How do we fix the economy???

Imaginos1892 wrote:How can anybody not see that having your employer pay for your medical insurance is insane? It has distorted the entire medical economy to the point where it's almost impossible to get coverage any other way. 0bamacare has made the situation even worse; I just got an extra tax form to prove that I have "compliant" coverage and don't have to pay a $2800 penalty. This year. It also requires 50-year-old men to pay for maternity insurance. On themselves.

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The worst thing is that it now mandates what I refer to as "every-scratch-and-sniffle" coverage. Medical insurance must cover EVERYTHING so the patient doesn't pay for ANYTHING. That is just idiotic. Insurance works by spreading the costs of expensive but rare events over a large number of people, very few of which will actually end up having those things happen to them. If you misuse insurance to pay for things that happen to everybody, it just adds overhead and increases cost with no real benefit to anybody. And, by disconnecting those making the decisions from those paying the costs, it practically guarantees that most decisions will be bad ones.
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If a business tries something that doesn't work, they either stop doing it or they will go broke. If the government tries something that doesn't work, they just keep shoveling our money into it forever.

As the late economist and Nobel Laureate Friedrich A. Hayek noted, "With the exception only of the period of the gold standard, practically all governments of history have used their exclusive power to issue money to defraud and plunder the people."

IIRC, the employer insurance started during a time when wages were frozen, as a way to provide compensation to workers. Anyone know if this is correct?

Inflation is nicknamed "The hidden tax." When BJ or I mention to youngsters that the price for standard candy bars used to be 5 cents, they stare. We point out that the value of the bar hasn't changed, the money has devalued.

The comments on insurance look right. We make sure there is an emergency fund, then go for insurance that lets us pay the small stuff. ALSO, we watch our nutrition, etc.

Apologies again for misreading this the first time around, Biochem.

I agree with this point but in perhaps in a different way than you intend. The free market system already has incentives in place to encourage individuals meeting societal responsibilities. What we have done recently is to destroy those incentives by making the markets less free.

Free markets based on voluntary exchange is the system that most closely parallels a core New Testament message; being of service to others. This is one of Jesus' principal charges. The servant is made first in His Kingdom through being a servant to God's children. Being of service means accepting the service of others as well. Unless all of us both provide service and accept it from others, how will all His children meet His charge to us?

To me this has always meant that relationships in any economic interaction is most moral if it is one of mutual service. A seller and buyer engage in voluntary exchange when both receive value from the other. Neither dictates in the exchange and both are free to walk away. Competition enables multiple producers to offer their wares for the consumers' consideration which tends to increase the amount of wares being offered as well as the variety of terms under which those wares may be purchased. That variety and availability means more people will find voluntary partners to consummate an exchange on mutually agreeable terms.

This same process is also true for the production process. People with skills, experience and/or labor engage with people that have capital or other material assets to produce things that consumers wish to purchase. So long as the terms are entered into voluntarily and all parties are free to disengage should the terms of those agreements be in default, let the parties decide the specifics.

That's where I believe we are failing more often that not in economic policy. Too often the laws made will make any exchange in the market LESS voluntary by increasing barriers to entry for other businesses through over regulation or mandating minimum compensation for employees (both the minimum wage and benefits) or business taxes specifically designed to limit new entrants.

Public policies like these do not increase private economic activity. They reduce it. Those that are squeezed out of participating in the reduce level of economic activity are instead encouraged to accept charity from the public purse. They are told this is not charity but a right. Creating this system that defines large swaths of people as useless drones fit only to receive the largess of their betters is morally repugnant.

Yet, that's what public policy centered around reducing voluntary exchange in a free market inevitably leads to. Public policy should act as the referee on the sidelines making sure all parties engage in economic activity within the framework of voluntary exchange and free markets. I suspect that implementing regulations that attempt to force moral behavior will not work. It is enough that open competition, complete disclosure, penalties against fraud, free markets and voluntary exchange are religiously enforced. Market participants will take care of the rest.

biochem wrote:snip

So a couple of my thoughts on solutions.

