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Monday Message Board

April 12th, 2010

It’s time, once again for the Monday Message Board. Post comments on any topic. As usual, civilised discussion and no coarse language.

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  1. Donald Oats
    April 12th, 2010 at 23:38 | #1

    Christopher Monckton is not the Messiah, he is a very naughty boy – ht Eli Rabbett.

    Now, if only a few “news” reporters (including at the ABC) would sit up and take notice.

  2. Tony G
    April 13th, 2010 at 01:09 | #2

    Donald, the only “news” is that the jury is still out on Jones’ poxy proxy temperature reconstructs and the extent of adulation encompassed in the temperature reconstructs replicated and used as (presumed independent scientific) verification by NOAA & NASA.

    Please note that to secure their public funding in perpetuity; NOAA, NASA & CRU have a vested interest to ensure that their proxy poxy temperature reconstructs are all manufactured with similar upward trends.

  3. April 13th, 2010 at 04:53 | #3

    I want to comment on Hayek. In TRTS, Hayek defines Socialism as Govt control of the means of production, and a system not based upon competition. In Hayek on Hayek, on pages 120-121, where he is being questioned about the book by two socialists, he says that, to the extent that his interlocutors are not arguing for what he termed socialism, it must be that they agree with him that such a system would not be advisable. As to their form of Socialism, he is doubtful that it will work, but explicitly says it will have to be seen in practice how it works out.

    I think that Hayek was right about Socialism, but wrong about the Welfare State, which I see as a form of Capitalism, not Socialism. A few other points:

    He explicitly says that his book is not about a particular political party.
    He does not claim that anything is inevitable. In fact, he doesn’t believe that there is such a beast.
    He is in favor of a Guaranteed Income.
    He is fine with government competing with private businesses, if it’s on a level playing field. He can support some forms of minimum wage. Indeed, a Guaranteed Income is one.
    He is in favor of govt building infrastructure.
    He is in favor of a Central Bank.

    Finally, Keynes said that he agreed with almost all of the book, and Orwell praised it while disagreeing with it in his short review.

    I do not agree with everything that Hayek argues, but I do agree with quite a bit. I really doubt that some of the commenters on your post have read Hayek. If people find reading original sources taxing, then Hayek on Hayek is the book for them. He answers many of the questions people have about his work. It’s fine to disagree with him, but much of the information being advanced about him is incorrect.

  4. April 13th, 2010 at 05:19 | #4

    One point: Hayek said that the monetary system should be under govt control. My own reading is that he feels about central banks in the same way as Bagehot in that comment.

  5. TerjeP (say tay-a)
    April 13th, 2010 at 06:14 | #5

    A minimum wage is nothing like a guaranteed minimum income. It does nothing for the unemployed. The LDP ran in 2007 promoting a minimum guaranteed income and abolition of the minimum wage. A minimum wage is a tax on marginal employment. It is worse than a payroll tax which applies to all workers and does not focus the burden on those employers that offer jobs to marginal workers. As much as I hate payroll tax we would be better off with a higher payroll tax which funds an income suplement for marginal workers if coupled with removal of the minimum wage.

  6. April 13th, 2010 at 06:58 | #6

    I favor a Guaranteed Income. However, if everyone gets a certain income, then there is a de facto minimum wage. That’s what I meant. Hayek addresses other minimum wage ideas in the book I mentioned.

  7. April 13th, 2010 at 09:58 | #7

    And here’s something for those troubled by the rise of the “nanny state”? (Should we use such an implicitly sexist term? Perhaps not. Let’s call it the carers’ state)

    Canada smoking ban leads to drop in hospitalizations or what if the carer state knows best?

    Hospital admissions for patients with heart and respiratory problems have dropped by around a third in Canada since anti-smoking laws were introduced in 2001, a new study showed Monday.

    The 10-year study was carried out in the city of Toronto and aimed to measure the effects of banning smoking in restaurants and bars.

    “Research delineating the impact of smoke-free legislation on cardiovascular and respiratory outcomes could have an immense impact on public health, given that an estimated one billion people are expected to die during the 21st century as a result of tobacco-related disease,” wrote lead author Alisa Naiman from the University of Toronto.

    Since smoking was banned nine years ago, hospital admissions for cardiovascular and respiratory conditions dropped 39 percent and 33 percent respectively, according to the article published in the Canadian Medical Association Journal.

    One can speculate on how many quality life years were added to the citizenry of Canada and probably underestimate, and if the pubs and clubs are right, and it spilled into lower consumption of alcohol, there may also be other incidental benefits in alcohol-related violence, domestic disputes etc.

