Friday, 10 January 2014

The Problem of Minimum Wages

Paul Kirby, the former head of No 10s Policy Unit has written on his idea for raising the minimum wage. Here's his justification:-

Before I nail my colours to the mast on the right level for the Minimum Wage, here are some of the reasons why I believe it can be radically increased without backfiring:

1) Low wage earners are, overwhelmingly, providing services for domestic consumers within the UK economy. They work in shops, cafes and hotels. They cut our hair, they clean our houses, they look after our kids and they care for our elderly.  They are not  in manufacturing, competing on the price of their labour with other countries. What they do has to be done in this country. Nor is it tradable with other countries. If the Minimum Wage increases, it impacts equally on all of an employer’s competitors, so there is no disadvantage. 

But what everyone is always doing is competing with others in all but the most essential services. Give me £20 and force me to spend it on a luxury, I'd opt for either a takeaway curry feast, a blu-ray or some kindle books by PJ O'Rourke. Right now, I'd probably go for the first or 2nd choice. But if you raise minimum wage, it's going to push the price of the former up quite a lot, and have little effect on the latter two. Most of the cost of those is going abroad. Raising the minimum wage means that the foreign, automated option looks better.

Even regarding the industries he mentions (and actually, manufacturing does have some min wage jobs, how much does he think cleaners in factories earn?) you can consider the following:-

  • Shops - more use of internet shopping
  • Cafes - buy a Dolce Gusto machine when you want a nice coffee, use a Costa machine at a garage.
  • Hotels - more use of automation such as electronic checking in systems. Cleaners replaced with Roombas.
  • Cutting hair - buy a pair of clippers, opt for shorter haircuts to do them less often, have mums doing kids hair, choose the "dry cut" rather than "cut and blow dry" option.

2) Raising the lowest wages does not mean that employers simply have to, or will, just cut jobs or working hours to keep the wage bill constant. The evidence is clear that employers find a variety of solutions.  Firstly, they restrain pay growth for their better paid staff. Secondly, they increase prices to consumers. Thirdly, they improve productivity and get more out of each hour that they are paying for. And then they squeeze their profits. Through productivity gains, they either earn more revenue or cut the amount of labour they need. 

But why do we need a minimum wage for that? If an employer can see it's worth investing in someone to improve productivity, why won't they just do that? The rest is basically garbage with the only correct thing being that it raises prices to consumers (so, yay, inflation!)

3) Increasing low pay has a limited impact on the overall costs of most businesses. In some sectors, very few earn less than the living wage, e.g only 6% in manufacturing. Even in hotels and catering, which is one of the biggests sector for the Minimum Wage, only 17% of jobs are below the living wage and raising the Minimum Wage to the Living Wage would only add 6% to the wage bill. This is the highest impact for any sector. More importantly, labour is only a proportion of all costs, e.g. 25-35% for restaurants. 

So what? It still raises costs. Still means you're going to send more manufacturing jobs abroad. Maybe people decide they'd rather have a dirty weekend in Paris instead of Brighton because it's tipped over into Paris being a better value proposition.

4) The current Minimum Wage is a very low baseline. Since it was created 15 years ago, the Minimum Wage has largely eliminated the exploitative wage rates ( in some cases only £1 per hour) which used to exist. A good, but limited job. But it is now just £6.31 and its value in the last few years has declined. It only covers 4% of employees, just 1m people. This rises to 6% in the North East and falls to 2.5% in London. 

It only covers a small percentage of employees because it's going to only be for jobs around that rate. If someone's labour is only worth £1/hour, their job no longer exists, replaced by either a robot or the work going to China. Or just not happening. Someone isn't going to pay someone £6/hour if the return on labour is £3/hour.

We don't know how many jobs at the £4-5/hr aren't being created.

5) We do not need to continue with a single National Minimum Wage. This has held down the wage to the lowest common denominator. Concerns about the impact in, say, Sheffield have left the Minimum Wage meaningless in London. We can and should have more than one geographically based level. 

