Basic economy questions

[Victor3]

I wanna ask some questions :
If a boss of a firm dont like to give high wages how happen that finally they do increase wages? I mean what are the mecanisms that goes there? And how government intervent in this task?
Next : how you make that that from poverty to get higher? I mean how is happen in the economy whit wages of people minus the spends? Cause from your salary must pay things. And doesnt matter just that your firm where you work goes well. Matters also the fact that the firms that sell you things at shop must get well also. Cause if they have high prices is bad for you. Your salary barrely cover the costs.
Thinking that all firms have different income different level how you can make a predictible economy? Some of firms make a chain reaction in economy whit their prices and wages they offer...

 

[Victor3]

Also..how happen whit small firms ....when theyre just at same level and have same area of activity....and only unskilled employees are avaible
Also how make firms to go in other areas specially those whit high electronics....since they have a profitable market...and create products that require resources make high prices so electronics arent rentable. How you make that the ones that give basic materials to electronic makers have low prices? Cause for rentability the ones that extract basic materials go back and buy machines exacly from electronics and high mecanical producers

 

[MananNarainSharma]

I wanna ask some questions :
If a boss of a firm dont like to give high wages how happen that finally they do increase wages? I mean what are the mecanisms that goes there? And how government intervent in this task?

The govt can't intervene or decide the wages a private business can or should offer to a citizen. In a lot of cases, the govt does impose a min wage but that Is in order to prevent exploitation of labour but other than that the govt doesn't interfere.

Why does a company decide to give its employees - well there are two components to a salary hike. One is inflation adjustment which you give to ensure that the real income or purchasing power of your employees is not reducing. Second hike is for merit, that is a promotion or loyalty being rewarded with pay hike. Your question why does an employer need to give any hike at all, well they don't but what happens if you don't reward your employees, they move to a different company. Even if we assume there is a unlimited supply of labour with the same skills, labour attrition is never a good thing for any organization. Ends up costing any business a lot of money. So if you don't reward your employees you lose them and in turn end up losing productivity and hence money.



Next : how you make that that from poverty to get higher? I mean how is happen in the economy whit wages of people minus the spends? Cause from your salary must pay things. And doesnt matter just that your firm where you work goes well. Matters also the fact that the firms that sell you things at shop must get well also. Cause if they have high prices is bad for you. Your salary barrely cover the costs.
Thinking that all firms have different income different level how you can make a predictible economy? Some of firms make a chain reaction in economy whit their prices and wages they offer...

.

Sorry can't make head or tale of what you have written. Please re read your posts before posting and use some grammar to make it easy for others to understand

 

[Mad Indian]

I wanna ask some questions :
If a boss of a firm dont like to give high wages how happen that finally they do increase wages? I mean what are the mecanisms that goes there? And how government intervent in this task?
Next : how you make that that from poverty to get higher? I mean how is happen in the economy whit wages of people minus the spends? Cause from your salary must pay things. And doesnt matter just that your firm where you work goes well. Matters also the fact that the firms that sell you things at shop must get well also. Cause if they have high prices is bad for you. Your salary barrely cover the costs.
Thinking that all firms have different income different level how you can make a predictible economy? Some of firms make a chain reaction in economy whit their prices and wages they offer...

1. Just blanket increase of wages as stipulated by govt does not increase wealth or the economy but only the inflation.

2. Minimum wage laws stiffle competition and favor big businesses and decrease the no. of jobs and also the on the job training in many cases.

