Quote Originally Posted by CoccoBill View Post
I don't equate killing and minimum wages, just bringing up two different examples. Theory may show that min wages are a bad thing, empirical evidence shows otherwise.
Empirical evidence doesn't show otherwise. If it did, the theory would change.

The results of studies are mixed. But the problem with all of them is they're poorly designed. I can't say to what degree of difficulty it would be to study what minimum wage does to the economy, but it's at least a few magnitudes more than what any of the studies to date have done. Most economists believe that most of the least indirect effects of minimum wage hikes are of less hiring of marginal workers. Zero studies on minimum wage have come close to being able to analyze this. What we do have to work with is extremely sound theory related to supply and demand and an overarching view of the natural rate of employment. The theory is that the higher above market rate minimum wage is the higher the natural rate of unemployment will be. When we look at various economies, we see this. But even then, nobody has been able to isolate that it's the minimum wage specifically that does this, but more broadly welfare, regulations, and taxes and how they influence incentives.

Standard of living is better in countries with higher minimum wages. Now, is this an unrelated consequence or are there some externalities the theories have left out, I don't know. Either way, I don't think it's a slam dunk for free markets as you claim, mainly because of the main point of my comment, which I feel you both evaded. Not having minimum wages has been tried, everywhere, in every society. In pretty much each of them it didn't work, and minimum wages were enforced.
Every known instance of rapid economic growth and social mobility has not involved minimum wages. They have all included massive deregulation and zero welfare. It hasn't happened just once, but many times, and there are no known exceptions. Welfare-statism arises in societies that have already become economic powerhouses and their growth rates greatly reduce after the welfare state is enacted.

If you have time, I'd watch these



Every modern country once did what half the world is today doing. The example of China should be enough to discard the concept of welfare altogether, since it has outperformed what anybody thought possible just a couple decades ago, and it has done so by way of its government deregulating the market. The government still has a long way to go and the journey will still be quite tumultuous, but China has no welfare, a fully open street vendor market, and pretty much zero zoning regulations. I don't think you could find an economist on the planet who would say those aren't easily the most significant factors in the China miracle. It's not the only example. Some SE Asian countries have been taking business from China because wages have grown so rapidly there that the cheaper labor in SE Asia has a hand in the game. If Cambodia had a minimum wage where it could not do this, its people would not be rising out of poverty like they are today. Hong Kong is a good contrast to China since it is culturally the same but more free.

BTW EU is in trouble mainly because countries with weak economies were let in. For 15-20 years prior to that it was doing pretty good. But apart from that, in theory, what's bad about opening borders and allowing free moving of resources between countries? It's not unlike the US but with more autonomy for the member states.
I agree with open borders and free trade. My comment on the EU was specifically about the common currency. The EUR is basically the Deutsche Mark and the ECB treats it as such. Its monetary policy revolves around what's good for Germany, not what's good for the EU. Most economists saw this problem coming a mile away, including some of the most "liberal" ones.

You are also right that weak economies being let in are a problem too. Greece lied and the Mediterranean countries are not culturally industrious yet maintain heavy welfare states

Here's a pretty great post and discussion I read yesterday tangentially related to the subject. Some points conflicting, but most very insightful.

http://www.themoneyillusion.com/?p=29868