-dog competition in the marketplace is harsh, and not everyone is born to be an entrepreneur. They say there may be other virtues too aside from being a John Galt, and that there's net benefit to re-routing some dollars to public education, public roads, etc.. and most controversial and taboo of all at the moment.. to pay those who are "unproductive" in society (Welfare, Medicare, Social Security etc). So I believe the Democrats in general harness the power of positive sums in game theory, akin to insurance (and do so unknowingly that the niche even exists (like christianity)). I know what I'm saying here is abstruse and esoteric, but essentially insurance exists because it fills a positive sum niche in the economy that creates non-zero value by spreading out risk via diversification. It takes wealth from times of plenty and transfers it to times of need. It's a form of arbitrage across either space or time that decreases total volatility aka risk, and everyone is net better off for that, because of their greater marginal utility in their times of need. So take that quantitative analogy from insurance, and apply it with a Robin Hood twist (take from the rich and give to the poor) to the US economy, and you have what I view as the underlying basis for the Democrats. This is not an insult to the Democrats - I think they fill a real niche with real value, and their perspective is totally valid.
So back to the Minimum Wage, there are these opposing forces where we want A and we also want B, (Where A = a living wage for workers a la FDR, and B = more jobs/less unemployment) but the more you get of A, the less you get of B and visa versa. A and B are both good. Democrats tend to myopically call for A, and Republicans myopically advocate B. Superficially.
Meanwhile, the Libertarian position is "Let the markets just be free and unregulated and things will sort themselves out for the better".. which I used to believe, but now I don't anymore. Libertarians point out the enormous overhead of our government, and want less Bureaucracy, thinking that we might harness the free market's efficiency, instead of sacrificing so much % in taxes trying to centrally plan and regulate things, and maybe the margins we could gain from Adam Smith's invisible hand could be distributed around to all sides equally and make everyone better off. Which is a valid point. But Where libertarians go wrong, is assuming people are inherently good. Not everyone has the public best interest in mind, or plays by the rules. Just ask my asshole of a business partner how entrepreneurs are motivated by greed. If people will steal whenever they can get away with it, then we DO need laws and regulations. It turns out that totally free markets are not desirable, and there's increased volatility in a whole multi-dimensional landscape of variables. Markets are prone to runaway positive and negative feedback loops, and self reinforcing processes.. what George Soros would call his theory of reflexivity. Totally free unregulated markets put us in a worse place than we are now. We get things like Great Depressions (which might be a bad example) and Dust Bowls. JPMorgan can brute force his larger DC poker stack upon AC Westinghouse. Vanderbilt can declare negative-sum war on the other railroads and win, while everyone loses. We get a bunch of financial derivatives and moral hazard crashing the market in 2008. We get bank runs, and more frequent recessions, and price fixing, and monopolies. In the words of James Watson, "If we don't play god, who will." Just leave it all up to chance and chaos? Or to the elites with their regulatory capture? But the biggest problem of all with free markets is that bottom-up capitalism can never harness the higher solutions to prisoners' dilemmas, and I say that is precisely the purpose and function of all government in general. In fact EVERY thing the government should be doing I think can be reduced to that concept.
