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Object Lessons in the Minimum Wage
Today is the sort of day that demands a quick and easy lunch. You see, I’m preparing for my company’s annual financial audit and I really just don’t have the time to wait around. (I usually try to get this audit done in February, but the birth of my anchor baby got in the way of that.) So, come 12:30 pm I hauled myself away from my desk and off to the nearest fast food establishment to grab a quick bite.
The restaurant is called CaliBurger, a not very subtle rip off of the great In-N-Out Burger, located near my office in Pasadena, CA. I’ve eaten there before but its usually not my first choice, the quality isn’t great and it’s a tad expensive compared to the real deal. What I like about it is that it’s close and they serve you quickly. The staff was always attentive and the service pretty good for a fast food joint. Lo and behold, when I arrived there today my experience was entirely different.
First, there was the person who greeted me and took my order:
Well, that’s new. Not that I’d never experienced an ordering kiosk at a fast food place before, it’s just that this place always had four employees at their various cash registers to take orders and keep up with the lunch rush. I looked around and saw one person milling about behind the cash registers, but he seemed to be doing other work. Ordering took about 30 seconds, a beep as my apple pay was charged and the machine spits out a receipt. There were no lines.
Ten seconds later the gentleman from behind the cash registers rushed over to me with a cup for my soda, which I filled at a self-serve station. He asked me if I wanted to watch my burger being made by “Flippy”. Well, I thought, that’s an odd and very specific nickname for the chef at a fast food burger joint, only to turn around and see:
Meet Flippy: the burger flipping robot. Equipped with a vast array of cameras and sensors Flippy can cook up to 300 burgers an hour to the exact same specifications every time. No more underdone or burnt burgers. He will even switch utensils for different jobs automatically and clean the grill in between each batch. Not only does he cook a pretty decent burger (it was the best one I’ve had at this restaurant) but he also is equipped with a sophisticated cloud-based AI that can learn from his surroundings and experiences and acquire new skills over time.
Well, damn.
Oh, that guy in the background? He’s Flippy’s assistant and puts cheese on the burgers when needed. I guess Flippy hasn’t acquired that skill yet. Other than the gentleman who brought me my cup and Flippy’s Sous Chef there was one other employee I could see, a nice lady who assembled the finished burger once Chef Flippy was done cooking the patty. The same gentleman from earlier brought my burger to my table.
All told, only three employees and a robot were there to serve me my lunch. Total time from order to first bite: about 2 minutes and 30 seconds. In a restaurant that used to employ four cashiers, nevermind the rest of the back kitchen staff required to make a burger.
Thank you, California’s $15 minimum wage.
Published in General
I’m O.K. with central banks that simply back up the financial system in a punitive way. That is actually a superior way to run civilized, productive society.
The problem is, central banks are a geopolitical tool and unless all of the other central banks follow what I’m talking about, it won’t work.
Trust me, 100 years from now, after WW4, the whole planet will adopt all of Mises.org’s policies.
One. Last. Thing.
Money does need to be added to match population growth. Probably.
Anything else is manipulating the economy with central planning, and it doesn’t work.
I thought it needed to increase with the value of goods/services in the economy. Isn’t the textbook cause of inflation “too much money chasing too few goods.”
You want to live with some deflation. The increases in purchasing power from progress and increased trade in specialization. The problem is, deflation makes loans harder to payback. Credit growth also expands the economy.
What we are trying to do is have a bunch of propeller heads guess at an inflation rate that will expand credit nicely and not be too regressive. The problem is, the serfs and the ruling class starts doing stupid things. Speculation. Dependency. The economy becomes “financial-ized”. People don’t save money. Inflation grows government. It’s impossible to grow government with private money or a real gold standard. But if you run with inflation, you have to have a central government doing whatever to compensate for the side effects. But now look at the debt to GDP. Anywhere. They are screwing this up. Look at the social problems. Trump and Bernie.
There is no one right answer.
Ultimately, we can’t have any geopolitical power without a discretionary central bank anyway.
Why are they babbling about UBI, $15 minimum wage, and head taxes? Tell me.
