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Comment by tastyfreeze | Hacker News Reader

It is not the role of government to set prices of labor or products. If a company wants to pay less than market rate for labor they will find themselves without employees. By letting the market dictate the price of labor, wages certainly fall from the artifically high price now. But, that is the result of people willingly entering a contract for the lower pay. People choosing to work for some money instead of no money. People choosing to work to improve their lives instead of being supported by welfare.

Minimum wage removes the choice. Minimum wage infringes on your freedom of contract.

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The role of government is to set the rules of the game to provide for the livelihood of all citizens. Free markets bring certain efficiencies but they are not a priori good and virtuous. If they bring the best outcome for society as a whole then we should lean into them, if not then we should consider regulation of some form.

Increasing income inequality should be very alarming to everyone. The bottom 90% because they're getting screwed, and the top 10% because the perfection of conservative talking points and scapegoating of minorities and immigrants will not address the truth on the ground: nostalgia for post-war prosperity will not bring the jobs back. Policy in today's interconnected world is complex and almost entirely driven by expert lobbyists representing special interests who donate to both political parties to guarantee their influence. It's going to get worse and worse until either the 1% see their own danger or the pitchforks come out.

Is the freedom to accept a contract for poverty wages to avoid starvation a desirable feature in our society?

Since we have a social safety net, nobody needs to do such to 'avoid starvation' so the question makes no sense.

Is the alternative - a total absence of contracts offered to those people - a desirable feature in our society?

If labor costs less products as a result cost less. How do you reconcile your view with the success of Singapore? A country with no minimum wage and a comparatively free market. There is income disparity in every time and every place. The question to ask is do the rules of the game allow anybody to succeed. Minimum wage is a rule that says some people just don't get to play.

> How do you reconcile your view with the success of Singapore?

A country general success does not equal the success of its poor people. There are not many income inequality stats of Singapore, but the ones I've seen [1] actually put Singapore with a similar income inequality to the US.

Furthermore, it is a small country (5M people) with a pretty high GDP per capita (8th in the world). I don't think you can extract too many conclusions that would be applicable to other, bigger countries.

> The question to ask is do the rules of the game allow anybody to succeed. Minimum wage is a rule that says some people just don't get to play.

And without a livable minimum wage, you'll get people that are working full time for peanuts. They won't be able to save, get healthcare, provide their kids with good education, etc. Are those people succeeding?

1: https://en.wikipedia.org/wiki/List_of_countries_by_income_eq...

In this discussion a country's population is irrelevant. For a small country with a GDP per capita higher than the United States only 55 years after independence I would say they are doing pretty damn good.

https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)...

There is no requirement that everybody succeed at the same level. The measure of a country's success is improvement of society over time. Has the general quality of life improved for the people of Singapore over the last 55 years? I think that is a resounding yes.

> In this discussion a country's population is irrelevant.

It's not. You'll see that a lot of the top companies in Singapore are operating at global level while headquartered in Singapore. It's a little bit like looking only at the economy of the main US cities.

> There is no requirement that everybody succeed at the same level. The measure of a country's success is improvement of society over time.

Inequality is a pretty important measure. What society is better, one where everybody earns two times a livable wage or another where 25% earn eight times a livable wage and the 75% remaining are in poverty?

There is always inequality in all aspects of life. We all do not perform on the same level. Looking at a specific point in time and comparing inequality is a poor measure of society. The only measure that matters is improvement over time.

Upon independence, "Singapore faced a small domestic market, and high levels of unemployment and poverty. 70 percent of Singapore's households lived in badly overcrowded conditions, and a third of its people squatted in slums on the city fringes. Unemployment averaged 14 percent, GDP per capita was US$516, and half of the population was illiterate." [https://en.wikipedia.org/wiki/Economy_of_Singapore#Independe...]

Compared to today, Singapore has about 1000 homeless, 3.16 persons per household, a literacy rate of 97.3%, GDP per capita of $602 billion, an unemployment rate of 4.11% and a median household income of $9,293. The income distribution isn't bad either. From what I could find the cost of living (minus rent) for an individual is $575 a month.

https://blog.seedly.sg/average-singaporean-household-income-...

