Re:What harm do minimum wages do?
by mattmcknight on Wednesday August 19, 2020 @05:24PM
(#24216741)
This is the one of the two biggest flaws in most macroeconomics. They act as if the national economy is a closed system. Of course, if wages rise too high, (in addition to automation) the products the wages were producing can be produced in other economies and delivered as finished goods. Immigration is of course another violation of the closed system model, where labor flows to places with higher wages. (The other biggest flaw in macro is treating the economy as an undifferentiated GDP factory)
I hesitate to call this a fantasy thought experiment (like all the atoms in the right place for a brick wall to allow a baseball to pass through). Not to mention the illusion of employment statistics (how it's measured), in many countries.
This stable equilibrium is impractical. The world is not a singular country. Employment within a single country is not representative of labor supply/demand, in this context.