No, we just don't need one. Give everyone a citizen's income and let the market sort it out. If someone can afford to live in London because they've got a massive inheritance from their aunt but like working in a Notting Hill bookshop for £5/hour because they can pick up intellectual chicks what's it to you? Why shold they move to Sheffield?

6) The Minimum Wage is an hourly rate, rather than a weekly wage. So it impacts on how many hours an employer wants to buy, rather than forcing a binary decision between hiring someone or not. The same is true for workers deciding how much to work.  Just over a quarter of employees are part-time ( nearly 7m people), but over 5m of these are women. More than 4 out of 10 women work part-time. Hourly rates for part-time workers are much lower than for full-time workers, e.g. the median hourly rate for full-time women is £12.00, but only £8.12 for part-time. So the Minimum Wage hourly rate could be a big deal for part-time workers.

It's the same problem whether you have 2 part-timers doing half a day or 1 full-timers.

7) There are a number of ways that the Government can compensate employers, if it wants to. Increasing wages helps the Treasury. It reduces the cost of in-work benefits and increases taxes. Moving to the Living Wage would make government nearly £4bn better off. For every £1 increase in low wages, the Government will be 50p better off. (Some say less because they have to pay public sector staff more. But I wouldn’t give into this. The public sector has many of the flexibilities of the private sector to soak it up – e.g. restrain pay growth for the better-off or improve productivity). Government could give some or all of this 50p back to employers. This could be across the board (e.g. via a cut in employer NI contribution). Or it could be highly  targeted. There are only two sectors which are seriously challenged by an increased Minimum Wage – retail/wholesale and hotels/catering. A key cost for both sectors is business rates. This could be reduced by a discounted rate specifically for their type of premises. 

But that assumes you've going to keep all the jobs, rather than losing some due to automation and global competition.

7) This is the right time to do it. Growth and optimism are back in the economy. Jobs are growing. Wages are rising. Those with the broadest shoulders were asked to take the strain of deficit reduction (e.g. reducing child benefit to higher rate taxpayers).  It is equally right that as the country gets richer again the poorest of the hard working families gets a bigger share of the new wealth. 

No, there's never any right time for a minimum wage. Not now, not ever, because minimum wages at the most fundamental level are a bad idea. If John is offering Bill £5/hr for his labour and John will pay no more, and no-one else will pay more than John, that is the value of Bill's labour. Saying "well, John should pay more" just isn't going to happen. John won't. You can appeal to his sense of morality or Christian goodness and if he still won't pay more, he won't. So, if you're then going say that John should pay Bill £10/hr, well, maybe John won't bother doing that thing. Or maybe he'll do it himself. Or he'll hire a company in China to do it. It's simply a problem that can't be solved.

Which doesn't mean we think that people shouldn't be looked after or that people shouldn't be living on more than £5/hour, but that's imposing society's moral views on an individual, which is a form of tragedy of the commons. If society wants Bill to live on more than £5/hour, society can pay Bill extra (and use CI rather than incentive-destroying means-tested benefits).

And it troubles me that the ex-policy unit bloke of No 10 can even think like this, and makes me wonder just what sort of cretinous thinking generally goes on in cabinet.

50 comments:

Mark Wadsworth said...

Re his point 7, yes, Employer's NIC depresses wages, so they could increase the NIC threshold*, the NIC cut feeds through into higher wages at bottom end.

Similarly, they could improve net incomes by reducing means-testing (i.e. shift towards CI).

There are so many easy things they could do, why does it always have to be the hard option, the one which won't work anyway?

* I'm not sure if this would be administratively workable, but they could change the threshold to be an hourly figure rather than a weekly one?

Lola said...

