ARNOLD KLING
February 13, 2012
Conversation with David Weinberger
February 13, 2012
Regional Variations in the Recession
February 13, 2012
Revisiting Goldin and Katz
February 12, 2012
Limited Liability and Banking
February 12, 2012
What is Bernanke Saying About Housing?
BRYAN CAPLAN
February 16, 2012
Imagine Grateful Welfare Recipients
February 15, 2012
Rand vs. Human Weakness
February 15, 2012
What If the Stranger Is a Drowning Child?
February 14, 2012
Krugman, Human Weakness, and Desert
February 14, 2012
A Search-Theoretic Critique of Georgism
DAVID HENDERSON
February 15, 2012
Japanese Voluntarism to Solve Social Problems
February 14, 2012
Problems with Henry George's Single Tax
February 13, 2012
How to Cut the Cost of Contraceptives by Regulating Less
February 12, 2012
Happy Birthday, Eugen and Julian
February 10, 2012
W. Allen Wallis: An Appreciation
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Is anyone aware of any papers dealing with unemployment/wage dynamics and the variation in employment law across states? I suspect it would be really tough to actually write down a convincing regression, though.
According to Wikipedia, Borders had 20k employees. At $40k/year each (probably an overestimate, I doubt book shelvers get that much), Borders could have saved $80M/year with a 10% pay cut. In contrast, between 2008 and 2009 alone their holiday sales alone fell by $100M or so.
Borders went under because revenues fell drastically, and they were locked into many 10 and 20 year store leases. Employee comp was only a small part of the problem.
This discussion is funny. You are playing with small portions of a puzzle and do not observe the big picture. The economy is a closed system with some conservation laws like in physics (particles in a box). Whatever are individual incomes (particle velocities) the distribution over incomes (e.g. Gini ratio) or energies (Maxwell-Boltzmann distribution) is conserved. Accordingly, if one changes (isolates) some portion of the closed physical system the rest of the system by all means will recover the original distribution.
When one introduces some disturbances (natural or artificial, but with some constrains like not a war or pandemics when economic laws are not applicable any more) into an economic system it has to recover the original distribution over personal incomes. Actually, the evolution of personal income distribution in the USA is driven by a simple physical law - http://ideas.repec.org/p/pra/mprapa/10107.html . The evolution of the overall personal income distribution and those in various age groups with their relevant Gini ratios since the start of the CPS in 1947 shows almost no change despite all perturbations. This is an empirical answer to the problem you are tackling.
Right, Borders was largely killed by its long term leases. For example, its San Fernando Valley store was in of the most expensive blocks in the entire SFV, on the nicest stretch of Ventura Blvd. in Sherman Oaks.
Right, Borders was largely killed by its long term leases. For example, its San Fernando Valley store was in of the most expensive blocks in the entire SFV, on the nicest stretch of Ventura Blvd. in Sherman Oaks.
Is it just me or is Bryan still speaking as if the entire cost of running a business is employee comp and profits are (revenues) minus (employee comp)?
Bryan's argument just seems to fall apart if instead profits are (revenues) - (employee comp) - a bunch of other stuff).
Sonic Charmer,
As Marx reminds us, the "other stuff" is (pretty much) ultimately made with labor. Payments are ultimately payments to income earners, who are mostly earning labor income. So complete wage and price* flexibility would allow "wing-walking", in the empirically relevant cases.
*I don't think much of New Keynesian arguments for (non-labor) price inflexibility as a source of unemployment. The old Classical model never required prices to adjust instantanaeously; that was a Keynesian caricature. Yet they still had good reason to expect roughly full employment.