  8. Chris Warren
    April 13th, 2010 at 11:27 | #8

    @TerjeP (say tay-a)

    A minimum wage is a tax on marginal employment. It is worse than a payroll tax which applies to all workers and does not focus the burden on those employers that offer jobs to marginal workers.

    No. Minimum wages are the most efficient way of delivering a equitable guaranteed minimum income.

    Minimum wages in effect set the standard by which all other prices can be determined based on productivity.

    If the economy is a set of equations based on commodity production, then you only get the same number of equations as there are commodities.

    But each commodity is a variable, BUT you have an extra variable for wage-costs.

    So you always have more variables than equations.

    So you must set a minimum wages. This is the only way you can get a stable economic system where you have the same number of equations as variables.

    If economic enterprises cannot pay minimum wages, they are not efficient, and should be competed out of existence.

  9. James
    April 13th, 2010 at 11:41 | #9

    Terje, there is no evidence that minimum wages lower employment. In fact, the reverse is often true. This does not get the attention it deserves because of the ideological threat it poses. See here:

    “[David] Card, a highly esteemed economist at the University of California, Berkeley, caught flak for his heresy not on trade but on the minimum wage. In 1994 he conducted a study to see whether an increase in the minimum wage in New Jersey had the negative effect on employment that basic neoclassical theory would predict. He found it didn’t. In fact, his regression analysis showed that, controlling for other factors, New Jersey gained fast-food jobs after increasing its minimum wage, compared with Pennsylvania, which hadn’t raised wages. The paper attracted a tremendous amount of attention and criticism, and Card himself largely abandoned working on the minimum wage. In a 2006 interview, he explained his decision to leave the topic behind this way: “I’ve subsequently stayed away from the minimum wage literature for a number of reasons. First, it cost me a lot of friends. People that I had known for many years, for instance, some of the ones I met at my first job at the University of Chicago, became very angry or disappointed. They thought that in publishing our work we were being traitors to the cause of economics as a whole.” ”

    The mainstream’s minimum wage theory is best summed up by this picture.

  10. John Steinsvold
    April 13th, 2010 at 12:26 | #10

    An Alternative to Capitalism (which we desperately need here in the USA)

    The following link takes you to an essay titled: “Home of the Brave?” which was published by the Athenaeum Library of Philosophy:

    http://evans-experientialism.freewebspace.com/steinsvold.htm

    John Steinsvold

  11. Chris Warren
    April 13th, 2010 at 12:56 | #11

    John Steinsvold :
    An Alternative to Capitalism (which we desperately need here in the USA)
    The following link takes you to an essay titled: “Home of the Brave?” which was published by the Athenaeum Library of Philosophy:
    http://evans-experientialism.freewebspace.com/steinsvold.htm
    John Steinsvold

    Ah, good old utopians, covering themselves in brown muck.

    Quite appropriate I thought.

  12. April 13th, 2010 at 13:12 | #12

    Anyone wishing to see where The Drum has got to should look here where Chris Berg from the IPA offers an apologia for the Tea Party Movement in the US.

    Apparently, Obama is “not literally a member of the Communist Party”, you will be glad to know, but The Drum does publish a picture of him in green as if he is toxic, with the endorsement “Health Care Poison: Obamacare”.

    Amazing.

  13. Salient Green
  14. James
    April 13th, 2010 at 14:10 | #14

    Obama isn’t a member of the Communist party?! Damn! Whyever did I use my vote in the One World Communist Government to vote for him?

  15. Freelander
    April 13th, 2010 at 14:37 | #15

    As part of the weekly message board maybe people should find “they didn’t say that!” – the silliest things that people, who ought to know better, have said.

    Here is a climate change example:

    “If you want to fight carbon emissions, then join the Pigou Club and push for taxes on bad energy. If you want to fight carbon emissions at a personal level, then act as if there were a high tax on your use of energy from carbon-emitting sources, and reduce your use of that energy. If you are not really all that worried about carbon emissions, but you get pleasure from making empty, self-righteous gestures, then do what Al Gore does — buy carbon offsets.”

    - Arnold Kling, The Political Economy of Alternative Energy, Tech Central Station, 2007.

  16. Donald Oats
    April 13th, 2010 at 17:21 | #16

    @Tony G
    No, the only news is that Monckton is given kid-gloves treatment even when firmly indulging in what the philosophers call “bullshit”. He can say and do what he likes, because he is not held to the same high standard of truth and reason that scientists are. Whether or not Phil Jones is also a very naughty boy is being decided through a series of enquiries; no such treatment of Monckton however, in spite of many examples of egregious embellishment, shall we say.

