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View Diary: This time, Paul Krugman is wrong (136 comments)

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  •  Macroeconomics indeed have human consequences (5+ / 0-)

    Raising the minimum wage has very positive human consequences.

    Are they outweighed by human costs?

    That is Ken's point.

    •  Can we have a little compassion (5+ / 0-)

      for someone who very likely will be affected by the dislocations caused by a macroeconomic change that will, overall, be beneficial to the economy?

      The original poster makes a very good, and very well-nuanced, point -- that while an increase in the minimum wage will benefit most minimum wage workers throughout the economy, it will not benefit his.  His business, which he clearly knows better than we do, is already operating at the margin of profitability, and this mandated increase in labor costs will simply send him over the edge.

      That's a tragedy, for him, for his co-owners, and for the people who work for him.

      I don't see him making the argument that the minimum wage should not be increased, rather that if and when it is increased it will have a negative impact on his business.

      When the union's inspiration /Through the workers' blood shall run /There can be no power greater /Anywhere beneath the sun /Solidarity Forever!

      by litho on Mon Feb 18, 2013 at 09:02:56 AM PST

      [ Parent ]

      •  I'm pretty sure it will benefit his employees (11+ / 0-)

        too, unless you think an increase in pay is not a benefit.

        You say "he clearly knows better than we do."

        On the minimum wage policy, he does not.

        IF an increase n labor costs of 25,000 on a 1 million dollars in revenue ends his company, then it was not the minimum wage that put it down, it was the business itself.

        Let's repeat that, - a 2.5% increase in labor costs that will not be unique to his business will, according to him, put him out of business.

        I think that it is hard to take at face value the idea that if his business ends, it is because of the minimum wage increase.

        •  Armando, I said he knows his business (1+ / 0-)
          Recommended by:
          Shocko from Seattle

          better than we do, and there is no question that is true.  His employees may benefit financially from an increase in the minimum wage, IF they are able to find other jobs after his business goes under.  It is not at all clear however that their new employers will provide a working environment as humane and as caring as the one he appears to provide for his workers.

          Look, the fact is that any macroeconomic change, no matter how beneficial to the economy overall, can cause local dislocations.  What we get in this diary is a report from the front lines, of a particular business that will be negatively impacted by the change.  His is the human face of economic dislocation.

          You can deny his claim that he will lose his business if the minimum wage goes up, but you won't be the one looking for a job when it happens.

          When the union's inspiration /Through the workers' blood shall run /There can be no power greater /Anywhere beneath the sun /Solidarity Forever!

          by litho on Mon Feb 18, 2013 at 09:20:28 AM PST

          [ Parent ]

          •  I'm not following your point (7+ / 0-)

            I certainly did not ask him to describe his business in order to engage in a discussion regarding the minimum wage.

            He chose to do so.

            Given the information he has given us, his claim that the proposed minimum wage increase will destroy his business is very suspect imo.

            If he does not want opinions regarding that topic, he should not write a diary about it.

            As I wrote here and in other places, I do not like it when folks bring up the personal to make an argument at daily kos, I really do not.

            I especially do not like it when it is done, as has been done to me, as an attempt to discredit my arguments. Classic ad hominem BTW.

            But the diarist is the one who decided to use his business as his argument.

            At that point it seems to me, we have to discuss his business if we are going to have a discussion at all..

            •  You and I are reading this diary (2+ / 0-)
              Recommended by:
              Manny, Shocko from Seattle

              in entirely different ways.  I see it as intensely personal, as his own unique reaction to how a broad national change is going to affect him directly.  I don't really see him suggesting that the minimum wage not go up nationally, but rather that such an increase will have a devastating effect on his own business.

              I also see him writing in a very articulate, understanding, and compassionate way about his forthcoming loss.  He knows it is very likely to happen, and he knows it will hurt.  It will hurt him.

              I don't see why that is so hard to understand.  We take action as a nation to promote the greater good, but we need to understand that greater good will always come at a cost to particular individuals.  In this case, that individual happens to be one of us.

              If he were suffering from cancer or some other life-threatening disease, the outpouring of support from this community would be overwhelming.  Instead, he's suffering from a business climate which still favors big box stores and is changing too slowly to be of benefit to his particular enterprise.

              That he is as articulate and as sensitive about his coming demise deserves respect and acknowledgment from our community.  It is disappointing to see this devolve into an attack on him for deviating from orthodoxy.

              When the union's inspiration /Through the workers' blood shall run /There can be no power greater /Anywhere beneath the sun /Solidarity Forever!

              by litho on Mon Feb 18, 2013 at 10:01:23 AM PST

              [ Parent ]

              •  He is arguing against the minimum wage (2+ / 0-)
                Recommended by:
                Mr Robert, OldSoldier99

                I think the title of his diary makes this clear.