3. If there is increase in salary, without increase in productivity , ,ie increase the goods available for consumption, the amount of money available to buy will be higher while the amount of goods will be the same. So, more competition(in terms of money) for the same amount of goods would mean increase in prices of the goods and hence inflation. So you end up at the starting place. This is how inflation is usually created in an economy

4. I cant get what you are saying in the last sentence

 

[no smoking]

I wanna ask some questions :
If a boss of a firm dont like to give high wages how happen that finally they do increase wages? I mean what are the mecanisms that goes there? And how government intervent in this task?
Next : how you make that that from poverty to get higher? I mean how is happen in the economy whit wages of people minus the spends? Cause from your salary must pay things. And doesnt matter just that your firm where you work goes well. Matters also the fact that the firms that sell you things at shop must get well also. Cause if they have high prices is bad for you. Your salary barrely cover the costs.
Thinking that all firms have different income different level how you can make a predictible economy? Some of firms make a chain reaction in economy whit their prices and wages they offer...

When the economy is going well, most of employers will plan to expand their business since everyone is optimistic about future. Expansion of business need more manpower which increase the demand of qualified employees. But the total number of qualified workers won't increase dramatically overnight. So you have 2 ways to recruit:
1. offer an attractive package to qualified workers, which generally mean slightly higher than current market. Meanwhile, in order to keep their own qualified employees, employers have to increase the salary to existing employees. That is how the national wages is pushed up.
2. Start to recruit those un-skilled work forces and training them by yourself. These workers generally come from poverty.

If your own company doesn't perform well in an economic boom, then either you shut down your business since you are not making money, or review your management and fix any problem you find, at the mean time also increase your employees' salaries since you believe you will make money eventually.

 

[pmaitra]

1. Just blanket increase of wages as stipulated by govt does not increase wealth or the economy but only the inflation.

2. Minimum wage laws stiffle competition and favor big businesses and decrease the no. of jobs and also the on the job training in many cases.

3. If there is increase in salary, without increase in productivity , ,ie increase the goods available for consumption, the amount of money available to buy will be higher while the amount of goods will be the same. So, more competition(in terms of money) for the same amount of goods would mean increase in prices of the goods and hence inflation. So you end up at the starting place. This is how inflation is usually created in an economy

4. I cant get what you are saying in the last sentence

Nicely explained.

In short, all boats will rise in high tide.

 

[Bhadra]

1. Just blanket increase of wages as stipulated by govt does not increase wealth or the economy but only the inflation.

You mean to say the govt increases wages blatantly (because it is a govt of wage earners) ?? The wholesale price index is manufactured and rigged ?

and it is not wealth in hands of wage earners? Then how does it increase inflation? After all inflation is also related to purchasing power ! Is not it. Increase in wages leads to somewhat greater consumerism which is key to the growth.

2. Minimum wage laws stiffle competition and favor big businesses and decrease the no. of jobs and also the on the job training in many cases.

Stiffle competition in killing the labour ? Or it is an instrument to keep the labour surviving at bare minimum standards and thereby make availability of labour in the market ? It favours big business ? Yes ... read the theory of minimum wages. Those are basics of theory of population also.

3. If there is increase in salary, without increase in productivity , ,ie increase the goods available for consumption, the amount of money available to buy will be higher while the amount of goods will be the same. So, more competition(in terms of money) for the same amount of goods would mean increase in prices of the goods and hence inflation. So you end up at the starting place. This is how inflation is usually created in an economy

Increase in production is related to wages or demand? If people have more money at hand, demand will increase. If demand increases the production will increase. Control of goods in the markets is a different thing altogether. After all US can dump million tons of wheat in the sea but does not reduce production of wheat!!

Labour still continues to be essential means of production . Even in this computer age it can not be eliminated. So take care of labour

 

[pmaitra]

@Bhadra, you missed the point @Mad Indian was making.

If you get paid Rs. 100 per day, and so does everyone else in your town, and if one meal costs Rs. 50, then everyone can afford two meals.

If you get paid Rs. 200 per day, and so does everyone else in your town, then everyone can afford to spend Rs. 100 per meal and afford two meals.

If there is no extra supply of meals, and since food is a necessity, the person selling the meal will sell it to those who can pay more. Since, everyone can now pay more, the price will adjust itself to Rs. 100 per meal. Eventually, you are still able to afford only two meals.

Got it?

 

[Bhadra]

@Bhadra, you missed the point @Mad Indian was making.