  17. April 14th, 2010 at 19:57 | #17

    James :
    Terje, there is no evidence that minimum wages lower employment. In fact, the reverse is often true… The mainstream’s minimum wage theory is best summed up by this picture.

    There is some empirical evidence either way, and both cases fit the theory. The obvious case is that higher payroll costs discourage hiring; this is so obviously true of very high minimum wages that the question then becomes “how much” and not “whether”. The less obvious case is that, when there is material oligopsony in the labour market, up to a point that promotes both hiring and higher wages (this was covered in my first economics text, Lippsey’s Positive Economics); again, that gives rise to a question of “how much”, as well as the question of which case applies, or if something else again is going on.

    However, that linked cartoon is basically a nonsense, not only for failing to fit the empirical evidence into known theory – instead sticking with the overly simplistic theory that doesn’t cover the range of cases as a straw man to knock down – but even worse for only looking at what minimum wages do for low paid workers. But that’s survivor bias, because it selects out what happens to the unemployed. It has never been in dispute that minimum wages help those still in the work force, the worry has been that they push people out of it. It’s not as though we currently have structural full employment in which that would be a non-issue.

  18. Alice
    April 14th, 2010 at 20:06 | #18

    @P.M.Lawrence
    Paul – let me tell you…my 18 year old has just got a job on a training wage (NSW awards) with an accountancy firm. He is a good hardworking kid and just left school and wants a gap year before he starts uni which he got into. He will be earning just over half the the minimum wage and not much more than a McDonalds worker at $8 an hour (legacy JH – traning wage).

    Stuff that. He hasnt even started and his morale is in the gutter. Exploitation of youth. Government subsidised and sold to businesses as cheap labour who may as work as be on the dole.

    MY hardworking son said “Mum – three quarters of my friends are unemployed and I will face the “experience – no experience question everytime I go for a job…oh god we might have to train someone”. Im going to do it.

    Bastards. Not if I find a way around the exploitation of youth (by business and governments) who are keen to learn and be given a chance, like my son…which I damn well will.

  19. April 14th, 2010 at 20:20 | #19

    Chris Warren :
    @TerjeP (say tay-a)

    A minimum wage is a tax on marginal employment. It is worse than a payroll tax which applies to all workers and does not focus the burden on those employers that offer jobs to marginal workers.

    No. Minimum wages are the most efficient way of delivering a equitable guaranteed minimum income.
    Minimum wages in effect set the standard by which all other prices can be determined based on productivity.
    If the economy is a set of equations based on commodity production, then you only get the same number of equations as there are commodities.
    But each commodity is a variable, BUT you have an extra variable for wage-costs.
    So you always have more variables than equations.
    So you must set a minimum wages. This is the only way you can get a stable economic system where you have the same number of equations as variables.
    If economic enterprises cannot pay minimum wages, they are not efficient, and should be competed out of existence.

    Minimum wages of the mandated sort are not a way of delivering an equitable guaranteed minimum income at all, let alone an efficient one. The whole point of the dispute is that they don’t reach the unemployed and might increase their number. Even if they didn’t increase their number, short of full employment they still wouldn’t deliver an equitable guaranteed minimum income to the remaining unemployed. Firms wouldn’t be unable to pay minimum wages and competed out of existence, rather they would pay them, just not to everybody in the labour pool, so leaving some would be workers out. (The situation is different with minimum wages delivered by a negative payroll tax of the sort I described on a earlier occasion elsewhere, since that promotes full employment too.)

    The remaining sentences between the first and last are a nonsense, precisely because even in the ordinary way the variables aren’t fully resolved. You could stick an extra zero on each number with no difference to activity. The only way to anchor other variables to wages is to anchor the currency to the price of labour, say with a hybrid poll tax/corvée such as was used for precisely that in colonial Madagascar (conventional income taxes don’t do it because they aren’t regressive – they lack a fixing level). Incidentally, such a system can operate to deliver relief funds, since the able bodied would be faced with the choice of paid relief work or paying tax to free them for better alternatives if they had any – it’s rather more benign (i.e. less malignant) than a straight poll tax or a straight (unpaid) corvée.

  20. Alice
    April 14th, 2010 at 20:23 | #20

    @P.M.Lawrence
    Sorry -revious post meant to PM not Paul…
    The oly people that do well out of this so called slave wage are the private pkacement agencies who get a govt kickback and the private business that hires these kids because they get tax deductions and hideously cheap labour. The govt gets benefits because they dont register as unemployed and the wage is not different to unemployment benefits. The poor kid who signs up gets jack except maybe some minimal experience and the big experience of being ripped off and feeling completely undervalued. Nice way to start the working career when they may be good kids and hardworking.