1. Bring God back. The Bible stresses over and over again, that people have societal responsibilities in how they act and how they treat others.

"So in everything, do to others what you would have them do to you, for this sums up the Law and the Prophets."

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This doesn't even begin to cover the required changes. But it's a start. Other thoughts?

Then there are all the yahoos demanding $15.00 an hour for $5.00 worth of work. If they spent the time they waste protesting on improving themselves, they could get better jobs and make more money. Of course, that would require them to actually put forth some effort and earn what they want.

Cost and value always equalize. If something is artificially forced to cost more than it's worth, either nobody buys, or the money is devalued until a balance point is reached.
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Greed is taking more than you have earned. There is nothing good about that.

Paying an adult $5 an hour is just plain wrong. No one could live in a developed country on that wage. If the business is so inefficient that they can't afford to pay a decent wage, then they should close.
How come every developed country bar the US manages to get along with a decent minimum wage?
Our minimum wage is currently $17.29 AUD for full time permanent work, and 25% more for casual workers to cover holiday and sick pay. We have factory hands, shop assistants, and cafe workers who generally get more than that (no tips).

Imaginos1892 wrote:Then there are all the yahoos demanding $15.00 an hour for $5.00 worth of work. If they spent the time they waste protesting on improving themselves, they could get better jobs and make more money. Of course, that would require them to actually put forth some effort and earn what they want.

Cost and value always equalize. If something is artificially forced to cost more than it's worth, either nobody buys, or the money is devalued until a balance point is reached.
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Greed is taking more than you have earned. There is nothing good about that.

Adults should have developed the skills and experience to be worth more than $5.00 an hour and it's their own damn fault if they haven't. Unskilled, entry-level, minimum-wage jobs are supposed to be the temporary first step to a better job. An opportunity to prove that you can do a job adequately, show up every day, on time, sober, and perform, without an employer having to risk a lot on somebody with no proven skills, no experience, and no work history. The low pay is a motivator!

As a previous poster put it:

At some point in their lives they should aspire to something more than flipping burgers and salting fries.

If idiots insist on demanding that low-value employees be paid more than they are worth, inflation will devalue the money until whatever arbitrary "minimum wage" they have set is again equivalent to about $5.00 an hour.
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It is not within the power of any government to increase the value of unskilled labor, only to raise its cost.

Imaginos1892 wrote:The low pay is a motivator!

Pretty shitty motivator, if you ask me.

If idiots insist on demanding that low-value employees be paid more than they are worth, inflation will devalue the money until whatever arbitrary "minimum wage" they have set is again equivalent to about $5.00 an hour.
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It is not within the power of any government to increase the value of unskilled labor, only to raise its cost.

I assume this means that, if (or rather, when) the job you're doing gets outsourced or handed over to a machine, you will be okay with getting a below minimum wage job while you retrain.

Obviously all our adults on a minimum wage are worth $12 US full time permanent or $15 US casual, or they wouldn't be employed by long term successful businesses. We can do it, Europe can do it, the US not doing it is not an indication that US workers are somehow thicker, just that the employers are less ethical. Our money has not been devalued by this as your attachment implies.
Occasionally here we have cases where an employer has taken advantage of people such as new migrants, or overseas students paying less than the living wage. Depending on the severity they either get big (sometimes in the millions) fines or jail.

Obviously we have a cultural abyss here. I can't see how any adult's time is worth less than a living wage, and you can't see how we are revolted by the notion of a person being taken advantage of like that.

Imaginos1892 wrote:Adults should have developed the skills and experience to be worth more than $5.00 an hour and it's their own damn fault if they haven't. Unskilled, entry-level, minimum-wage jobs are supposed to be the temporary first step to a better job. An opportunity to prove that you can do a job adequately, show up every day, on time, sober, and perform, without an employer having to risk a lot on somebody with no proven skills, no experience, and no work history. The low pay is a motivator!

