Re:What the Fourth Industrial Revolution Looks Like
by scrumper on Wednesday April 15, 2015 @10:34AM
(#9381211)
My conclusion is simply that the going rate (market clearing price) for TPS writers is 50 groats a year, meaning that our TPS clerk can expect 50GPY for his labor. Since the employee gets 10GPY from the state, the company now only needs to pay him 40GPY to ensure he's equally well compensated. The money for BI has to come from somewhere, so I don't think it's a plausible conclusion that salaries would stay the same while everyone gets a chunk of extra money from the state. Further support comes from the rationality of employers who would prefer to ensure employees were equally paid in total in both a no-BI and BI scenario.
I think your point is that declining marginal utility of income in a BI scenario means that companies have to pay proportionately more to make up for the decline in utility caused by everyone having more income. I don't have what I assume is your background in economics to argue that point with theory, but it fails a basic plausibility test for me: your claim is that it's more likely that employers will pay more in direct salaries to workers who are receiving money from the state than it is that they will pay less. It doesn't hold up in today's world either: compare salaries in Scandinavian countries, where the state provides huge benefits to citizens against the USA where there is essentially no support from government.
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> BI scenario: State pays everyone 10 groats a year. Company now pays 40 groats to its TPS writers
How does that conclusion work?
We've already established that in the absence of the BI, the intersection of the supply and demand curves for companies to hire people to write TPS reports is at 50 groats a year. Howe does giving everyone 10 groats per year of income independent of groat writing decrease the market clearing cost of groat writing? Considering the supply (labor) supply alone, it shouldn't decrease the marginal utility cost of groat writing, but given that, like most things, income has a declining marginal utility, the baseline income should increase the financial equivalent to that cost, and thus shift the demand curve in a way that would increase the market clearing cost. Where's the countervailing supply side effect that more than makes up for this? I suppose its possible depending on tax rates and how they are distributed that the marginal value to the company of TPS reports could be decreased, resulting in a shift in the demand curve that has the effect of reducing the market clearing price, but that's not obviously correct.
In any case, at the same time, work that has a marginal value to the employer less than the pre-BI minimum wage becomes a viable form of employment with BI if the minimum wage is removed. (The BI provides the minimum condition guarantee, removing the need for a minimum wage to provide an assurance that at least those employed have a minimum condition guarantee.)