    Utter disgust. Is this how we should treat our youth? Id rather sack the government and the private sector placement agencies who are getting the larger share of my energetic son’s efforts.

    Real jobs please and no shirking by companies from training. Let it all occur at the minimum wage instead of this exploitation.

  21. conrad
    April 14th, 2010 at 20:25 | #21

    Alice,

    doesn’t your story really confirm Terje’s suggestions? It seems to me that if it wasn’t for the training wage, your son would be on the dole right now, going backwards instead of forwards in life.

  22. April 14th, 2010 at 20:25 | #22

    @Alice

    There’s a false choice between two things that don’t work that is being presented to people, so if they point out that one is no good (as you have done for “youth wages” or whatever they call them) they will be tricked into thinking the other one they haven’t looked at so hard will work (here, minimum wages). In fact, neither work, and it’s just a trick to con the voters. I would prefer something else again, like the negative payroll tax I just mentioned.

  23. Freelander
    April 14th, 2010 at 20:45 | #23

    One position that is possible to take regarding individual choice and so called paternalism, is that the older person is, to some extent, a different person. The person one is, say ten years later, is in some ways similar to a son or daughter of the present person. That future person has no say over present behaviour but does inherit the consequence of the present person’s choices. When those choices are clearly wrong and will have obvious detrimental consequences that will be regretted by that future person, the question is to what extent should even the relatively benign interventions of something like anti-smoking campaigns be regarded as paternalistic, especially when the state is called on to pick up the costs of those bad choices.

  24. Alice
    April 14th, 2010 at 21:11 | #24

    @conrad
    I could argue that if it wasnt for the dismantling of unions and “free market flexible labor adherent policies” that my son would be enjoying a decent wage right now for a school leaver (that didnt exploit him or demoeralise him) and decent humane working conditions liekley to foster his productivity, instead of private sector organisations making all the profit at his expense… Conrad.

    There are two sides to this story and not necessaarily the one that says “your son should be eternally grateful for any job he gets no matter what wage he gets paid.” There is at least one non subscriber to that theory here (and probably millions of other mothers across this country also do not subscribe to that view).

  25. conrad
    April 14th, 2010 at 21:29 | #25

    “that my son would be enjoying a decent wage right now for a school leaver”
    .
    That’s a pretty big assumption. The alternative is that he would be unemployed, and many other people would be too. I get to see this every year when I work in France, where there are strong unions and the labor market isn’t especially free (see for example here), so the things you refer to arn’t all milk and honey. I also find it hard to feel sympathetic for this position, especially because many other people go to university to get training and have to pay for the privilege — I mean, if people can’t sacrifice a small amount of their life to get ahead in the long term, it just shows you what Australians have obviously become (actually, at least based on the statistics I’ve seen, perhaps that should be young white male Australians, as their female counterparts don’t seem to have this problem nearly as much).

  26. paul walter
    April 14th, 2010 at 21:33 | #26

    Alice, disagreeing with the implicit proposition that:
    ” Your son should be eternally greatful for any job he gets, regardless…”.
    Sort of reminds me of a chat between me and Fran Barlow the other night, where she quoted some of an old Monty Python sketch along thelines of:
    1st Lancashire industrialist:
    “When we was young, all we had to wear was the snow that fellow off the roof ”
    2cnd Lancashire industrialist: : ” that’s nothing, once the snow wore off we had nothing but the icy cold wind”,
    sort of thing ( yeah, I know Fran , anything but exact, but you get my drift.
    I replied with a verse from the old BBC Great Depression series “When the Boat comes in”,
    ” thou shalt have a fishy, etc”.
    We are back to the nineteenth century and the poor laws with the sort of thinking that Conrad exhibits: gratitude from the duped worker to the boss that (s)he can have a chance to lick the dog leavings off the bottom of the bosses leather shoes.

  27. conrad
    April 14th, 2010 at 22:07 | #27

    Paul,

    the alternative view is that many people now have an over inflated sense of entitlement (which won’t get you anywhere in life). The idea that things like apprentice wages might help people rather than hinder them in the long term is not exactly radical — indeed this sort of training system worked fine until what appear to be cultural changes in the last decade or so when many young white males obviously decided they didn’t need to invest in their futures as much as before. It still works in many countries, including fairly socialist ones, like Germany (where the demand is huge I believe). Perhaps young Germans are smarter than young Australians.