Sort of OT.
Apropos MW and tax, I was reading up on pensions stuff recently - including QROPS and similar and it is self evident that the whole thing - the complicated tax rules and pensions rules - are a massive waste of time money and brainpower, and the people in the private businesses paid to interpret the rules get paid shed loads. IMHO (and I am in the business) this is just total wastage. Just cutting out all this crap and stopping all the subsidies and the like would likely reduce the overall tax burden hugely, which would be good for take home wages.

Robin Smith said...

When is anyone going to ask:

"What is the cause of low wages, compared to the cost of living, despite increasing productivity?"

You know, go to the root of the problem, and stop fiddling with question begging. (what you want to be the question)

Its very simple. True, it goes too deep for almost everyone because, in the end, we are all rent seeking, so cave in just at the moment of truth.

Lola said...

There is also this argument

http://mises.org/daily/6630/The-Minimum-Wage-Forces-LowSkill-Workers-to-Compete-with-HigherSkill-Workers

Bayard said...

"and makes me wonder just what sort of cretinous thinking generally goes on in cabinet."

And not just in cabinet. The usually admirable Merryn Somerset-Webb came out with exactly this sort of guff in her editorial in this week's Moneyweek. The driving force behind this is point 7, that the government will save money on in-work benefits if the MW is put up. My counterblaste to that is why not abolish in-work benefits? The country got on pretty well without them until Goron introduced them and saddled the country with a huge addition to the welfare bill. If you did that, then you could afford to raise the tax and NI thresholds to a point where someone working full time on the MW won't be paying any tax, and the country would still be in pocket. I calculate that someone working 40 hrs a week on the minimum wage would be £1,512 a year better off if they paid no tax or NI, which is an increase in take home pay of 13% or equivalent to an increase in the MW to £7.20/hr or an increase of 17.5% at current tax rates and all without costing employers a single penny extra. (What it will do, however, is turn lots of part-time jobs into fewer full-time jobs, which will Look Bad on the unemployment figures.)

Lola, any administration that is happy to pay benefits with one hand and then take them back as tax with the other isn't going to be worried about the costs of complexity.

Kj said...

Excellent summary.

Kj said...
This comment has been removed by the author.
Lola said...

B. Last para. True. True.

Leg-iron said...

The miniumum wage is an hourly rate. Increase the minimum wage and employers will simply decrease the number of hours they'll pay for.

That's not a big problem for the likes of me: working less hours would mean faster book-writing and model-building and selling, and more time to look for real science work.

For some of the other cleaners, who have nothing to fall back on, it would be a disaster.

One of them gets (I don't pretend to understand this) something called 'working tax credits' which makes a big difference, but he has to work at least 24 hours a week to get it. If his weekly hours drop below 24, he might as well go on the dole.

That's based on hours, not on income - so if the minimum wage goes up and hours drop so we all get roughly the same pay, it makes no difference to me but wipes out his finances.

He does not have my 'other skills' so he'd be completely stuffed.

In other news - my experience of the low end of the job market in this last year has proven that a rediuction in hours does not equate to a reduction in the amount of work expected.

Increasing minimum wage will make some low-end jobs no longer humanly possible.

Lola said...

"... and makes me wonder just what sort of cretinous thinking generally goes on in cabinet.". You know, exactly, what cretinous thinking goes on - this 'thinking'.

The Stigler said...

Mark,
Yeah - we don't even need to do CI + LVT in one big bang. We could do things like reducing the amounts governments get centrally which would push up rates.

Lola,
As a software developer this creates a load of work. The thing about website accessibility laws is it generally does more to keep software developers and testers in work than helping the tiny number of disabled people visiting a site.

RS,
Speak for yourself. Personally, I desperately avoid rent-seeking as I know it's a high-risk strategy.

Bayard,
Not a subscriber, so I can't read it. I'll take your word for it.

Kj,
Ta

Leg-Iron,
I wasn't aware of that idiocy about working tax credits. But it doesn't surprise me. I have a huge amount of sympathy for the low-paid who want to work in our society - it seems about the roughest place to be.

