And borders are just imaginary lines. They are however a based around the underlying reality of geographical, cultural, and political factors. We could make a law that all airplanes must slow down to 50 miles per hour over crowed areas but that doesn't matter if most planes can't fly any slower than 120mph without falling out of the sky.

Laws do have to take into account things like physics and economics. The latter is the study of scarce resources that have alternative uses and specifically addresses things like the cost of labor and the affect of artificially manipulating it.

Economics has no particular respect for human self-sufficiency. If businesses can operate with employees just above starvation wages then all sorts of technologically feasible efficiencies are skipped while human suffering is prolonged.

From a practical standpoint, it feels like for a time that capitalism seeking local-optima was perfectly ok in that the efficiencies gained were lifting society all around - and it still seems that way in the world at large.

However, in more mature economies it seems like a different discussion needs to be made because the business actions seem to be divergent from the interests of society - optimizing on the same financial metrics seems merely a shell game of keeping a larger share of the production -- to the point that there is little to no growth in value to most of society.

> Laws do have to take into account things like physics and economics

Economics is not even remotely similar to physics in any respect.

Where did I say they were? I called them both "things" I guess.

If you read precisely past the point where you stopped quoting, you see their reasoning why this bad, the answer to your "And?"

Whether or not you agree with that answer, shouldn't that answer be the part you respond to, instead of deliberately misrepresenting what the poster you were responding to was saying?

My objection was to the word "artificial," (which is why I didn't quote further) as if mandating a minimum wage is somehow different from everything else we do with the economy. The "natural" economy doesn't exist, except insofar as the adjusted economy we have is the natural economy. Making changes from what is to what someone wants is entirely normal.

Well congratulations, you found a nit to pick.

And? It keeps people who want to work from working. People who would be willing to work at less than the minimum wage. Subsiding on government relief can lead to depression, loss of social status, load term mental illness. Not having a job is a very unhealthy thing for most people.

There are people willing to do valuable work for less than the minimum wage - they're called volunteers. A lot of work done by volunteers is more important than work done by minimum wage workers, but involves no commerce.

A basic income provides the opportunity for people to find healthy, fulfilling things that do not pay money.

I'm absolutely OK with some types of paid work going away entirely. Our society leans too heavily on the ability to pay someone else to do something at a rate that is usually more than we would like to pay and less than we would like to make. It is essentially a way of saying that we are more important than other people and that's lame.

Food delivery, for instance, is convenient, I take advantage of it, but I tip far more heavily than most people, and I could live without it. Some people who deliver for a pay service today may end up, with basic income, volunteering for meals on wheels. That's a better allocation of society's potential energy than to bring me a burrito when I don't feel like leaving the house.

> It keeps people who want to work from working.

That doesn't mean the work (the individual is capable of) is valuable enough to justify the position, in the locality.

But what are the alternatives, for the people whose productivity is lower than minimum wage?

And the mortgage deduction makes a house a better investment, and so increases the price of buying and renting houses.

These are all tradeoffs that we decide to make.

I don't really follow. They must not want to work that bad if they would choose not to work ...

Really? I read complaints about the mortgage interest deduction all the time. I mean, subsidizing home ownership isn't exactly an obviously worthy goal in and of itself and it creates weird incentives.

The difference in popular discourse is threefold: the mortgage interest deduction is less of a blue/red team tribal marker; it isn't as morally charged an issue (the arguments against it are more economic in nature than moralistic); a disproportionate number of the people who would be complaining about it are homeowners themselves and therefore heavily incentivized to keep it around, regardless of its economic effect.

My statement was exaggerated. Of course people object to it. I do. But relatively speaking, if you got rid of it there'd be all but revolution.

I actually prefer zero deductions for anything, for all people and entities. Here's the rate: pay it. If you're below the line we draw, you don't have to pay.

The mortgage interest deduction "hurts" only government tax revenues. Raising the tide on minimum wage impacts every business that has employees, regardless of what their cost structure is.

What if your business worked in such a way that a single employee wouldn't even produce $15 of revenue in an hour? You can't lose money on every sale and make up for it in volume.

The artificial increase is a problem because it goes against supply and demand, which is a natural law of economics.

The mortgage interest deduction disadvantages renters compared to owners. Subsidizing home ownership effectively taxes renting.

Sure, and property taxes effectively tax owning. The amount of tax a landlord pays per unit is less than a homeowner pays for his house.

Disagree. I've owned 3 homes and my mortgage interest deduction made no difference on whether or not I purchased.

The difference between renting and owning is income, savings rate, and lifestyle. If you can't afford to buy, you either don't make enough or don't save enough. It's the down payment that separates a lot of renters and buyers. If you are arguing homes are expensive, I'd argue that $15 minimum wage isn't helping.

Mortgage interest deductions may be bad policy, but it doesn't "tax renting." That's asinine.

It changed the amount you paid.

