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We're not there yet, but our economy has been headed in that direction for the past 30 years. Michael Lind has termed it "Brazilianization", in reference to the

We're not there yet, but our economy has been headed in that direction for the past 30 years. Michael Lind has termed it "Brazilianization", in reference to the inequality and corruption one sees in much of Latin America due to the lack of a concern for social justice in the governing class. Capitalist economies with no welfare state (laissez faire) converge to an economy where people have to work to survive, which depresses wages, which can very easily (and reliably) bring about a vicious cycle. The end state of this is one where the lucky among the proletariat become servants (paid a pittance, but in a nice house and well-fed, enabling a very nice life in comparison to the alternative) while the unlucky and poorly-connected (who cannot even find employment as domestic servants) starve. This would be very damaging to minorities and Latinos, because the upper classes would demand (and be able to get, due to the collapsed economy) white, formerly middle-class, maids and nannies. Minimum wage and welfare programs aren't good just for their direct beneficiaries, but for a lot of people, because they raise the bar across the board. If minimum wage is $8/hour, then skilled workers will expect $15 and entry-level white-collar will expect $20. Increase that to $10, and skilled workers are now asking for $18, and white collar is asking for $25. Although this causes "inflation", it's the good kind because it represents a wealth transfer away from legacy and in favor of labor. On the other hand, if there is no minimum wage (which is similar to a basic income but contingent on working) then the reference point collapses and everyone gets poorer.

CWuestefeld 16y ago
Capitalist economies with no welfare state (laissez faire) converge to an economy where people have to work to survive How horrible. If only we could get rid of that pesky market, everyone could lie about eating lotus flowers. Wait -- who is going to grow the lotus flowers for us? it's the good kind because it represents a wealth transfer away from legacy and in favor of labor First, why is taking away the fruits of one's labors to give it to another, less productive person, good? Second, you're wrong. minimum wages cause unemployment in the very lowest ranks. Thus, minimum wage laws are a transfer of money from the very poorest people to the next rank above them.
- houseabsolute 16y ago
  To be fair there is some evidence that in certain cases raising the minimum wage can, because of anchoring, raise wages overall without having a harmful effect on employment. But in general you are right. What there is less evidence for is the entire thesis of the grandparent post.
- Dove 16y ago
  That is my understanding of minimum wage as well. If we raise the minimum wage to $20/hr, fast food will no longer be cheap. Some McDonalds will turn into nice restaurants, but as the minimum price of going out rises, more people will seek alternatives such as cooking at home (likely paying themselves a lot less than $20/hr, ironically). The net effect is to destroy an industry. You can pity someone working for $4/hr doing hard agricultural work. But if you apply minimum wage to the situation, you don't raise his wage, you destroy his job. He likely needs the money; that doesn't help! Hence, I have come to regard minimum wage as an act of oppression, and unmitigatedly evil. It should be abolished.
- Avshalom 16y ago
  >>How horrible. If only we could get rid of that pesky market, everyone could lie about eating lotus flowers. Wait -- who is going to grow the lotus flowers for us? Umm.. the exact same people that grew them under communism, mercantilism, feudalism and non laissez faire capitalism. "The market" is a way to allocate 'capital': money, labor, and general stuff. It's not the only possible way. Further, an attack on laissez faire capitalism is not the same thing as an calling for the abolition of capitalism as a whole.
  - CWuestefeld 16y ago
    the exact same people that grew them under My point was that somebody MUST work if we all want to eat. There is no solution to the problem that does not force people to work for their survival.
    - looprecur 16y ago
      Surprising fact: most people like working. Many people hate being told what to do and when to do it, but people have a fundamental desire to work. Here's how to do basic income. Starting with 2010 GDP as a base, 50% of all GDP after that goes into a basic income fund that's distributed to everyone. It starts out small and eventually grows to a point where no one has less than a 1/2*N share. For example, let's say GDP/capita is $40000 in 2010. If it rises 2% to $40800, then $400 goes into the basic income fund. If the result of the basic income is that people become lazy and don't work, the basic income falls or is phased out and we call the experiment a failure.
jswinghammer 16y ago
Laissez faire does not refer to the lack of welfare state but rather the lack of government interference in the economy in general. No state is currently even remotely like that. If you've been paying attention over the last 50 years the countries with the strongest presence in the economy typically do the worst. Exceptions are for countries with rich natural resources per capita like Norway or Sweden. The free market naturally raises the standard of living and wages because it allows people to act in their own self interest and try things that might go really well or fail. The notion that minimum wage laws helps anyone outside of unions is laughable. It effectively puts a floor on wages and makes marginal work illegal. This means the young and unskilled don't get jobs while those who belong to unions do. This hurts the poor at the expense of the middle class. Countries in Africa that are quite poor often have very high minimum wages because they made the mistake you're making. High wages don't lead to prosperity. Prosperity leads to higher wages.
- muhfuhkuh 16y ago
  But, China has a centrally planned command economy built around subsidies, wholesale-rate or zero-interest loans and development grants, and nationalization. Of course, there is not one country on earth that has an economic trajectory as high. They are experiencing the largest uplift from abject agrarian subsistence to working- and middle-class job creation in the history of civilization. Obviously they do not have the raw materials within their borders to stem that insatiable hunger for growth, thus their foray into resource-rich Africa (and, btw, directly contributing to the relatively quick rise of the African middle-class, as well). Heck the US during and after WWII was centrally planned, and it caused the largest economic growth the world has ever seen, until China's in the 1990s to now. Actually, one needn't look any further than the Marshall Plan to see that government intervention and fiscal stimulus can propel countries to prosperity worldwide. Without a larger central body taking a macroeconomic view and actually being the "invisible hand" that Adam Smith relegated to the self-regulating market, Europe probably would have never recovered from either of the world wars and the US possibly wouldn't have seen the growth it did post-WWII.
pissmaster 16y ago
Liberals like you are destroying our country.
- looprecur 16y ago
  I will gladly work to destroy the bigoted and heartless sort of society that conservatives and so-called "libertarians" seek.
scrod 16y ago
It's extremely refreshing to see your perspective on hacker news; I encourage you to continue posting. The free-market-fetishism around here is becoming nauseating.
- looprecur 16y ago
  The Hacker News libertarians (who are, despite our shared nausea, far smarter and more reasonable than the right-wing of any other community, I'll note) believe they will be future technology "barons". Pretty much everyone I've ever met with conservative leanings expects to be fabulously wealthy one day-- the smart ones and the idiots alike. (I once heard a community college drop out making $8/hour defend Republican economics, opening with the sentence "if I make a few million dollars...") At least 95 percent of them are going to achieve upper-middle-class status but not great wealth or connections. They'll have decent jobs and nice lives, but they won't be dick-swinging robber barons. They won't be on the short list for garden parties thrown by Sequoia partners. When this fate befalls them, they'll swing hard to the left.
  - Dove 16y ago
    Excuse me, but as one of the Hacker News Libertarians (tm), I find your analysis quite patronizing. I believe in free markets because I think they are best for everyone, not because they are a situation I expect to take advantage of. I don't know whether or not I will be wealthy some day. I haven't even decided if the attempt is how I want to spend my life. While a freer market would make it easier if I did try, that is not why I favor it. I favor it because it would make such an attempt easier for anyone who wanted to try. Because I believe it fundamentally just for individuals to own what they create, to profit from their labors however they can, to be able to spend their money freely on anything anyone else is willing to provide at whatever price they find mutually agreeable. I think it is the fairest way to distribute wealth--those who create it keep whatever they make--and the surest road to prosperity. Now, you can disagree with me about that opinion. I could well be wrong about whether markets work, or whether they're fair, or whether they make everybody prosperous. Hackers are famously conoisseurs of ideas, and I am no exception. I like new ones. What I resent is false analysis of my motivations, the prediction that I'll change my opinion if I cannot realize selfish, unlikely dreams. Please give your opponents the benefit of the doubt; we are all decent people trying to make the world a better place for everyone, we just have different ideas on how to do it. Have the courtesy to address my opinions, and not my person.