If you get paid Rs. 100 per day, and so does everyone else in your town, and if one meal costs Rs. 50, then everyone can afford two meals.

If you get paid Rs. 200 per day, and so does everyone else in your town, then everyone can afford to spend Rs. 100 per meal and afford two meals.

If there is no extra supply of meals, and since food is a necessity, the person selling the meal will sell it to those who can pay more. Since, everyone can now pay more, the price will adjust itself to Rs. 100 per meal. Eventually, you are still able to afford only two meals.

Got it?

Read my reply carefully....
I had got it too early in life ...

You are saying in essence what I said.. to keep labour at minimum standard to survive is the basis of minimum wages...

Wages do not contribute to inflation.. It is inflation that necessitates changes in wages..

 

[pmaitra]

Read my reply carefully....
I had got it too early in life ...

You are saying in essence what I said.. to keep labour at minimum standard to survive is the basis of minimum wages...

Wages do not contribute to inflation.. It is inflation that necessitates changes in wages..

Inflation necessitates changes in wages.

What @Mad Indian is trying to say is that if everyone's wages are increased, i.e., if everyone has more printed pieces of paper that we call currency, no one will be richer. People will still be the same in the wealth hierarchy.

 

[MananNarainSharma]

@Bhadra, you missed the point @Mad Indian was making.

If you get paid Rs. 100 per day, and so does everyone else in your town, and if one meal costs Rs. 50, then everyone can afford two meals.

If you get paid Rs. 200 per day, and so does everyone else in your town, then everyone can afford to spend Rs. 100 per meal and afford two meals.

If there is no extra supply of meals, and since food is a necessity, the person selling the meal will sell it to those who can pay more. Since, everyone can now pay more, the price will adjust itself to Rs. 100 per meal. Eventually, you are still able to afford only two meals.

Got it?

And your assumption is supply is inelastic and that it will stay the same irrespective of demand which is simply not the case. Min wage increase can be used as a fiscal tool to increase consumption demand which leads to increase In supply and hence economic activity. You assume that supply won't increase, well that is wrong.

Obviously using min wage increase as a fiscal policy tool has its pros and cons like any other economic policy tool, any govt needs to be careful in determining the min wage so as not to crowd out employment or increase inflation. But to claim it has no impact on economic activity based on the assumption that supply is limited is flawed.

 

[MananNarainSharma]

Inflation necessitates changes in wages.

What @Mad Indian is trying to say is that if everyone's wages are increased, i.e., if everyone has more printed pieces of paper that we call currency, no one will be richer. People will still be the same in the wealth hierarchy.

But we are not talking about increasing everyone wage, we are only talking about min wage which effects only a portion of the people.

 

[pmaitra]

And your assumption is supply is inelastic and that it will stay the same irrespective of demand which is simply not the case. Min wage increase can be used as a fiscal tool to increase consumption demand which leads to increase In supply and hence economic activity. You assume that supply won't increase, well that is wrong.

Obviously using min wage increase as a fiscal policy tool has its pros and cons like any other economic policy tool, any govt needs to be careful in determining the min wage so as not to crowd out employment or increase inflation. But to claim it has no impact on economic activity based on the assumption that supply is limited is flawed.

You are saying my assumption is that supply is inelastic. That is not true. That is just your assumption.

I just gave a simplified example to help @Bhadra who missed the point @Mad Indian was trying to make. Because this is a simplified example, I kept the plethora of other variables absent.

But we are not talking about increasing everyone wage, we are only talking about min wage which effects only a portion of the people.

I don't know for sure what the opening post is saying, but you are right, raising only the minimum wage will not affect everyone in the same way, but will tend to affect most people in the same way. It will make the next higher skill level workers to demand more wages, which in turn will have the same effect on the next higher level. This will be a ripple effect.

 

[MananNarainSharma]

You are saying my assumption is that supply is inelastic. That is not true. That is just your assumption.

