First of all this is a continuation of my previous post where I was incisive in demonstrating in a simple way that minimum wages far from helping only cause the opposite effect and how this affects the general welfare of the population. (you can find it here) these measures are usually implemented by useless and disdainful bureaucrats that dismiss scientific, empirical knowledge and abundant evidence; with a belief in their overcapacity to say what to do and how things should be done, they attempt against those who "want" to protect.
As Hayek would say in his final work.
The curious task of economic science is to show men how little they really know about what they imagine they can design. For the naive mind that can conceive of order only as the product of deliberate ordering, it can seem absurd that under complex conditions, order and adaptation to the unknown can be achieved more effectively by decentralizing decisions and that a division of authority will actually extend the possibility of a general order. That decentralization actually leads to a greater amount of information being taken into account.
-Friedrich Hayek extract from The Fatal Conceit.
"Order and adaptation to the unknown can be achieved more effectively by decentralizing decisions and that a division of authority will actually extend the possibility of a general order."
Unfortunately if this were known to cavalry surely in all Latin America and the world there would be no such thing as the minimum wage.
Friend pogre says: Always so pessimistic you
Do not you see that they are inclusive measures for the people?
It's not a matter of optimism, it's a matter of data and if it's a matter of help, it's better to do it right.
Continuous.
All this is summarized for the employer as follows: inability to pay wages, make investments, produce good quality products. Which will lead him to implement measures to reduce the loss these can be. (Some were described in the post atenrior here will be seen a little more in detail.)
Implementation of stronger hiring measures for the worker, that is, this must have more skills that generate in the employer the safety of their productivity to help as much as possible the production, now in decline due to the cut of personnel.
Absorb the costs of all salaries thus reducing the profit margin for the employer.
Pogre excited: Perfect!
Of course what you do not understand is that the capital is not infinite and it is consumed and if the correct measures are not taken it is consumed and it goes bankrupt, something worse for everyone
- To allocate all the cats of production at prices thus exposing themselves to the loss before the competition.
Because these cases are not isolated and are given to all companies the increase in costs that fall on the prices of products and because money is increasingly unable to acquire goods by increasing inflation. the consequences are so disastrous in the long term that they end up hindering the growth dynamics of even the richest country.
In the previous graph you can see the productivity and the average salary of the nations and the following can be highlighted.
The salaries of those in green are free that this is paid for their productivity and as if it were little above their own productivity.
While the countries in yellow the average salary (red) is the minimum required and when this is above the productivity we have described above what happens.
So, being logical and pragmatic, the imposition of the minimum wage becomes the sacrifice of short-term welfare for the long or in the worst cases and the beginning of unbridled statism.
Nobody spends another person's money as carefully as he spends his. Nobody uses the resources of another person with as much care as he uses his own. So if you want efficiency and effectiveness, if you want the knowledge to be used appropriately, you have to do it through privately owned means
Milton Friedman
¡Que viva la libertad carajo!
Thank you very much for reading and sharing