CWuestefeld 16y ago

Capitalist economies with no welfare state (laissez faire) converge to an economy where people have to work to survive How horrible. If only we could get rid of that pesky market, everyone could lie about eating lotus flowers. Wait -- who is going to grow the lotus flowers for us? it's the good kind because it represents a wealth transfer away from legacy and in favor of labor First, why is taking away the fruits of one's labors to give it to another, less productive person, good? Second, you're wrong. minimum wages cause unemployment in the very lowest ranks. Thus, minimum wage laws are a transfer of money from the very poorest people to the next rank above them.

houseabsolute 16y ago
To be fair there is some evidence that in certain cases raising the minimum wage can, because of anchoring, raise wages overall without having a harmful effect on employment. But in general you are right. What there is less evidence for is the entire thesis of the grandparent post.
Dove 16y ago
That is my understanding of minimum wage as well. If we raise the minimum wage to $20/hr, fast food will no longer be cheap. Some McDonalds will turn into nice restaurants, but as the minimum price of going out rises, more people will seek alternatives such as cooking at home (likely paying themselves a lot less than $20/hr, ironically). The net effect is to destroy an industry. You can pity someone working for $4/hr doing hard agricultural work. But if you apply minimum wage to the situation, you don't raise his wage, you destroy his job. He likely needs the money; that doesn't help! Hence, I have come to regard minimum wage as an act of oppression, and unmitigatedly evil. It should be abolished.
Avshalom 16y ago
>>How horrible. If only we could get rid of that pesky market, everyone could lie about eating lotus flowers. Wait -- who is going to grow the lotus flowers for us? Umm.. the exact same people that grew them under communism, mercantilism, feudalism and non laissez faire capitalism. "The market" is a way to allocate 'capital': money, labor, and general stuff. It's not the only possible way. Further, an attack on laissez faire capitalism is not the same thing as an calling for the abolition of capitalism as a whole.
- CWuestefeld 16y ago
  the exact same people that grew them under My point was that somebody MUST work if we all want to eat. There is no solution to the problem that does not force people to work for their survival.
  - looprecur 16y ago
    Surprising fact: most people like working. Many people hate being told what to do and when to do it, but people have a fundamental desire to work. Here's how to do basic income. Starting with 2010 GDP as a base, 50% of all GDP after that goes into a basic income fund that's distributed to everyone. It starts out small and eventually grows to a point where no one has less than a 1/2*N share. For example, let's say GDP/capita is $40000 in 2010. If it rises 2% to $40800, then $400 goes into the basic income fund. If the result of the basic income is that people become lazy and don't work, the basic income falls or is phased out and we call the experiment a failure.