I just gave a simplified example to help @Bhadra who missed the point @Mad Indian was trying to make. Because this is a simplified example, I kept the plethora of other variables absent.
.

Fair enough, but your basic conslusion is that min wage is irrelevant and any increase only leads to inflation and reduction in employment, well that is simply true. Min wage increase ignoring the social arguments about dignity of labour, can be and is used by govt as an effective fiscal policy tool to spur economic growth/activity.

I would place the social and humanitarian arguments for having min wage and increasing them to keep place with inflation but most ultra right people I come across don't really care much for greater society, it's all I, me, myself. So what's the point eh?

 

[pmaitra]

Fair enough, but your basic conslusion is that min wage is irrelevant and any increase only leads to inflation and reduction in employment, well that is simply true. Min wage increase ignoring the social arguments about dignity of labour, can be and is used by govt as an effective fiscal policy tool to spur economic growth/activity.

I would place the social and humanitarian arguments for having min wage and increasing them to keep place with inflation but most ultra right people I come across don't really care much for greater society, it's all I, me, myself. So what's the point eh?

Your post raises a greater philosophical debate.

I will go back to the opening post, and from what I can understand, he is saying that even if your salary is increased, high prices will cause us to spend most of your salary, and at the end of the day, we have earned more currency units, and have spent more currency units, and have not really seen an improvement in our situation. This is exactly what @Mad Indian was trying to explain.

Regarding minimum wage, it would not be necessary to raise them, if the Reserve Bank of India, taking India as an example, stopped printing counterfeit currency. Every time one Rupee is printed, the RBI should add so much precious metal to its reserves to preserve the worth of the Rupee. However, RBI does not do that, and hence, increase in the number of Rupees, with no increase in the reserve, causes the value of all Rupee units to drop. Every Rupee that is printed without adding precious metals to the reserves is counterfeit, but since RBI issues all Rupees, we cannot distinguish between what is counterfeit and what is not. Therefore, the ill effect of counterfeiting is shared across all Rupees that exist.

So, to come back to your question, what is the point? I don't know.

 

[Mad Indian]

And your assumption is supply is inelastic and that it will stay the same irrespective of demand which is simply not the case. Min wage increase can be used as a fiscal tool to increase consumption demand which leads to increase In supply and hence economic activity. You assume that supply won't increase, well that is wrong.

Obviously using min wage increase as a fiscal policy tool has its pros and cons like any other economic policy tool, any govt needs to be careful in determining the min wage so as not to crowd out employment or increase inflation. But to claim it has no impact on economic activity based on the assumption that supply is limited is flawed.

What BS. If thats the case all the countries of the world would just legislate their way to increase the minimum wage using consumption driven economic growth justification and become rich. It is a fallacy through and through.

About min wage being a fiscal policy- it has more to do with welfare and the political gains rather than economic ones. This is kind of the same retarded argument used by MNREGA proponents, among many others that MNREGA will increase the money circulation among the poor and will stimulate consumption and hence growth. But the actual result of course is there for anyone to see

 

[Mad Indian]

Fair enough, but your basic conslusion is that min wage is irrelevant and any increase only leads to inflation and reduction in employment, well that is simply true. Min wage increase ignoring the social arguments about dignity of labour, can be and is used by govt as an effective fiscal policy tool to spur economic growth/activity.

I would place the social and humanitarian arguments for having min wage and increasing them to keep place with inflation but most ultra right people I come across don't really care much for greater society, it's all I, me, myself. So what's the point eh?

yeah humanitarian BS is always used to justified retarded programs in socialism which keeps poor poorer to keep the rich poor divide smaller - From MNREGA to Obama care

 

[Mad Indian]

Anyway, I would like to give a link on Minimum Wage by Milton friedman

 

[Mad Indian]

This is link is not for ideological retards .

 

[pmaitra]

This is link is not for ideological retards .

Then why did you see it? I presume you did, because you posted it.

Just kidding.