Either you're wrong, or I'm about to learn something. Explain?

You probably paid a higher purchase price, because even if you couldn't take the mortgage interest deduction (for whatever reason, maybe you paid all cash), you are still competing against other buyers, most of whom could take the deduction. That deduction saves them money, meaning they're willing to pay a higher price than they would if they couldn't take a mortgage interest deduction.

That those other buyers are willing to pay a higher price affects the comparable sales, the appraisal, the "Zestimate [haha]", the willingness of the seller to select your offer, etc.

Then, assuming you did have a mortgage and qualified for the deduction (most people with one home do), you paid less (net) for the loan than you would have otherwise.

Your argument is suggesting that there are enough people in the market using their tax deductions as a strategy for paying their mortgages. I'd argue that if you are that close to not being able to afford your mortgage, you won't make it past underwriting. Even if you did, the volume wouldn't be such that it demands significantly higher sale prices. And even if it did - it would pale in comparison to China-fueled cash-in-hand sales and zero interest rate policy, which is driving all markets.

A quick google search doesn't produce results that suggest that removing the deduction would reduce housing prices to the point that people in this thread are saying. Here is just one example that states it would reduce prices by 0.3%: http://www.taxpolicycenter.org/taxvox/what-changes-mortgage-...

You read that wrong I think. It says that limiting itemized deductions to a marginal rate of 28% (an Obama proposal that was DoA) would cause housing prices to fall by 0.3%.

Reading two sentences further from that same article you linked: "completely eliminating the mortgage interest and property tax deduction—a drastic change that probably would only happen if accompanied by a new tax preference for housing—would cause housing prices to fall by an average of 11.8 percent in the 23 cities studied. Estimated price declines would range from 10.3 percent in Seattle to 13.8 percent in Milwaukee."

I'm not using the tax deduction as a "strategy for paying my mortgage". I did figure the savings from the tax deduction in modeling my budget, the effective cost of housing, all of which influenced my bid(s).

That's an excellent attitude. You seem to be interested in researching this further, given the chorus of "deduction causes increased prices".

I'll try a different tactic for the explanation: What effect do you think the mortgage deduction has? Does it increase your disposable income?

Also, if a self-employed business traveler knows one can deduct the cost of hotel, flight, and meals (partially) spent during a business trip from income for calculating income tax, does that affect how much that traveller is willing to pay versus similar categories while not traveling for work?

Mortgage interest deduction also inflates home prices, benefitting home sellers and harming everyone else. A home buyer might think they're benefitting, but in fact the seller simply increased price until the deduction was of net zero benefit for the buyer.

What are you talking about? Mortgage interest deduction determines how much money a private person pays in taxes to the federal government each year, relative to their income minus deductions. It does not directly impact home sale price.

The National Association of Realtors argues that removing the mortgage interest deduction would reduce home values by 15%. There are likely other less biased studies as well but that was the first that I found during a quick search. More at https://en.wikipedia.org/wiki/Home_mortgage_interest_deducti...

Who does it help? Anybody? When you tell every home shopper "you can afford x% more house thanks to this deduction", what do you think that does to prices?

Trust me, its not mortgage interest rate deductions that are driving up demand and prices for homes. Overseas buyers paying all cash are driving up prices - and stock markets pumped full of zero interest cash are causing soaring prices.

If you are suggesting that mortgage interest rate deductions are fueling another housing bubble, then we are about to witness another amazing sub-prime real-estate crash.

Considering I just purchased a new home under the new underwriting rules / regulations, I can assure you that this marginal deduction is not qualifying a huge number of home buyers to the point it makes a difference on the price in comparison to the rest of the home market environment.

I am not suggesting that mortgage interest tax deductions are fueling a housing bubble. Nothing of the sort.

I am merely pointing out that a subsidy that applies to everyone in a market naturally drives up the price by a similar amount. It wouldn't fuel runaway growth, but neither does it help 'affordability'.

The mortgage interest deduction started in 86. Or rather, the isolation of mortgages as tax deductible started in 1986. The effect has been in place for longer than the more recent trends you're describing.

I suppose that means I don't trust you?

You're overthinking it. Once again, I say, I am not talking about bubbles, I never said "more recent trend."

It's very, very, very, very simple. You could afford $500k without the interest deduction. Let's say the deduction helps you afford a monthly payment on a $550k mortgage. Now you can afford $550k. The same is true of all other potential buyers of the same property. Guess what, a $500k property just became a $550k property.

I didn't ask you to trust me, I didn't say anything about "more recent trends," I didn't cite it as a cause of the bubble, I didn't mention dinosaurs.

I merely said I don't see how the mortgage interest tax deduction actually helps anybody, because it causes prices to rise accordingly.

It is a problem if all of the would-be employers look at you and say, "Well, for what you bring to the table, I would be willing to pay $3/hour, but no more. If I have to pay more than that, I will simply make do with life having fewer employees."