jswinghammer 16y ago

Laissez faire does not refer to the lack of welfare state but rather the lack of government interference in the economy in general. No state is currently even remotely like that. If you've been paying attention over the last 50 years the countries with the strongest presence in the economy typically do the worst. Exceptions are for countries with rich natural resources per capita like Norway or Sweden. The free market naturally raises the standard of living and wages because it allows people to act in their own self interest and try things that might go really well or fail. The notion that minimum wage laws helps anyone outside of unions is laughable. It effectively puts a floor on wages and makes marginal work illegal. This means the young and unskilled don't get jobs while those who belong to unions do. This hurts the poor at the expense of the middle class. Countries in Africa that are quite poor often have very high minimum wages because they made the mistake you're making. High wages don't lead to prosperity. Prosperity leads to higher wages.

muhfuhkuh 16y ago
But, China has a centrally planned command economy built around subsidies, wholesale-rate or zero-interest loans and development grants, and nationalization. Of course, there is not one country on earth that has an economic trajectory as high. They are experiencing the largest uplift from abject agrarian subsistence to working- and middle-class job creation in the history of civilization. Obviously they do not have the raw materials within their borders to stem that insatiable hunger for growth, thus their foray into resource-rich Africa (and, btw, directly contributing to the relatively quick rise of the African middle-class, as well). Heck the US during and after WWII was centrally planned, and it caused the largest economic growth the world has ever seen, until China's in the 1990s to now. Actually, one needn't look any further than the Marshall Plan to see that government intervention and fiscal stimulus can propel countries to prosperity worldwide. Without a larger central body taking a macroeconomic view and actually being the "invisible hand" that Adam Smith relegated to the self-regulating market, Europe probably would have never recovered from either of the world wars and the US possibly wouldn't have seen the growth it did post-WWII.

pissmaster 16y ago

Liberals like you are destroying our country.

looprecur 16y ago
I will gladly work to destroy the bigoted and heartless sort of society that conservatives and so-called "libertarians" seek.

scrod 16y ago

It's extremely refreshing to see your perspective on hacker news; I encourage you to continue posting. The free-market-fetishism around here is becoming nauseating.

looprecur 16y ago
The Hacker News libertarians (who are, despite our shared nausea, far smarter and more reasonable than the right-wing of any other community, I'll note) believe they will be future technology "barons". Pretty much everyone I've ever met with conservative leanings expects to be fabulously wealthy one day-- the smart ones and the idiots alike. (I once heard a community college drop out making $8/hour defend Republican economics, opening with the sentence "if I make a few million dollars...") At least 95 percent of them are going to achieve upper-middle-class status but not great wealth or connections. They'll have decent jobs and nice lives, but they won't be dick-swinging robber barons. They won't be on the short list for garden parties thrown by Sequoia partners. When this fate befalls them, they'll swing hard to the left.
- Dove 16y ago
  Excuse me, but as one of the Hacker News Libertarians (tm), I find your analysis quite patronizing. I believe in free markets because I think they are best for everyone, not because they are a situation I expect to take advantage of. I don't know whether or not I will be wealthy some day. I haven't even decided if the attempt is how I want to spend my life. While a freer market would make it easier if I did try, that is not why I favor it. I favor it because it would make such an attempt easier for anyone who wanted to try. Because I believe it fundamentally just for individuals to own what they create, to profit from their labors however they can, to be able to spend their money freely on anything anyone else is willing to provide at whatever price they find mutually agreeable. I think it is the fairest way to distribute wealth--those who create it keep whatever they make--and the surest road to prosperity. Now, you can disagree with me about that opinion. I could well be wrong about whether markets work, or whether they're fair, or whether they make everybody prosperous. Hackers are famously conoisseurs of ideas, and I am no exception. I like new ones. What I resent is false analysis of my motivations, the prediction that I'll change my opinion if I cannot realize selfish, unlikely dreams. Please give your opponents the benefit of the doubt; we are all decent people trying to make the world a better place for everyone, we just have different ideas on how to do it. Have the courtesy to address my opinions, and not my person.