Lola (again)
It's a new level of cretinism. An inflation rise to look less "nasty" I could understand, but £10/hr? You'll basically replace lots of people with machines, something that neither them, nor us, want.

DBC Reed said...

@TS
Please explain how, in one of your examples, taking dirty weekends in Paris rather than Brighton exports manufacturing jobs as you assert.
Most of your argument is pitched at the Economics Stone Age level of : if employers could pay £7 an hour well then, they jolly well would. All Economics 101 concepts like the Paradox of Thrift (circa 18th century) or the Fallacy of Thrift (19th cent)are absent.
This site is now less progressive than the Conservative Party and Tim Worstovall's blog.

Bayard said...

Another point about increasing the MW is that it is going to hit the young and inexperienced. They are usually, through lack of experience, able to offer the least value to their employer per hour worked. However they often have the advantage of the lowest outgoings - living with parents etc, but that is no advantage when they have to be paid the same as someone more experienced.

Birkonian said...

I stumbles across this vile ultra-right wing blog by mistake. I won't do that again but before I go, why should the taxpayer subsidise an employer who won't pay a living wage, a wage that no one reading this blog would work for. If your business model depends on paying minimum wage then you are just as guilty of exploitation as the mult-nationals with their third world sweat shops.

The Stigler said...

DBC,

It's not a comparison with manufacturing jobs - sorry if that wasn't clear. It's simply that raising wages in Brighton means that someone may go on a dirty weekend to Paris instead. I was trying to say that it applies as much to holidays as to manufacturing.

As for your point about Paradox of Thrift, the problem you're dealing with is the tragedy of the commons situation that individuals, unless particularly public-spirited aren't going to pay more. They'll want someone else to pay more.

I don't know if it's less "progressive" or not. If you mean progressive as in "Guardian writers" then no, we aren't. If you mean, do we have some of the best practical solutions to raising the wealth of the nation, including the poor, yes, we are.

The Stigler said...

Bayard,

And by doing those jobs, they gain experience, a reputation and other skills on the job.

I did a summer job programming when I was 17 in between my years in college. It was £1.50/hr, which was less than a lot of shop work, but hey, it was writing programs.

And it was enough money to buy fags, records and to take my girlfriend to the pub, and that was enough.

But when I left, it meant I had a summer of commercial experience that everyone else on my course didn't, and probably got my foot in the door of my first job.

The Stigler said...

Birkonian,

are you going to be back? Or not, because if not, I won't bother replying. Let me know if you'd like to hear my response to your point.

DBC Reed said...

@TS
You should answer Birkonian anyway: he gets to the heart of the problem. We are not subsidising skint families with Family Credits : we are subsidising their arsehole employers.
Well done: you have succeeded in giving this middle-of-the-road, politically pragmatic site and the YPP it represents the characterisation of a" vile ultra right wing blog."

Mark Wadsworth said...

DBC, woo-hoo! We are right wing now, are we? That's not what the Faux Libs and Homeys say, is it?

I don't understand Birkonian's question anyway:

"why should the taxpayer subsidise an employer who won't pay a living wage, a wage that no one reading this blog would work for?"

Does he mean tax credits or citizen's income? Which one is he slagging off and which does he prefer?

Dinero said...

Just a mathematical observation.

Increasing the cost of services has a comparatively greater effect on what can be afforded by people on low incomes.

The Stigler said...

DBC,

Why should I? It's pretty clear that he came here to just vent at "right-wingers" despite the fact that "right-wing" and "left-wing" are ambiguous terms with at least 4 axis definitions (free-market, pro-rich, nationalistic, authoritarian) and so are unclear in terms of communication.

I'm here to exchange ideas with people and to propagate them, and I will expend the time and thought where it suits me and this blog. If I think I've made my point and I'm just going to be repeating myself, I'm not going to bother. I've explained the Tragedy of the Commons situation of expecting employers to pick up people's social welfare twice, and you haven't done me the courtesy of trying to dispute it with an argument, just some ad hominem attacks.