It’s because the Fed—Alan Greenspan— has been stepping on the gas since 1997. Bubbles, inequality, social problems, crazy politics.
The other thing is, inflationism requires that you have an income tax. This is what Progressive taxation is: they point a gun at our heads and auction off rates and deductions. That is how we central plan our progressive taxation system. It’s insane. There is no value added here. The same with FICA taxes. FICA taxes are a joke. FICA taxes are complete fiction. Total accounting B.S.
So have at it. Where am I wrong?
Because they are politicians and they are trying to buy votes, which is what politicians do. That simple, and it has nothing to do with the central bank. Personally, I kind of doubt that Bernie and the other lefties who babble about this stuff even know that there is a central bank.
We’re Living in the Age of Capital Consumption
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Be sure to vote!
All of you guys are smarter than me. Shoot holes in this.
Inflationism requires central planning and they are screwing it up. The whole West.
Rufus, I have to admit – I’m not getting your point. Yes, unfunded public pension liabilities are a catastrophe waiting to happen, and made worse by the fact that there is a very good chance that the courts won’t allow these public entities to modify their pension plans when they flat out run out of money. We are headed for a world where states and municipalities will be unable to provide any services, because all of their revenues will be going to service their pension obligations. We are already half way there. (The same is true of unfunded social security liabilities, although at least Congress can fix that one if they ever get the courage.)
But this is the pattern I have noticed in your comments. You identify a very real problem in the economy, and then throw out words like “inflationism” and “central planning,” without any explanation of what those words mean or how they relate to the problem you have identified. Actually, I think some central planning is very much needed to address the public employee pension issue. Congress should pass a law applying to public pensions the same ERISA standards that govern private pension plans. Specifically, they would have to be fully funded. That would stop local politicians from buying off public employee unions with promises of lavish pensions, and then leaving the problem of how to pay for it to future government officials. Or, better yet, simply prohibit defined benefit pension plans in the public sector. Public employees can have 401k’s, just like me (and probably you).
Inflation has nothing to do with any of this right now. (Nor does central planning, since there is none.) Inflation will matter when the crunch comes. When cities and states have no money for police, fire, teachers, streets, or any other public services, because all the money is going to retired employees’ pensions, the federal government will have to step in and bail them out. And since the federal government is itself bankrupt, it will become necessary to devalue the dollar (i.e., massive inflation).
I think it is well worth trying to explain all of this (good luck with that though), but I don’t even know if any of this is what you’re talking about. I urge you to be more specific than simply reciting words like “inflationism” and “central planning.”
Sorry. Fair enough. It distorts human behavior, governance, investment, actuarial assumptions, project assumptions, entrepreneurial estimates. You can’t make up for this with voting, “Democracy”, or making Paul Krugman Dictator Of Everything. You just can’t have fake interest rates. It won’t work in the long run.
The GDP has been retarded all over the planet, there is no Debt to GDP that is OK anywhere, and the central banks are out of bullets.
The financial system and the monetary system have to be set up a certain way, or democracy is just going to exacerbate the problems it’s causing.
George Bragues
One way I know I’m right is, Larry Summers is the leader on all of this stuff. (Google: the committee to save the world) If you look at his long interviews, if you know how to read between the lines, he’s in total panic. He knows he screwed up. I’ve had to extremely smart and experienced people on Twitter tell me I was dead on.
I mean asset inflation, too. Also, inflation can’t really be measured
We just have to disagree on this. The tax code, regulation, medicare, medicaid, light rail, the list is endless.
Look at this comment over here.
That’s what I mean.
In reality the dollars going to stay propped up forever, so nothing will get really bad nor will it improve. Maybe the leftist kooks will get control and make it worse.
Well, Rufus, there is a simple law of economics which I think is the answer to all of your observations: Whatever can’t go on, won’t go on.
I think probably the only fair thing to do given our political system and all of the debt and the geopolitical issues, is to target nominal GDP, and then if they deviate from that, they have to make a very clear justification to Congress.
That isn’t going to increase wealth and prosperity, but it’ll do less damage.
Forgive me, but this is just too perfect. This is an Austrian economist talking about central banks:
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That guy has a great twitter feed.
Forgive me #2