the reason I have in the past supported the minimum wage was more of the 'it increases the overall wealth of those most likely to spend it' variety, which for obvious reasons is most likely not to be the case. in recent years it seems that the cost of things is based upon, 'what the market will bear', which has always been a strong determinant of pricing, and therefore an increase in ages may not lead to an increase in overall wealth.
Common misconception on the "what the market will bear" part. That pricing theory doesn't pass the diamond water paradox at all.
Let's suppose we have a competitve market. Company A tries to charge a very high price (whatever the market will bear, whatever that means, exactly). Companies B, C, D, E... will all undercut them. In short you've left out the supply side of supply and demand.
Now let's suppose we have a monopolistic industry. This would be closer to your ideas. We have ONLY company A producing the good or service. Now, they can't be undercut. So do they raise their prices? Oh, yes! But to "whatever the market will bear?" Well, I don't know what that phrase means. But like any company a monopoly is a profit maximizer. And whatever they produce follows the Law of Demand (which says that as the price rises the quantity demanded falls.) In otherwords, as they raise prices they sell fewer. Of course the per unit profit increases. This is a simple optimization problem. I can't SOLVE it without knowing the marginal costs for the production as well as the shape of the demand curve. But the company is still restrained by prices. And that's when it's a monopolistic (read non-free market) scenario.
This is a gem of humor, how many people criticize psychology and the field of mental health on a daily basis? How many people try to add moral elements to all sorts of science.
And do you think such critisisms are valid? By "we," I meant we in
these forums. I am aware that society at large criteques science and scientific conclusions with non-scientific reasons. But aren't we supposed to act differently in that regard?
The concensus with any group of people is often not determined by what is rational, but by what is powerful, benefits them or is the vogue.
You misunderstand rational as defined by economists. Rational behavior for individuals is that which maximizes expected utility. Which is basically what you said (power, benifits them personally, etc.)
Aaron