Meanwhile, the socialists are saying something along the lines of "the Minimum Wage should be the ONLY wage," and they point out that the wage-labor system we're all familiar with isn't even the only game in town, but wage-education and wage-welfare are some other possibilities. And our whole system of capitalism itself has got to go too, because that's akin to a mild form of slavery. And they're right about that. If not only just labor gets rewarded, but capital gets rewarded too just for being capital, for capital's sake, then we tend to have inequality, an aristocracy, and an elite upper class where the 1% owns most of the wealth, and their capital just grows itself by itself, like gravity accumulating mass together in clumps (but really by the efforts of the 99%). We have Einstein saying, "Compound interest is the most powerful force in the Universe." And us humans have known about this slavery-by-capitalism problem for thousands of years.. The Biblical Jews called it the crime of Usury and tried to assert that "Loans and capital shall receive 0% interest." Other attempts too were made: Hammurabi, Plato, Charlemagne, Queen Mary and Elizabeth.. all experimented with condemning/outlawing interest on loans.. and decoupling the very time value of money. Which is harder if there's inflation. Not to mention money inherently still has some time value left even if there's zero inflation. And no we canNOT do away with money entirely OK John Lennon. But where socialists go wrong, is that so far, all attempts have failed miserably - Just ask the USSR and N. Korea. because there's a big difference between "in theory" and "in practice" and there's a huge discontinuous leap to there from here. We don't have a clear or a safe trajectory, and we're not even sure if there IS a landing spot at all if we leap by revolution. A deeper problem with the socialists is that they want to engineer a utopia of the "No Child Left Behind" variety where everyone is equally entitled to comfort.. which sounds wonderful and great. No eugenics/disgenics allowed - only free lunches. It essentially translates to "Survival of the UNfittest." But then reality says, wait a minute, survival of the fittest is really the name of the game for... ever. Like the last 13.8 GY, that's how we make progress.. that's how improvements and innovations are made. We didn't arrive at tall giraffes by allowing every proto-giraffe to survive undifferentiably. There must be selection as well as variation for evolution, and now you're trying to paddle a ship upstream, in a current that's flowing downstream. With the ship being eroded smaller as you go. If everyone's entitled to wealth and health and "To each according to his Need," then the strong subsidize the weak, resulting in net backwards DEvolution, instead of an economy evolving forward to better things. And admittedly, this is a very harsh metaphor for socialism and not necessarily a correct or fair evaluation, because cooperation is also an aspect of game theory which evolution favors. because it yields positive sums. Sometimes when cooperation happens there's a giant leap of punctuated equilibrium.. except bigger. Regime changes so major, the likes of which have only occurred 3-4 times in the history of Life on Earth - the biggest leaps of all. Like mitochondria cooperating with prokaryotes to form eukaryotes. Or primate brains communicating together for collective learning. The emergence of the new domain of memetic evolution on top of genetics. The origination of technological evolution. Maybe nature has already invented the workings of socialism (namely, the cells in a multicellular organism) and we should copy it rather than re-inventing the wheel. Socialism might actually be an experiment that could succeed if the whole world is on board under the yoke of a one-world gov't, but as long as there's capitalism somewhere else, I think it'll probably out-compete the socialism at first, if not indefinitely, which I think is exactly how the cold war ended. But the socialists are right that capitalism is a form of slavery. And they're mad about that. And they also have a point that: equality, human rights, and comfort, and humane-ness are all important. But what if that bears a heavy cost, paid for by no less than a reversal of progress and evolution itself. (Don't hate me for saying it, I'm just the messenger. I didn't create the Universe with entropy this way.)
So altogether, Republicans are right, Democrats are right, Libertarians are right, and Socialists are right. And the Green party is right too. They all have valid complaints, and everyone has good intentions. But the solutions each party offers all have other indirect consequences and collateral damage somewhere else in the economy. If all you do is look at the issues superficially and scratch the surface a bit, depending on which genre of complaints you tend to focus on the most, that may place you into the corresponding political stance. But the fact of the matter is there are complex opposing dynamics at work here, and in every other issue too. To oversimplify, and reduce down to the essential logical structure: Both A and B are good. We want A and we want B, but A can only come at the expense of B, and more B can only come at the cost of less A. If you think about it, that MUST be the situation we have with a lot of political issues because if we didn't have a complicated mess of a situation, then it would already be resolved. If it was easy, it'd be figured out by now.
I think the key to actually taking a stance on these issues is to first realize that the world is not perfect. And it won't ever be perfect, and it can't possibly be. Knowing that, we must eventually satisfy ourselves with a position that compromises between the perspectives. If you find yourself with a complaint right now about the economy, you're not alone. EVERY one has a complaint, but ask yourself, "Will remedying this complaint bring about another complaint somewhere else that is greater in magnitude?" Maybe you're right, and the economy and everyone would be net better off if we follow your perspective. But maybe your complaint is valid, and you're still wrong, because your position advocates a change that has a complex consequence elsewhere. The chain of causality may well be inchoate and incomprehensible to you, and you can hardly be blamed for that, because indeed it isn't simple. Not everyone has time to learn about the international political economy and all its fractal nooks and crannies. But yet you still vote. We are all voting on incomplete information. Democracy still votes with or without deeper understanding because "Aint nobody got time for Dat!" It's basically a popularity contest, so pull up your nearest bandwagon and commence confirmation bias.
This looks like a job for our hero Fallacy Man:
