Keir Martland
For my opinion, I refer you to Murray Rothbard writing in 1988
In truth, there is only one way to regard a minimum wage law: it is compulsory unemployment, period. The law says: it is illegal, and therefore criminal, for anyone to hire anyone else below the level of X dollars an hour. This means, plainly and simply, that a large number of free and voluntary wage contracts are now outlawed and hence that there will be a large amount of unemployment. Remember that the minimum wage law provides no jobs; it only outlaws them; and outlawed jobs are the inevitable result.
All demand curves are falling, and the demand for hiring labor is no exception. Hence, laws that prohibit employment at any wage that is relevant to the market (a minimum wage of 10 cents an hour would have little or no impact) must result in outlawing employment and hence causing unemployment.
If the minimum wage is, in short, raised from $3.35 to $4.55 an hour, the consequence is to disemploy, permanently, those who would have been hired at rates in between these two rates. Since the demand curve for any sort of labor (as for any factor of production) is set by the perceived marginal productivity of that labor, this means that the people who will be disemployed and devastated by this prohibition will be precisely the “marginal” (lowest wage) workers, e.g. blacks and teenagers, the very workers whom the advocates of the minimum wage are claiming to foster and protect.
The advocates of the minimum wage and its periodic boosting reply that all this is scare talk and that minimum wage rates do not and never have caused any unemployment. The proper riposte is to raise them one better; all right, if the minimum wage is such a wonderful anti-poverty measure, and can have no unemployment-raising effects, why are you such pikers? Why you are helping the working poor by such piddling amounts? Why stop at $4.55 an hour? Why not $10 an hour? $100? $1,000?
It is obvious that the minimum wage advocates do not pursue their own logic, because if they push it to such heights, virtually the entire labor force will be disemployed. In short, you can have as much unemployment as you want, simply by pushing the legally minimum wage high enough.
Osborne is showing himself to be made of exactly the same stuff as Cameron. For Cameron, it was the NHS. For Osborne, it is the National Minimum Wage. However, maybe Osborne is to be hated all the more. Cameron, for all his faults – and they are many – has merely preserved the status quo with regard to the NHS. Osborne, however, has decided to go further than a good many in the Labour party on the minimum wage. Indeed, this policy smacks of the economic policies of the 1970s.
For all the hot air about ‘cuts’, taxes are up substantially, spending projections are up, and to make matters worse, by 2020 nobody with a productivity of less than £9 an hour will have a job. This is a Chancellor clearly not content with the present level of state involvement in the economy. He also makes my skin crawl.
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Damn you Keir, I was going to write my first ever proper LA post about this budget, to expunge my fury, now you’ve beaten me to it 🙂
Oh well, just a couple of comments to make then. I’m doing some voluntary work with unemployed people with disabilities at the moment, and it’s people like them who are going to be hardest hit. A person with a learning disability may only be worth a maximum of, say, £7.00/hr. The employer who has to pay £9.00/hr will only employ somebody worth £9.00, so those disabled people are not going to get jobs.
They will then be blamed for pretending to be disabled, not trying hard enough, being feckless and lazy and sitting at home drinking beer and watching their “widescreen televisions” and so on, by Daily Mail readers (and indeed too many Libertarians). But they really do want to work, at least the ones I am helping. They just can’t get a frigging job.
The interesting and sad thing is that many of them do voluntary work, because the DSS say it helps you get job skills and so on. So they loyally turn up at some charity shop and enthusiastically do the work and keep the place ticking over, shifting furniture and goods around, and so on; then an actual job comes up and they don’t get a look in. Because hey, they’re working for free already. Why pay them to?
If Gideon Osborne and that red faced fist waving buffoon Iain Dimwit Smith ever come anywhere near me, I will punch them very very hard indeed.
That is a very depressing prediction to make. Therefore, it’s probably going to end up so.
I’m not at all prepared to believe that those in the Treasury are stupid enough to believe that increasing the NMW will raise living standards, boost incentives to work, etc etc. Those who think that misunderstand the nature of the state. The state is not a Great Do-gooder, as the Friedmanites say. The state is a monster.
The question is, therefore, why? Why increase the minimum wage? One reason has to be that most people do buy in to the bad economics. Most people do think it’s a sound policy. But while this is a good reason for a political party to increase the NMW, i.e. to win over the electorate, it doesn’t explain why the ruling class as a whole support the idea of the NMW.
Is it designed to keep certain elements out of work permanently? Or is there some other reason?
I think it’s just political posturing to offset the criticism of slashing welfare. I might also in a dark moment believe that it’s to justify inward migration on the “the locals won’t do the jobs” justification, when in fact many of the locals are just priced out of the market.
Just write it then, Ian, nobody will mind!
Keir already said pretty much what I was going to write, I’m afraid 🙁
Just right your post anyway Ian, old fella. It’s got some hinterland to it now too.
By the way, it’s not the economics of the 1970s, in that back then welfare was not being cut back and the industrial heartlands had not yet been laid waste.
Ospuke is just another fucking public schoolboy moron. He probably thinks minimum wages actually help people.
However–as the Greece caper shows –the shit will hit the fan at some point and we may yet have a chance to watch them kicking from lampposts.
Sigh. If only. But I don’t think there’s enough men left in the country with the balls to do that kind of stuff.