    Like I pointed out, if you want see the effects of the type of laws I imagine you think are a good idea, then feel free to go to France where the effects are pretty obvious or feel free to remember what Australia was like a few decades ago. I’m surprised how many people want to to return to that given that the main people it appears good for are the privileged few who are protected by it.

  28. Freelander
    April 14th, 2010 at 22:36 | #28

    @conrad

    “The alternative is that he would be unemployed, and many other people would be too.”
    Pretty big assumption, also. Also a brave assumption that there would be only one alternative.

  29. Donald Oats
    April 14th, 2010 at 22:56 | #29

    Playing the Devil’s Advocate, may I suggest the third alternative for youth earning such a low wage? Work two fulltime jobs. That’s what the Americans do. And if two fulltime jobs still isn’t enough cash, well you know the third alternative for that..

    Oh, I love the arguments over “minimum wages”. Working two fulltime jobs two towns apart is just sooo character building.

  30. Ken Miles
    April 14th, 2010 at 23:03 | #30

    The CRU has once again been cleared by another enquiry. This time is a panel of scientists who studied the CRU’s published work for fraud/etc.

    Money quote:

    We saw no evidence of any deliberate scientific malpractice in any of the work of the Climatic Reseach Unit and had it been there we believe that it is likely that we would have detected it. Rather we found a small group of dedicated if slightly disorganised researchers who were ill-prepared for being the focus of public attention. As with many small research groups their internal procedures were rather informal

    PDF here

  31. Freelander
    April 14th, 2010 at 23:27 | #31

    @Donald Oats

    And live in your car while you save up enough to own your own business – shining shoes, or whatever. Also, sell your blood and any spare organs, then get paid for drug trials, and lease parts of your skin to host tattoo advertisements. Hell, the opportunities are endless… And I haven’t even touched on prostitution, drug dealing, mugging little old ladies or the myriad of other ways of earning easy money an enterprising youth is capable of.

  32. conrad
    April 15th, 2010 at 08:29 | #32

    “Pretty big assumption, also. Also a brave assumption that there would be only one alternative.”

    Well, if you seriously believe all of that, and if it obviously won’t affect youth unemployment, training opportunities, etc., then my recommendation is that you campaign to get rid of the youth wage. I guess we can fill the skill shortages caused by it pretty easily via skilled immigration anyway, no doubt with people only too happy to work hard.

    Alternatively, it would be handy for you to then suggest a decent way of dealing with the even greater number of bored young white males who have dropped out of the education and training system. Perhaps we can create banlieus for them like France.

  33. Freelander
    April 15th, 2010 at 09:44 | #33

    I thought I had provided that? Let them mug old people. That way they could probably solve the demographic problem created by the baby boom while, at the same time, their self employment provides them with adequate remuneration.

  34. James
    April 15th, 2010 at 17:14 | #34

    @P.M.Lawrence

    I find it a bit hard to believe that you are criticising a satirical cartoon for straw-manning. In any case, you mustn’t have read it very carefully, because the cartoon explicitly says that the minimum wage has no clear effect on employment, and so does the data – notably David Card’s study which I mentioned earlier.

    Chris Warren’s point about the number of equations are not “a nonsense” but a generalisation of Sraffa’s economic model, which shows that a set of prices can be found that clear markets and enable economic reproduction for any division of wages and profits. Wages and profits cannot therefore be said to be determined by the market – they determine the market. The split between them is governed by relative power in class struggle as expressed through employer/employee conflict, union/antiunion activity, government policy, etcetera.

    In Sraffa’s model the profit/wage share is an independent variable – this is a logical consequence of the mathematics, but I’m a bit hesitant to say that this logical consequence is also a policy consequence, since this depends on the degree to which reality matches our mathematical approximations of it – as the GFC has shown that’s a pretty dicey thing to assume.

  35. James
    April 15th, 2010 at 17:34 | #35

    @conrad

    As our host has commented a few times (eg here) the idea that European labour markets are somehow dysfunctional compared to the US (or Australia) is another myth in need of busting.

    @ Paul Walter:
    “See saw, Marjorie Daw, Johnny shall have a new master,
    He shall earn but a penny a day, because he can’t work any faster”.
    Children remember what a nightmare the Industrial Revolution’s “free market in labour” was, even if economists seem to forget.

  36. Alice
    April 15th, 2010 at 19:06 | #36

    @conrad
    Oh how high and mighty of you Conrad when you say this

    ” I also find it hard to feel sympathetic for this position, especially because many other people go to university to get training and have to pay for the privilege — I mean, if people can’t sacrifice a small amount of their life to get ahead in the long term, it just shows you what Australians have obviously become (actually, at least based on the statistics I’ve seen, perhaps that should be young white male Australians, as their female counterparts don’t seem to have this problem nearly as much).”

