Reply to Help me understand the impact of a $15 minimum wage?

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[quote=Anonymous][quote=Anonymous]
[b]I'm not the one that was arguing that hedge-funds are productive because they help the rentier class get higher rents. Even hedge funders don't argue that!
[/b]
I'm not an economist either, but, as you mention, this is about Econ 101 type stuff. If I'm so wrong in my understanding of all of this, why haven't you addressed my point that productivity gains over the last few decades have *not* accrued to the lowest skilled workers, which means a simplistic understanding of why wage increases will drive inflation might not be correct? If the idea that people will use the extra money to pay down debt is wrong, tell me why?[/quote]

Isn't that the very definition of improving market efficiency by getting higher rent for an asset by finding the right renter that can derive the most economic value out of an asset? Such an improvement in efficiency improves productivity and whoever can make that happen is rightfully rewarded for that contribution.

I have addressed the divergence between productivity gains and wages. Look for the keywords "immigration" and "workforce participation".

Wage increase alone does not drive inflation. Wage increase without productivity drives inflation. Whether additional income is used to pay down debt or used for additional spending is only meaningful at an anecdotal level since looking at broad consumer behavior, debt levels are positively correlated with income levels: people who make more money also take on more debt. So at least broadly speaking, it's irrational to posit that raising the minimum wage will lead to a broad behavior of debt repayment. [/quote]

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