                He argues against it using his own business as his evidence of why it is a bad idea.

                I actually respect the diarist for not making it about his personal hardship.

                I think in fact you are damning him with your praise here.

                •  And I think you focus on the title of the diary (1+ / 0-)
                  Recommended by:
                  Manny

                  to the detriment of its content.

                  His argument is a great deal more nuanced and sophisticated than the title would indicate.  I would expect you, in particular, to be capable of reading that nuance and sophistication.

                  It is disappointing that you cannot.

                  When the union's inspiration /Through the workers' blood shall run /There can be no power greater /Anywhere beneath the sun /Solidarity Forever!

                  by litho on Mon Feb 18, 2013 at 10:06:26 AM PST

                  [ Parent ]

                  •  I am addressing the argument presented (1+ / 0-)
                    Recommended by:
                    Mr Robert

                    You seem to be addressing a diary you wish had been written, ratther than the one that was written.

                    To wit "Here's who wins if minimum wage goes up: The big box stores. Because they CAN raise their prices. Because their volume WILL absorb higher wages. Because they can FORCE their suppliers to meet their price points. Because their remaining competition -- our little business, for example -- will quit nipping at their heels."

                    That's an argument against the minimum wage increase.

                    •  not quite (1+ / 0-)
                      Recommended by:
                      litho

                      I am trying to make an argument (and clearly failing, the way Armando reads me) that applying it to all markets in this country has negative consequences in my market.

                      That the definition of a living wage in New York is different from a living wage in...Rapid City, to pick a name at random.

                      A one-bedroom college apartment here rents for $300, if that gives you any context.

                      We live in a big country, in a global economy. But the dynamics are not the same. Too many decisions are made by people who have neither the interest nor the patience to listen to the issues of my small corner of the world.

                      So be it.

                      "Good Lord, how can the rich bear to die?" -- Nikos Kazantzakis

                      by Shocko from Seattle on Mon Feb 18, 2013 at 02:01:13 PM PST

                      [ Parent ]

                      •  And none of that means (0+ / 0-)

                        that Krugman is wrong.

                        You could argue that he overlooked a point, even a significant one.

                        But that's not the title, nor the thrust, of  your diary.

                        The bulk of your post, btw, is anecdotal evidence with an n of exactly one -- you did take elementary statistics, right? -- which lends emotional weight but no logical or evidentiary support to your argument.  And, you see, Krugman in his column did provide evidence  -- the real kind -- supporting the opposite conclusion.

                        Which makes your diary.... wrong.  Sorry.

                        "A standing military force, with an overgrown Executive will not long be safe companions to liberty. The means of defence agst. foreign danger, have been always the instruments of tyranny at home." - James Madison

                        by gharlane on Tue Feb 19, 2013 at 01:54:32 AM PST

                        [ Parent ]

              •  What part of (0+ / 0-)
                That's why Paul Krugman is wrong.
                do you not understand?

                Seriously.  

                The story is articulate, and heartfelt, and pulls at the heart strings.

                Unfortunately, Shocko titles the diary

                This time, Paul Krugman is wrong
                Then Shocko writes:
                In the purity of statistical analysis and national economic theory, he may well be right. He is, after all, an internationally respected economist.

                I'm just a small business owner, a serial entrepreneur.

                Note the language carefully: The "purity" of statistical analysis by an "internationally respected economist", but I'm "just small business owner".

                Translation: I'm just a regular guy [I'm going to assume Shocko is male, and apologize if wrong], a down-home small business owner, and those ivory tower intellectuals with their statistics have no clue how their intellectual musings affect us ordinary folk.

                Straight outta the Frank Luntz playbook.

                He then offers his story.  Others here have raised serious questions about the conclusions he draws, and about whether other factors might be playing into his business's struggle.

                And ends with:

                The numbers don't work.

                Not for us.

                 [...]

                That's why Paul Krugman is wrong.

                Those factual assertions and conclusions are subject to critique and examination, as they have indeed been here.  That's called "debate."  It's not the "attack" you claim it is.  However "intensely personal", "articulate", "understanding", and "compassionate" the diary is, it does not exempt the purported facts presented, and the conclusions drawn from those purported facts, from critical examination. It also doesn't exempt Shocko's logic from being examined -- and when Krugman does not say the things that Shocko claims he's saying, and when Shocko's presentation doesn't really contradict what Krugman said, that's perfectly fair game.  And it has nothing to do with whether Shocko "deviated from orthodoxy" either.  

                To quote you,

                I don't see why that is so hard to understand.