Dinero said...

expanding on

"Increasing the cost of services has a comparatively greater effect on what can be afforded by people on low incomes."

ie

for Person A earning minimum wage = X, person B earning X+Y can afford the services of A as can person C earning X+2Y

if minimum wage rises by Y, A earns X+Y , C earning X+2Y can still afford the services of A but B earning X+Y cannot.

Bayard said...

"We are not subsidising skint families with Family Credits : we are subsidising their arsehole employers."

I think everyone on this blog realises this, but it's not an argument for raising the minimum wage, it's an argument for abolishing Working Family Tax Credits, a crap idea since 1795.

In any case, the main reason why the minimum wage is not a living wage is the ridiculously high cost of accommodation: it's not the employers who are arseholes, it's the bloody rentiers and their government-sponsored support scheme (Housing Benefit).

The Stigler said...

Dinero,
In a competitive market, yes. If say, you raise min wage for waitresses, it's going to raise the price of a cup of tea.

Bayard,
Something I would like to do is to try to calculate how much Housing Benefit is going on high rent areas about which I'm thinking mostly London and the South East.

One thing with CI is that I'm not at all sure how much it really costs, compared to HB and I need to do some research into this and get county by county figures.

See, I think that if you set a CI level based on say, renting a house in Birmingham, you'd cover a lot of the CI bill with the reduction in HB.

And yes, that means lots of people are going to leave London and the South East, but I don't see why that's such a bad thing. Plenty of empty and depopulated bits of the country. If some chav wants to sit on a sofa and do nothing, they can do it in a former mining town.

DBC Reed said...

@TS
Rather than ad hominem I have tried to deal with your arguments on a point-for-point basis. (I had not realised that they were official YPP policy until MW intervened).
The Brighton v Paris dirty weekend farrago did not turn out very favourably from your (presumably also YPP) point of view.Now saying that your scenario applies to holidays as much as manufacturing is the complete opposite of what you said originally. It is also nonsense: any scant amount added on to chambermaids' ,waitresses' wages by a Minimum Wage rise is not going to equal the amount you would have to pay in fares to reach Paris.( This is the whole point of the original argument:nobody can afford to bring in cleaners, washer-uppers and other staff regarded as "casuals" from abroad.
You are repeating (in error) the basic point: that putting up waitresses' wages will put up the price of a cup of tea.[Not that I can think of anywhere in Brighton (where I used to live) where you can get waitress service for cups rather than pots of tea.]
Increasing the Minimum Wage in the way described initially, will mean there are significantly more customers with more disposable income so the caff will shift many more units with no inflationary effect as takings/income rise with outgoings / wages.

Bayard said...

DBCR, I suppose the whole minimum wage argument boils down to whether people should be paid what (their employer thinks) they are worth or (what someone in authority thinks) they deserve. It's a classic left/right split.

The Stigler said...

DBC,

It doesn't add cover the cost of flights. But does Brighton have the Louvre, the Musee D'Orsay, the Arc de Triomphe? So, what we're comparing is not just price but value, and you've made Brighton less good value than it was.

RE: Your point about raising incomes with wages. Do you accept that people can automate jobs? Are you aware that garages and a few supermarkets now sell coffee out of machines? Do you accept that for someone buying a take-away coffee, they are in direct competition with a cafe? Do you accept that a greater proportion of the labour for an automated coffee machine can be done abroad rather than in the UK?

Let me know your answers to those questions, because I want to know what you think are the facts are before we then explore what practical solutions that gives us.

Mark Wadsworth said...

DBC, The Stigler is not (yet) a member of YPP and does not speak for it.

YPP's view is get rid of VAT, get rid of NIC, get rid of means testing and then hourly wages will rise of their own accord.

The bulk of these taxes are borne by employees in the form of lower net wages. And stuff in the shops will be cheaper anyway.