As a previous poster put it:

At some point in their lives they should aspire to something more than flipping burgers and salting fries.

If idiots insist on demanding that low-value employees be paid more than they are worth, inflation will devalue the money until whatever arbitrary "minimum wage" they have set is again equivalent to about $5.00 an hour.
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It is not within the power of any government to increase the value of unskilled labor, only to raise its cost.

So you believe that workers are so stupid that they will work for unreasonably low wages just because a prospective employers offers that wage? There are always other jobs out there. What sort of an elitist are you to think workers can't sort through this sort of rubish, Daryl? Everyone is free to turn down employment that demands unreasonable employment conditions. That's the best check against unscrupulous employers.

Assuming that laws are required because workers are too stupid to know what is unreasonable for them, is elitist bs.

Daryl wrote:Obviously all our adults on a minimum wage are worth $12 US full time permanent or $15 US casual, or they wouldn't be employed by long term successful businesses. We can do it, Europe can do it, the US not doing it is not an indication that US workers are somehow thicker, just that the employers are less ethical. Our money has not been devalued by this as your attachment implies.
Occasionally here we have cases where an employer has taken advantage of people such as new migrants, or overseas students paying less than the living wage. Depending on the severity they either get big (sometimes in the millions) fines or jail.

Obviously we have a cultural abyss here. I can't see how any adult's time is worth less than a living wage, and you can't see how we are revolted by the notion of a person being taken advantage of like that.

In Australia at the moment, there's about 10 unemployed per available job.
Possibly more.

There's no guarentee that a better job is out there.

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Daryl wrote:Obviously all our adults on a minimum wage are worth $12 US full time permanent or $15 US casual, or they wouldn't be employed by long term successful businesses. We can do it, Europe can do it, the US not doing it is not an indication that US workers are somehow thicker, just that the employers are less ethical. Our money has not been devalued by this as your attachment implies.

Really? I checked Google Finance this afternoon and the Australian dollar is under 72 cents. The British pound used to be over $2.80; now it's $1.46. Both of those are relative to a US dollar that has been devalued by 70%. Your "impressive" minimum wage of $17.29 is actually worth $12.40. Why don't you try an experiment - raise your minimum wage to $35.00 and see how long it takes the AUD to drop to 36 cents.

What is inflation? It is an increase in the ratio of money to value, and all value is derived from work. Arbitrarily raising the minimum wage to $15.00 is like setting the price of copper to $50.00/Kg - it doesn't make the copper more valuable, it just makes it cost more. Then everything made from copper costs more, and the effects work their way through the economy until $50.00 becomes equal to the real value of a kilogram of copper.

Daryl wrote:Occasionally here we have cases where an employer has taken advantage of people such as new migrants, or overseas students paying less than the living wage. Depending on the severity they either get big (sometimes in the millions) fines or jail.

Obviously we have a cultural abyss here. I can't see how any adult's time is worth less than a living wage, and you can't see how we are revolted by the notion of a person being taken advantage of like that.

There seems to be an abyss there, but it's not cultural.

It's not about the employers; it's about the economy. There is not $15.00 worth of value in unskilled labor. Paying more than it is worth distorts the economy, devalues the money, and dilutes everybody's wages. It is not reasonable for a notional "adult" to expect to make a career and raise a family on a low-value job that the average 8th-grader would be overqualified for.

Annachie wrote:In Australia at the moment, there's about 10 unemployed per available job.
Possibly more.

Might that have something to do with an absurdly high minimum wage? All those unemployed are not creating value or expanding the economy, as they would be if they were working, even for low pay.

If enough people are working at jobs that create value by making things that are worth more than they cost, the economy grows. Getting a raise, or a better job, is easier.

Spending does not make an economy grow; neither does buying and selling the same things over and over again. Taxation makes the economy shrink, by increasing costs without increasing value.
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It is not within the power of any government to compel employers to pay unskilled workers some arbitrary "minimum wage", only to punish them for paying less.