                "A standing military force, with an overgrown Executive will not long be safe companions to liberty. The means of defence agst. foreign danger, have been always the instruments of tyranny at home." - James Madison

                by gharlane on Tue Feb 19, 2013 at 11:10:44 PM PST

                [ Parent ]

          •  our employees will not benefit (1+ / 0-)
            Recommended by:
            litho

            because the strong possibility is that we will be out of business

            perhaps they will benefit from new employment opportunities, but I am not certain of that...in this place, in these times

            your mileage, as someone else used to say, will vary.

            "Good Lord, how can the rich bear to die?" -- Nikos Kazantzakis

            by Shocko from Seattle on Mon Feb 18, 2013 at 03:31:29 PM PST

            [ Parent ]

        •  I shouldn't have gotten into numbers (0+ / 0-)

          because that's not the issue I wanted to raise. I have been oblique about the nature of my particular business in large part because I wanted to further a discussion of the tensions within our economy.

          Let me try to put numbers to this, anyhow. Increasing minimum wage to $9 an hour means I need to bring in almost ten percent more revenue every day, all other costs being equal.

          Increasing minimum wage -- in my marketplace, in the segment of the market we serve -- does not, in the main, place more money in the hands of the majority of our clients. In some, yes. Do I want the rest of the county to be better paid? Yes.

          Yes, but.

          If the consequence of that is that WalMart and Amazon and the rest of the boxes increase their stranglehold on the goods sold in this country...I think that's a problem.

          And I think that's a problem on which labor and the management of small business can and should be able to agree.

          "Good Lord, how can the rich bear to die?" -- Nikos Kazantzakis

          by Shocko from Seattle on Mon Feb 18, 2013 at 01:58:22 PM PST

          [ Parent ]

          •  Your numbers don't really work out (1+ / 0-)
            Recommended by:
            puzzled

            If you're grossing $1 million a year, that would mean a $100K increase in revenue. That would cover increasing the minimum wage for 25 full time employees from $7.25 to $9.00 an hour.  That would mean your total payroll would be at least $450K a year. You've said you're in competition with Walmart and Amazon, so you must be a retailer. I've worked with scores, maybe hundreds of small retailers. None of them ever had labor costs that were anywhere near approaching that level. If these numbers are right, then your problem isn't the minimum wage. It's the model itself that is broken.

      •  No, he did make the argument that minimum (3+ / 0-)
        Recommended by:
        melfunction, Mr Robert, OldSoldier99

        wage should not be increased.  His title is that Krugman is wrong.

        We can sympathize with him - and I do - without agreeing with him and without ignoring the fallacies of his argument.

        "If you trust you are not critical; if you are critical you do not trust" by our own Dauphin

        by gustynpip on Mon Feb 18, 2013 at 09:23:17 AM PST

        [ Parent ]

        •  You've got to work on nuance a little (1+ / 0-)
          Recommended by:
          Shocko from Seattle

          because this is what he says in the first lines of the diary:

          In the purity of statistical analysis and national economic theory, [Krugman] may well be right. He is, after all, an internationally respected economist.
          So, in the macroeconomic, he acknowledges that Krugman's numbers almost certainly add up.  In the particular, however, he goes on to say:
          I'm just a small business owner, a serial entrepreneur. And there is no doubt in my mind that another increase in minimum wage will close our doors.
          You, in particular, have been quite harsh on the diarist throughout the comments section.  It seems to me you don't actually understand the argument he made.

          When the union's inspiration /Through the workers' blood shall run /There can be no power greater /Anywhere beneath the sun /Solidarity Forever!

          by litho on Mon Feb 18, 2013 at 09:28:50 AM PST

          [ Parent ]

          •  I've been a bit harsh because I've been where (4+ / 0-)

            he is, recognize the mistakes he's making because I made them, and know what it takes to pull out of it.  And using low wages to sustain a business is not what it takes.  If he continues in the mindset he's in, his business is indeed doomed.  It takes honest speaking to move people out of their mindset.

            While he did indeed ackowledge that Krugman might be right in the macroeconomic sense, his title quite clearly stated that Krugman is wrong.  And he definitely seems to be arguing that proof that Krugman is wrong is provided by his own business.  

            He wrote the diary knowing he would be criticized, so I've assumed he's capable of handling that criticism.  It's not easy being a small business owner and anyone who's been doing it for as long as he has is, I suspect, quite capable of discussing an issue on an honest level rather than a superficial rah rah level.  I'm generally an overly compassionate person, until I see someone treating someone else unfairly.  I will admit that I saw much of what he wrote as a justification for his continued unfair treatment of his employees.  While I feel some level of compassion for him, I see it as a situation he has some control over, while his employees do not.  I also see it as one in which he's asking us for sympathy for having to treat his employees unfairly - which is never the actual situation.  So my compassion has quite definitely been tilted towards the employees more than him.