    Would you possibly mind telling me how “many other people go to uni to get training and have to pay for the privilege”

    If, when the person in question is like my son aged 18, just left school, he has to go to uni “and pay for the privilege”

    With what Conrad??? He is 18 – just out of school. What you really mean is the children of the “privileged” get to go to uni just out of school and have their privileges paid for by their privileged parents until they get a job at the local RSL (and that wont pay for it either)???

    Sp privileged parents pay Conrad. Tell us something we dont know.

  37. Alice
    April 15th, 2010 at 19:22 | #37

    BTW Conrad -

    I dont worry about my son. He is smart. He is getting the best of both worlds – experience and a qualification in the year that he works – despite low pay rate – and then he gets living away from home allowance to attend uni.

    You dont realise a lot of those kids slaving for uni degrees with no work experience and exhausted by doing occasional pub shifts in something entirely unrelated to where they are studying (and broke) are frowned on by private sector employers…because Conrad most private sector employers know that unis have sold out to the almighty dollar and a degree just aint worth what it used to be worth (when standards have dropped and thousands more are being pumped out of the semi or mostly privatised unis with a low fail rate, low standards and a piece of worthless paper and no experience)…and experience is valued more highly.

    Pay all the way for education for your kids if you want to (if it makes you feel good as a parent)…my kid and I are trying to combine the best of both worlds…as you do for your kids.

  38. conrad
    April 15th, 2010 at 19:39 | #38

    “With what Conrad???”

    You haven’t of HECS? I got to pay for uni, and didn’t even get a training wage to go.

    “Because Conrad most private sector employers know that unis have sold out to the almighty dollar and a degree just aint worth what it used to be worth ”

    I don’t know who perpetuates this myth, but all the statistics I’ve seen show that getting a degree is still worthwhile (really worthwhile in fact). If people arn’t smart enough to realize that, they arn’t obliged to go.

  39. conrad
    April 15th, 2010 at 19:43 | #39

    “the idea that European labour markets are somehow dysfunctional compared to the US (or Australia) is another myth in need of busting.”

    The Australian labour market is far better than the French one. I’d rather be young here any day, let alone young and coloured, where you’ll get brutally discriminated against. I also think the US isn’t the right comparison given that their problems are caused by many other factors like (a) a stupidly large military budget; and (b) being the epicentre of all the current financial problems. How about Singapore or HK, who have even more free markets than us?

  40. Alice
    April 15th, 2010 at 19:44 | #40

    @conrad
    Well Conrad…what can I say ..so who supported your hecs (you?) but who supported your petrol, food, going out money, textbooks, clothes and food while you were studying??..and if it was you entirely..where was your job and did you pay rent or board?

    Ill tell my son to look there for a job.

  41. Alice
    April 15th, 2010 at 19:54 | #41

    @P.M.Lawrence
    I dont know PM – I work for a company that seems to employ a lot of local northern beaches people in a service that runs 24/7 but its usually below the payroll tax threshold. There are lots of employers like that. Im not so sure its much of an incentive. Frankly I dont agree at all with payroll tax given that Im loathe to give the desperately incompetent NSW state labor a single solitary cent.
    They have privatised veryting under the sun that used to bring them income because they are too laxy and bungling to administer things and like heroin addicts they want a short quick high from a sale, but they have almost privatised their revenue sources in entirety and are still looking for sales.

    What do you do with such an incompetent lot of morons?. Not give them payroll tax at all? Im all for it.

  42. conrad
    April 15th, 2010 at 21:47 | #42

    “where was your job and did you pay rent or board”

    I worked in a bakery and lived in a share house. I’m sure there are easier jobs to be found than bakeries these days incidentally (unless you like waking up at 3:30am). Really shitty jobs were unforunately a hazard of when I was born (which basically meant I turned 18 in the middle of a recession). As it happens, I didn’t go out much because I simply didn’t have the money and nor did I even own a computer for that matter (let alone a car or a mobile phone — indeed, I didn’t buy a car until I was over 30, but that was in part due to working in other countries where they arn’t necessary). In hindsight, it would have been simpler for me to study part time, although being poor didn’t really bother me. I seem to remember quite enjoying university, despite this. Not surprisingly, I paid off my HECS once I was working full time. You’ll also be pleased to know that I tried to get an apprenticeship at 16 (twice), despite poor wages, but was knocked back.
    .
    Incidentally, you still haven’t answered my question about whether you support getting rid of apprentice and training wages. I assume according to your logic, it shouldn’t make much difference. Or am I incorrect (and I could ask the same question about re-regulating the labour market like it was, say, 3 decades ago)?