If the state is basically a giant imposed cost on innocent people then the minimum wage is one imperfect way of redressing this. Obviously, employers end up paying for it and there will be “mandatory unemployment”. In this context the employers are always pictured as struggling entrepreneurs rather than corporate capitalist pigs. The indictment against “crony capitalism” is used when it suits your argument, I guess. Otherwise we actually do live under capitalism and the big bad state is ruining it for everyone. Why? Why do libertarians assume a perfect free market when it suits them? People on relatively low wages have their economic freedom rationed out to them by the state, are forbidden to engage in all sorts of exchanges, and pay all sorts of ridiculous taxes and charges with their market determined wage! Is that fair? Why is the priority to bash piffling minimum wage increases rather than the costs imposed on the low earners in the first place? How do you know that justice is not served when Tesco is forced to pay their employees more, given the benefits Tesco have received thanks to the state? (Sean has mentioned these a few times in interviews)
“Ospuke is just another fucking public schoolboy moron. He probably thinks minimum wages actually help people.”
Well, it obviously will help some people, won’t it? And it may shaft others, as with all intervention. This is where the much maligned “bleeding heart libertarians” actually have a good point. They want to dismantle the state, but they get at an important question which, say, Walter Block, never bothers to address: In WHAT ORDER should this happen?!
Nobody here ever pretends we live in a perfect free market, we often discuss various aspects of the “in what order?” question, and the problem here is that the “piffling” (in fact, about 38%) hike in the minimum wage is going to end up harming the most vulnerable in society, not give them more liberty.
I suspect a surreptitious nudge in the direction of helping big joint-stock-companies, at the expense of smaller firms and “small businesses”. Larger producers can afford to amortize the costs of having to fork out a larger minimum wage, partly by charging more in an oligopoly and getting away with it, and partly by easier ways of costs savings in bulk.
That said, IF taxes were cut, _really cut_ , in strategic ways that _really shrank_ the Public Sector, then a £9 minimum wage probably wouldn’t matter at all. I’m talking cuts of tens of billions at once, like for example completely deleting about 50%-60% of all the functions of _all_ “councils”, shutting the offices, firing the staff (fully firing them, not rehiring them in some other function) and selling the sites off for demolition, and not replacing any of the buggers. Like most governments have done to Naval Dockyards, for example.
We probably can’t “cut” the NHS, at least not at this time. But if we fired about ten London Underground drivers, this might make a small difference. Whatever the State says about the legal status of whatever outfit runs the Tubes, they are in effect nationalised even now.
It is economically illiterate but politically savvy. It is all about kicking the Labour Party in the balls…
It helps me and other people on the minimum wage.
If we lived in a taxless, non-equality/diversity, utopia; less skilled people could live without it.
What about that city in Holland that’s paying all citizens a minimum cost of living allowance?
It will help you onto the dole queue.
As for this Dutch city–what is the source of income from which it makes these so-generous payments?
They have a magic money tree.
The Independent, Sat 11 July Says:
Dutch city of Utrecht to experiment with a universal, unconditional ‘basic income’
The Dutch city of Utrecht will start an experiment which hopes to determine whether society works effectively with universal, unconditional income introduced.
The city has paired up with the local university to establish whether the concept of ‘basic income’ can work in real life, and plans to begin the experiment at the end of the summer holidays.
Basic income is a universal, unconditional form of payment to individuals, which covers their living costs. The concept is to allow people to choose to work more flexible hours in a less regimented society, allowing more time for care, volunteering and study.
University College Utrecht has paired with the city to place people on welfare on a living income, to see if a system of welfare without requirements will be successful.
The Netherlands as a country is no stranger to less traditional work environments – it has the highest proportion of part time workers in the EU, 46.1 per cent. However, Utrecht’s experiment with welfare is expected to be the first of its kind in the country.
Alderman for Work and Income Victor Everhardt told DeStad Utrecht: “One group is will have compensation and consideration for an allowance, another group with a basic income without rules and of course a control group which adhere to the current rules.”
“Our data shows that less than 1.5 percent abuse the welfare, but, before we get into all kinds of principled debate about whether we should or should not enter, we need to first examine if basic income even really works.
READ MORE:
DUTCH COURT ORDERS GOVERNMENT TO CUT COUNTRY’S EMISSIONS
UTRECHT FEATURES THIRD IN TOP 20 BIKE FRIENDLY CITIES
WORKING POOR SET TO FACE CUT IN TAX CREDITS
“What happens if someone gets a monthly amount without rules and controls? Will someone sitting passively at home or do people develop themselves and provide a meaningful contribution to our society?”
The city is also planning to talk to other municipalities about setting up similar experiments, including Nijmegen, Wageningen, Tilburg and Groningen, awaiting permission from The Hague in order to do so.
Well just personally, if the government gave me a living income for doing nothing, I’d happily never work again. And no, I wouldn’t volunteer or any of that either. I’ve always dreamed of living in genteel idleness on a stipend.
There is one silver lining here; thanks to the government’s other policy of promoting continuous inflation, £9 in 2020 will be worth a lot less than £9 today.
The Osborne theft of the Living Wage slogan is really just a raise in the National Minimum Wage for those of 25 years and over. Companies that pay more per hour through voluntary payment of a voluntary living wage might well now adopt the lower, compulsory version. A wage rise of £2.00 over two years, is that really too much for a firm to bear in this day and age and in a western society? Except for social employees, council and government funded employees, whose outsourcing costs more than any in-house tender ever would, most for profit companies could cover that hourly wage increase by limiting their consultancy fees for management to tell their management how to do their job.
The majority of state workers (and other subsidised sectors) are paid way above market value for their abilities, so why do people freak out when small concessions are given to some of the most marginalised and productive people?