            "If you trust you are not critical; if you are critical you do not trust" by our own Dauphin

            by gustynpip on Mon Feb 18, 2013 at 09:40:30 AM PST

            [ Parent ]

            •  So I read your comment (0+ / 0-)

              as acknowledging you failed to appreciate the nuance in the original diary, but even as you come to understand your own misreading you continue to justify your mistreatment of the author.

              That's sad.

              When the union's inspiration /Through the workers' blood shall run /There can be no power greater /Anywhere beneath the sun /Solidarity Forever!

              by litho on Mon Feb 18, 2013 at 10:03:27 AM PST

              [ Parent ]

              •  I have no idea at all what you're reading, (2+ / 0-)
                Recommended by:
                Catte Nappe, OldSoldier99

                because it doesn't seem to be what I'm writing.  No, I didn't acknowledge that I failed to appreciate any nuance - I pointed out that what I'd originally said was accurate, regardless of the snippet you quoted.  And I'm afraid your definite of mistreatment is just simply bizarre.  I appreciate that you are feeling bad for the diarist and that's fine.  But it still doesn't make any sense at all to begin inflating what's being said here as "mistreatment".  

                "If you trust you are not critical; if you are critical you do not trust" by our own Dauphin

                by gustynpip on Mon Feb 18, 2013 at 01:04:09 PM PST

                [ Parent ]

                •  I asked for a discussion (0+ / 0-)

                  no offense taken.

                  But I do think we limit our possibilities by assuming that I'm either (a) an idiot who doesn't know how to run a business or (b) I'm a predatory owner who's bent on ripping off his employees.

                  What if I'm neither of those things?

                  What then?

                  Small business is getting killed in this country. They are our natural allies, here on the left. This may not be the issue on which we will agree, but, please...let's have some flexibility.

                  "Good Lord, how can the rich bear to die?" -- Nikos Kazantzakis

                  by Shocko from Seattle on Mon Feb 18, 2013 at 02:04:42 PM PST

                  [ Parent ]

                  •  Please, if you want a discussion, don't try (1+ / 0-)
                    Recommended by:
                    OldSoldier99

                    putting words in my mouth that I didn't put there.

                    Lots of people who are far from idiots are not the best business people in the world.  And lots of people who are good business people have made some poor decisions or had unexpected events occur which has caused problems.  

                    While I do think what you've said has indicated a tendency on your part to justify underpaying your employees, that's quite a far cry from your (b) choice.

                    I mean, if you want to portray yourself as a picked upon victim, then your attempts at recreating what's been said makes sense.  But if you want to have a discussion, let's at least try to be honest about what's been said.

                    "If you trust you are not critical; if you are critical you do not trust" by our own Dauphin

                    by gustynpip on Mon Feb 18, 2013 at 02:18:52 PM PST

                    [ Parent ]

                    •  so, paying minimum wage (0+ / 0-)

                      is inherently a tendency to underpay employees?

                      it's just not that simple

                      "Good Lord, how can the rich bear to die?" -- Nikos Kazantzakis

                      by Shocko from Seattle on Mon Feb 18, 2013 at 03:37:53 PM PST

                      [ Parent ]

                      •  In one word, yes. When you're getting paid (0+ / 0-)

                        a wage that, if working full time, would not pay for a single person's rent, food, gas, insurance, and other most basic living expenses, you're underpaid.  A person's time, without any work involved, is worth more than the current minimum wage.  So imo, if someone is paying minimum wage, they are by definition underpaying.  Which is why I strongly believe the minimum wage needs to be increased so that those who pay only the bare minimum the law requires won't be permitted to underpay their employees.

                        Think about it honestly for a minute.  Would you be willing to work for the current minimum wage, regardless of how much you enjoyed your job?

                        "If you trust you are not critical; if you are critical you do not trust" by our own Dauphin

                        by gustynpip on Mon Feb 18, 2013 at 03:49:55 PM PST

                        [ Parent ]

              •  When you title your diary (0+ / 0-)

                "Krugman is wrong" and then your defenders are forced to point to a sentence in the diary itself that basically says "Well, I didn't really mean what I said in the title" (and the actual language of which suggests very thinly-veiled snark against ivory-tower pointy-headed intellectuals), then you deserve to be raked over the coals for the logical and evidentiary flaws in your argument.  That's all that's happening here.  It's not mistreatment, and it's not sad.  It's what you risk when you put up a diary with evidentiary and logical flaws with a misleading title.

                "A standing military force, with an overgrown Executive will not long be safe companions to liberty. The means of defence agst. foreign danger, have been always the instruments of tyranny at home." - James Madison

                by gharlane on Tue Feb 19, 2013 at 02:02:21 AM PST

                [ Parent ]

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