Living wage

Posted on April 16th, 2006 by Tim.
Categories: General/Misc., Politics, Tim.

Anyone who has taken economics knows what happens when you try to enforce a price above or below the equilibrium price. Setting a price above the equilibrium price causes surplusses. Suppliers want to produce more than consumers want to consume at that given price. The same logic applies to employment. Setting an enforced wage above the equilibrium wage causes surplusses of human labor (aka unemployment). Usually, when an economic system is at a point other than it’s equlibrium, there is economic inefficiency in the market. So what’s wrong with letting the market determine the wage rate? Why do we need a minimum wage? Well, the problem is that if the market sets the wage rate for all employees, many employees will earn wages that will not provide a reasonable standard of living. Having a large population with below a living wage is “bad” in an ethical sense, but also carries some negative externalities. So it is obviously a completely reasonable economic goal to increase the minimum wage that the employees are paid. But by setting a mandatory minimum wage, you create unemployment, and therefore you have economic inefficiency. If the workers who are out of a job were working, GDP would increase.

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The evil Walmart empire - a thought expierment

Posted on April 11th, 2006 by Tim.
Categories: Philosophy, Politics, Tim.

I had a fun conversation with my friend Barb over spring break concerning the labor abuses that Walmart is guilty of. It’s hard to dispute that Walmart has been caught in some abusive labor practices. Refusing to give employees more than 38 hours of work per week (to avoid paying full-time benefits), paying female employees less than the average, and abusing child labor are all hings that Walmart has been accused of. That’s bad.

 But that got me thinking. Would these people be better off if they didn’t have a job with Walmart at all? I’m not sure. Dr. McDaniel was talking about RFID today in class (CSE 497c, Computer Security). Mostly, he was talking about the security implications of using RFID pervasively in society, in applications such as RFID passports and RFID inventory access. But the primary reason to use RFID in a setting such as Walmart is to decrease labor cost by using RFID scanners instead of humans scanning barcodes. RFID will be an extremely inexpensive way to drastically decrease the amount of employees needed to run the store. Walmart could decrease their costs, increase employee wage, and decrease the number of headcount. So there will be less labor abuses, but there will be less employees needed in general.

 Is this a good thing or not? I’m still not sure. From an economic perspective, we’ve increased economic efficiency by reducing costs. Are people better off? The lower class certainly isn’t, since we’ve replaced low-paying, unskilled work with a technology replacement. In theory, however, if this method can increase GDP, we can compensate the lowest paid workers and still be better off in the long run. Will this happen in practice? I don’t know.

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Is free software really free?

Posted on April 2nd, 2006 by Tim.
Categories: General/Misc..

Squeegie and I have written a number of articles on the topic of the economics of open source. One thing that I think neither of us has directly addressed is that there is a great deal of disagreement about the use of the terms “Open Source (OS),” “Open Source Software (OSS),” “Free Open Source Software (FOSS),” “Free/Libre/Open Source Software (FLOSS),” and “Doesnt Everyone Notice That Acronyms get Longer Free/Libre/Open Source Software (DENTAL FLOSS),” etc. Our good friend Richard Stallman (also known as RMS) has been militantly vocal about distinguishing between these terms over the years (then again, RMS has been known to be… eccentric). Originally, there was little confusion over the terms; Open Source refered to projects such as GNU, Linux, and Apache. As companies sprang up to profit from open source software, and as licenses appeared that were incompatible with the GPL, there arose a need to distinguish between these various classifications. Generally, people simply lump all of them together under the category of “Open Source”.

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