  43. James
    April 16th, 2010 at 10:25 | #43

    @conrad
    You are changing the subject. The issue at hand is unemployment rates, not racism (and I think you might be surprised how difficult it is for aboriginal and other non-white kids to get jobs in Australia).
    Hong Kong and Singapore are not valid comparisons, because they are city-states with a privileged citizen-class employing large overseas/migrant worker populations. They manage unemployment or labour shortages by contracting or expanding their intake from mainland China and Malaysia/Indonesia/The Phillipines, which they can do at a moment’s notice.

  44. Chris Warren
    April 16th, 2010 at 11:31 | #44

    @James

    Yes, I have often wondered whether this wagesprofit share can be used in policy.

    Where Sraffa has rate of profits r as:

    r = R (1- w) …….. w is wages

    I can see this working if R is the real growth increment from the previous cycle of production. Sraffa has R as the “maximum profits”.

    Also – this may work, but only if r and w are fixed by social agreement (irrespective of R which changes as growth goes up and down).

    In this case I can see no instability.

  45. April 16th, 2010 at 12:29 | #45

    Since we have been talking of tax and welfare a bit of late …

    The single mother’s manifesto, by that well known single mother, J K Rowling

    Worth a read.

    Rowling, speaking of why despite her ability to exploit tax havesn chose to remain domiciled in the UK said in part:

    A second reason, however, was that I am indebted to the British welfare state; the very one that Mr Cameron would like to replace with charity handouts. When my life hit rock bottom, that safety net, threadbare though it had become under John Major’s Government, was there to break the fall. I cannot help feeling, therefore, that it would have been contemptible to scarper for the West Indies at the first sniff of a seven-figure royalty cheque. This, if you like, is my notion of patriotism. On the available evidence, I suspect that it is Lord Ashcroft’s idea of being a mug

    I quite liked the Harry Potter books yet my opinion of Ms Rowling the person, is now rather warmer.

  46. conrad
    April 16th, 2010 at 14:09 | #46

    “They manage unemployment or labour shortages by contracting or expanding their intake from mainland China and Malaysia/Indonesia/The Phillipines, which they can do at a moment’s notice.”
    .
    We could too if we wanted — we just don’t, although we’re getting closer to it now with some of our temporary visas. If you think we could benefit from that, which your comments implies we could (or at least Singapore and HK could), then obviously our current labor market restrictions are hurting people. I’d be surprised if that sort of system didn’t help some groups, like females with children.
    .
    “The issue at hand is unemployment rates, not racism (and I think you might be surprised how difficult it is for aboriginal and other non-white kids to get jobs in Australia).”
    .
    Actually, I think they’re strongly related. If you have high minimum wages and strict labour rules like France, no-one will ever give marginal chances a chance. Thus the effect of within-group prejudices is amplified, and not surprisingly, the social out-group gets marginalized. Similarly, various organized structures seem to love to create rules to keep others out (like medicos — I guy I knew had to move back to Austria because his girlfriend’s qualifications wern’t valid in Australia, which is just crazy)

  47. April 16th, 2010 at 15:19 | #47

    @conrad

    The minimum wage arguments are complex because, as with so much that we want to talk about in social policy it’s not simply about the economics. If one were indifferent to human wellbeing, then we ought to allow children to flog off their kidneys and go down the mines in exchange for a slice of day-old bread and a bit of lard. Most people would regard that as at best borderline undesirable. And of this majority, the overwhelming preponderance think there should be serious constraints on exploiting people. It’s perverse but so that the more exploited you are the more likely you are to put up with continuing to be exploited. Apparently it’s not good for your confidence and you tend not to demand the kind of bargain that people who think they have rights demand. And the poorer you are, the less likely you are to worry about the future and the more likely you are to take gratification now, which simply makes things worse.

    Who knew?

    One possible advantage of rubbish working conditions for youth might be that it discourages leaving school early and underpins the idea of getting qualifications. In the longer run, being in an unskilled job will probably cost you more than temporarily passing up a minimum wage and minimum hours job at some fast food outlet. So making these jobs more attractive might be counterproductive — assuming of course there are higher skilled and better paid jobs awaiting them in the long run.

    Yet this is a pretty blunt instrument to use. It would probably be better to simply make schools more appealing by offering better tailored curriculum, paying them better OzStudy if they turned in good results on attendance and assessment. That would pretty much cut out kids taking jobs below the minimum wage anyway.