YPP are pretty indifferent to the whole concept of National Minimum Wage, it's a crappy solution to a different problem, fix the problem and you don't need the solution either :-)

DBC Reed said...

@B The left-wing view is that (pace Marx) you have to distribute a lot of purchasing-power in the form of wages to buy all the products of mass production.Don't distibute enough and there's a demand deficit and over-supply/working at under capacity.The right-wing attitude is to ignore Marx's quite helpful advice and save money on wages so reducing demand for their products.This is not even efficient capitalism.
@TS The automation argument is not the way to go. Major Douglas developed the scenario above by positing large scale automation ,now plausible on the scale of the completely robot factory or at least production line.Such a workplace would have few or no workers and a massive output.Where are the wages to come from to buy the products?Clearly not from the individual employer.Nor in demand from other people outside the robot factory. They will almost certainly have been displaced by robots too.Clearly you have to provide some kind of unearned income for people to buy the goods.Douglas called this a National Dividend; nowadays they call it a Social Dividend or Citizens Income.This has to be gauged so the total national supply of money equals the total national supply of goods and services working at full capacity. Unfortunately such is the regression in political and economic theory that Citizens Incomes are thought to be best generated from the Tax system_ which adds new money to the production consumption loop.No new money no new production.
So in brief: unless accompanied by measures to boost demand and unearned income, automation leads to stagnation.

DBC Reed said...

PS above should read "adds no new money to the production consumption loop"

The Stigler said...

DBC,

I'll discuss automation when you give me the answers to the 4 questions I asked you.

DBC Reed said...

TS
Yes Yes No No

Kj said...

I beg to differ that automation (always) cause stagnation, unless we'we been in a permanent one since 90% of the population worked to provide foods with hoes and scythes.

Bayard said...

"you have to distribute a lot of purchasing-power in the form of wages to buy all the products of mass production"

If you go back to the original post it kicks off with,
"Low wage earners are, overwhelmingly, providing services for domestic consumers within the UK economy. They work in shops, cafes and hotels. They cut our hair, they clean our houses, they look after our kids and they care for our elderly. They are not in manufacturing...." So we are not really talking about the wages of the workers who mass-produce things, it seems they get better than the MW already (well 94% of them do).
Another point is that the government is pushing this because it wants to save money on the rotten Working Family Tax Credits system, i.e. your MW worker isn't going to see any extra purchasing powere from their higher MW, because it's all going to get knocked off their WFTC.

Bayard said...

Another point is that the MW employment sector doesn't appear to be one where arsehole employers are are making huge profits off the back of MW workers, with the possible exception of old people's homes and, of course, supermarkets.

Dinero said...

- KJ - "I beg to differ that automation (always) cause stagnation, unless we'we been in a permanent one since 90% of the population worked to provide foods with hoes and scythes."

Yep, in personal endeahvours being releived from toil is a benefit but in the economy of the division of labour there is a problem assosiated because a job is not only something that needs to be done to acheive some desired outcome, it is also the income mechanism within the division of labour.

Kj said...

Dinero:
Yep, in personal endeahvours being releived from toil is a benefit but in the economy of the division of labour there is a problem assosiated because a job is not only something that needs to be done to acheive some desired outcome, it is also the income mechanism within the division of labour.


Agreed. The point was that this process has been going on pretty much at full force since that removal of people from the fields, and we have, except for temporary individual hardship indeed, achieved that mechanism of division of income through labour getting a proportionally greater part of the growth (and thus being able to consume their own product etc.). I haven´t dismissed that future transitions may be tougher, but empirically you can´t say that automation causes stagnation.

Kj said...

- "division of income" = distribution of income

Kj said...

And I´m awfully curious about the rationale for DBC´s two "no-" answers to Stigler´s questions.

The Stigler said...

DBC,

Forget it then. I'm not going to spend any more time trying to convince you if you think a garage supplying coffee isn't in competition with a cafe that does takeaway coffee.