The better society is the one where everyone has an opportunity to improve their lot in life by satisfying a need of others.

> Compared to today, Singapore has about 1000 homeless, 3.16 persons per household, a literacy rate of 97.3%, GDP per capita of $602 billion, an unemployment rate of 4.11% and a median household income of $9,293. The income distribution isn't bad either. From what I could find the cost of living (minus rent) for an individual is $575 a month.

By that same link, the bottom 10% of the population have less average income than your cost of living.

But I read a little bit more, and it looks like that they are indeed tackling the income inequality problem [1]. Which is where country size and GDP per capita comes into play: a richer country has more money to implement inequality-reducing measures, and implementing them for a 5M people country is far easier than for bigger countries.

> The better society is the one where everyone has an opportunity to improve their lot in life by satisfying a need of others.

Well, that's why inequality is important as a metric. If you're born in a poor household, statistically you'll have far less opportunities than if you're born in a better situation. Want everybody to have an opportunity to improve and succeed? Fight poverty.

1: https://www.straitstimes.com/politics/parliament-inequality-...

Do you think Singapore is a free market? What do you think of their housing policy?

Thank you for pointing that out. That housing market is certainly not free. Not an aspect of Singapore I had read about before.

Other than my opinion that the needs of the people would have been better met with a free housing market. I don't have much to say on it.

Is starvation preferable to getting a low wage job?

You start somewhere. Minimum wage laws just reduce the amount of opportunities low skill workers can choose from.

This could just go in circles. What benefit does a job that doesn't provide enough of a wage to survive actually provide to the employee, except a way to waste their time while they accrue debt and wait for an emergency expenditure to bankrupt them?

If only there were less regulations, allowing the creation of more businesses which would compete for this man's labor, increasing the wages as a result.

> If a company wants to pay less than market rate for labor they will find themselves without employees.

What if multiple companies in an area do that? What incentive does a entering company have to increase wages if employees will take jobs at lower wages nevertheless because they need to eat?

> But, that is the result of people willingly entering a contract for the lower pay.

This viewpoint ignores that people need to work in order to eat. It's not exactly willing if your alternatives are "accept this contract or starve".

You mean price fixing and collusion that are already illegal?

Without price fixing and collusion the employers have to compete for labor. Competition that would as a result improve the compensation for employees.

It's not price fixing nor collusion. It's just the incentives companies have to lower wages.

Look at this example: a number of companies in an area are paying a livable wage at time T for low-skilled workers. Now, time goes on and inflation kicks in. Those wages, which did not grow, are not livable now. Workers, however, can't complain too much because they will be fired, and bad income is better than no income (not to mention healthcare tied to the jobs). There are also more workers than job positions, and new young workers are constantly entering the market, so companies will always find someone that needs to work even at that low wage.

What incentives do those companies have to increase wages? Absolutely none. In fact, this is what is happening right now.

> Without price fixing and collusion the employers have to compete for labor.

If employees actually had to compete for labor in all cases, we wouldn't be having this debate and people wouldn't be complaining that their wages are not enough to live.

That sounds like blaming a broken money supply for lower wages. They are making the same wages. The inflation of money supply makes their dollar worth less. Two separate issues. I would prefer to examine one issue on its own.

The company has no say in the money supply. Their money is worth less as well. Do you expect a company to pay more when they are earning the same amount and employee production stays the same?

The Fed is the only entity that controls money supply and the purchasing power of a dollar. Upset that what you are earning doesn't buy the same amount of stuff? Blame for that is entirely on us for asking the government for more while demanding lower taxes. Their only alternative to raising taxes is printing more money.

The example is not about inflation, it's just a method to show how without any specific action, companies don't have incentives to raise wages. But in fact, it's a real example because it's what has been happening in the US for a while, inflation increasing, company profits increasing but profits stagnating.

Anyways, the point is that companies will tend to push for lower wages, always. It's just how capitalism works, it pushes for maximizing profits. If there are more workers than jobs (which is the case almost everywhere) you can't say that competition will push companies to increase wages, because there will be no competition, and workers can't just stay home if there are no satisfying jobs.

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