You would prefer $7/hr instead of $3/hr, but you would prefer $3/hr instead of $0/hr.

My employer, who hired me for my degree, told me that he was willing to pay me for 40 hours. I later found out that it was a requirement that I work 60-80 hours a week - not written into my contract, but this particular employer has an aversion to providing contracts. This displaces up to an entire employee. Said employer also gets taxpayer funding for the employee I've displaced.

I would prefer that my employer met the minimum (non-US) legal requirements for salaried employees, but the literal threats of violence and permanent unemployment should I complain to the government, have kept me on up to $5/hour less than minimum wage - without meal breaks, public holidays, and weekends - all in breach of the law.

Unethical law-breaking employers abound in my country, and many of the wealthiest have political contacts that mean they can get away with a lot. Having a minimum wage gives them something to dance around but if that disappeared things would get a lot worse: I would most likely find myself working for something nearer to $5 an hour.

This (small) city alone has a median wage that sits about 25% under minimum wage on paper, but if you started really looking into it you'd find that the paid hours don't match the hours worked.

No matter what your theories about minimum wage and the market say, you'll find that pragmatic side of having a minimum wage has a major positive impact on employees by providing some restriction to what employers can get away with.

To put things in perspective a little, my younger brother works as an inventory clerk for a company that makes custom industrial fasteners in the Midwest, US, and the working conditions you describe are actually better than his working conditions -- though I wholeheartedly agree that both of you have unfortunate working conditions and more should be done to improve the situation.

If your situation is so extreme as to involve threats of violence, then it is non-negotiable that you need to remove yourself from it, even if it means facing grave and dire financial hardship. The psychological damage of an employer threatening you is worse than the damage of financial ruin or uncertainty.

Also, on one hand you are claiming that minimum wage laws are beneficial, but then you're also saying that the political favoritism of your country allows those laws to be basically ignored (as in your case) with no consequence.

To me, your comment is much more about ensuring legitimacy of government and enforcement of laws overall, and is very much unrelated to minimum wage at this point. Only after the enforcement of those laws is legitimized can you then begin to ask questions about what is the actual human effect of the law.

Finally, I'd like to point out that I already said this type of reasoning (the argument that minimum wage denies opportunity to those who would agree to work for less) is overstated. I understand the economic rationale in the ideal case, and I was explaining that case just to clarify for the OP that I commented on ... not positing it as a robust defense or anything.

Here's my other comment if interested: < https://news.ycombinator.com/item?id=11424743 >.

$0 an hour is life's true minimum wage.

He gave the "and" in his comment- artificially increasing the cost of labor can potentially prevent people whose contribution is worth less than that cost from ever entering the market.

It makes people who got a bad education unemployable and perpetuates their culture of dependency on welfare.

Conditional welfare perpetuates it also because people are afraid to take a job and then lose it.

I bitch about the mortgage interest deduction on a regular basis. A national policy that drives up housing prices is plain stupid (and it obviously isn't helping the ~1/2 of the country that doesn't have any wealth build wealth).

I'm ambivalent about a minimum wage. I think the arguments about the imbalance in negotiating power have some merits, but the GP answered your question about why it is a problem with their next sentence, it likely makes some productive tasks uneconomic.

I think it's important to try to characterize the actual economic impact of a minimum wage though, just pointing to the expected negative marginal effect isn't a very useful argument.

I usually really, really hate when people trot out the "go back to econ 101" argument, but in this case it applies. The reasons why a minimum wage might be inefficient (to what degree is very much debatable and dependent on the cirumstances) are explained thoroughly in any introductory microeconomics educational resource.

The ECON 101 argument regarding minimum wage and deadweight loss gets a lot less convincing when get to ECON 110 and start learning that the real world is a lot more complicated than two roughly-perpendicular curves. In real life, labor markets have very inelastic supply, which means that the deadweight loss is small and comes almost entirely from consumer (in this case, employer) side. In most cases this is a net gain for workers. Of course, all of this goes out the window if the minimum wage is non-binding (as it is in most of the US), in which case there is actually zero deadweight loss. Basic income is far superior to minimum wage for meany reasons, but "minimum wage doesn't work" isn't one of them.

Sometimes econ 101 is macro.

I feel like a lot of the people who think economics is all terrible nonsense start off with macroeconomics (and maybe never get to microeconomics because of it).

Actually, mortgage interest deduction was considered to be limited to only 1 home. It causes higher demand than without, which helps to drive house prices up, and at this point, out of reach of many in some cities.

Same with the availability of cheap loans and grants for colleges - it only really serves to increase the price of an education.

The majority of economists (as well as many other people) think that the mortgage interest deduction is bad policy.

Read the rest of the sentence

>it's no longer worth it to an employer to hire a low-output employee

Because it keeps desperately poor people unemployed and outside of productive society.