DBC Reed said...

@KJ
Absent some necessarily unearned income distributed over an entire economy, automation in its proper sense of working automatically ( a tractor or combine harvester does not work automatically)will induce stagnation.Robot factories+ no customers.
@TS You what? I answer your questions, trivial though they are in comparison with the problems illustrated by the robot factory and addressed years ago by Douglas's Scheme of Social Credit, and you flounce off?

Kj said...

DBC: that may or not be needed, but how does a MW fit into this? A MW is not distribution of unearned income, it´s tipping the scale over to automation for the lower rung of the income scale, whether we like it or not.

DBC Reed said...

KJ
I am trying very hard to see how coffee vending machines in petrol stations ( which sell other things besides) are a threat to Mc Donalds which sells coffee out the side window (but which also sells other things besides).
I would have thought that the service industries (most affected by MW increases)are the least likely to be pressured by automation; unless you want robot waitresses,robot chambermaids, robot office cleaners etc. Robots are best for fixed place work on moving production lines where they don't have to move round unpredictably.
In which connexion there is an old argument that a plenitude of cheap labour retards mechanisation; that it is a shortage of labour that prompts mechanical innovation which gears up production levels.

The Stigler said...

DBC,

I am trying very hard to see how coffee vending machines in petrol stations ( which sell other things besides) are a threat to Mc Donalds which sells coffee out the side window (but which also sells other things besides).

Because they take away some of McDonald's business. And that means less income, which means that the McDonalds is less profitable, and therefore less viable.

Now, I'm not predicting the closure of McDonalds, in part because selling mochas is a small part of their business, and they sell a lot to people also buying food and make decent profits.

But a lot of cafes are already a bit borderline as businesses. You add in mechanisation and some will tip into no longer being viable.

I would have thought that the service industries (most affected by MW increases)are the least likely to be pressured by automation; unless you want robot waitresses,robot chambermaids, robot office cleaners etc. Robots are best for fixed place work on moving production lines where they don't have to move round unpredictably.

Generally true. But what's a Costa Express machine, other than a robot that serves coffee? Sure, it doesn't replace waitress service, but that's why I singled out take-away where they compete directly with non-waitress service.

DBC Reed said...

TS
Trying hard to think why people would make a special journey to a filling station just to get a coffee.I have driven through McDonalds drive thru just for a coffee.I just don't think this is a very good example of robots displacing people in the service sector which as you admit is very rarely mechanised: for obvious reasons.

The Stigler said...

DBC,

Trying hard to think why people would make a special journey to a filling station just to get a coffee.

I worked somewhere where the nearest place to buy a latte was the garage, and closer than town. So I went to the garage.

Based on that, will you agree that you can see a reason why some people would make a special journey to the filling station to buy a coffee?

DBC Reed said...

TS
No.I would n't have the nerve to go into a petrol station, use a coffee machine and then walk out, purchasing nothing else whatsoever.
Can I point out that this very isolated case is not a representative instance of the very real problems with automation which the formidable (she scares me) Frances Coppola is saying over on Tim Worstall's blog in the comments on Picketty ,threatens the whole nature of capitalism?

The Stigler said...

DBC,

But we're not talking about you. We're talking about other people who do do that.

So, your problem is that you project your choices on others rather than seeing that some people make choices differently to you. I can't discuss anything further with you if that's the way you think.

DBC Reed said...

@TS
I'm just saying that these garage coffee visitors are statistically insignificant numbers of people that do not affect a serious economic problem (of automation's effect on demand).You're the one who's saying your behaviour is significant just because you do it.

The Stigler said...

DBC,

I didn't say anything about the degree of statistical insignificance. You said that you couldn't see why anyone would make a special trip, and I pointed out a reason that I did it.

So, based on that, and regardless of the numbers, will you agree that you can see a reason why at least 1 person would make a special journey to the filling station to buy a coffee?