    I’m quite happy for there to be a minimum wage with minimum hours. Like any resource, the cheaper it is the less efficiently is is going to be used. If the employers pays a decent rate he/she is likely to make sure the person is used effectively and efficiently, which implies some training and responsibility — the sort of thing that a person can take away from the job. They can acquire a modicum of self-respect and a sense of what real work is like. And let’s also be clear, if the payment of minimum wages is incmpatible with someone being given a job, then maybe there realy is no good economic rationale for the job to exist.

    Doubtless, if I were totally indifferent to human dignity and could find someone trustworthy and willing to be my servant for $1 per day I’d figure I didn’t need bins and would toss my scraps everywhere and simply bark out instructions to the minion to clean up after me. Perhaps I’d save on toilet paper too. But would that be real employment? Not really. It wouldn’t even be efficient, since such a person could be contributing far more to the wealth of the country doing something more productive, while I attended to my personal needs in a somewhat more efficient manner too.

  48. conrad
    April 16th, 2010 at 16:04 | #48

    “Doubtless, if I were totally indifferent to human dignity and could find someone trustworthy and willing to be my servant for $1 per day I’d figure I didn’t need bins and would toss my scraps everywhere and simply bark out instructions to the minion to clean up after me. ”

    At least where I work, I encourage our students to do voluntary work for $0 per day in the field they are interested in if they ask (which is often like a very unskilled version of the work they’ll later get paid to do), and those that do get far better long term outcomes, most of them learn a lot, and most of them enjoy it. I’m not going to stop recommending that they do that, and I don’t see it as anything like your example — it’s an enjoyable stepping stone to prosperity for them. I don’t deal with them, but if I did, I’d also recommend to certain groups that doing apprenticeships is a good idea, even if it doesn’t pay well (i.e., it is essentially a version of a lower minimum wage). I notice no-one here is yet to actually say we should get rid of this, despite me asking twice. If you think it should stay, then you also think there should be a lower minimum wage under some conditions, so you basically agree with Terje in this case, like I do (I think training wages work fine in most countries that have them, like Australia and Germany).

    Also, there’s a big difference between low wages and low income. That’s what Terje goes on about when he’s talking about a negative income tax. If people don’t earn enough, the alternative is to use income transfer via the government rather than set a minimum wage which excludes some people from getting work experience.

  49. conrad
    April 16th, 2010 at 16:06 | #49

    “It would probably be better to simply make schools more appealing by offering better tailored curriculum, paying them better OzStudy if they turned in good results on attendance and assessment. That would pretty much cut out kids taking jobs below the minimum wage anyway.”

    Maybe you’re are not aware of this (most people arn’t), but NSW gets some of the best school outcomes in the world, so improving the system even further is going to be quite difficult, especially for those who obviously have difficulty at school for one reason or another. I therefore don’t see it as a realistic solution to the problem of bored young males.

  50. TerjeP (say tay-a)
    April 16th, 2010 at 16:17 | #50

    Alice – I’m not worried about your son either. He does indeed seem smart.

    James – you cite one study by a guy that got criticises by his peers and then abandoned the field rather than defend his work. Sorry if I don’t find that compelling.

    If low wages are a social concern that the government should correct it is better to tax all employers and pay workers a subsidy rather than taxing only the employers that employ marginal workers.

  51. April 16th, 2010 at 19:24 | #51

    @conrad

    As a NSW HS teacher, I am aware. I also aware that we do have a problem with the bottom two deciles of achievement/socio-economic status. It is improving, but there’s still a lot of room to do better.

  52. April 16th, 2010 at 19:33 | #52

    James :
    @P.M.Lawrence
    I find it a bit hard to believe that you are criticising a satirical cartoon for straw-manning. In any case, you mustn’t have read it very carefully, because the cartoon explicitly says that the minimum wage has no clear effect on employment, and so does the data – notably David Card’s study which I mentioned earlier.
    Chris Warren’s point about the number of equations are not “a nonsense” but a generalisation of Sraffa’s economic model, which shows that a set of prices can be found that clear markets and enable economic reproduction for any division of wages and profits. Wages and profits cannot therefore be said to be determined by the market – they determine the market. The split between them is governed by relative power in class struggle as expressed through employer/employee conflict, union/antiunion activity, government policy, etcetera.
    In Sraffa’s model the profit/wage share is an independent variable – this is a logical consequence of the mathematics, but I’m a bit hesitant to say that this logical consequence is also a policy consequence, since this depends on the degree to which reality matches our mathematical approximations of it – as the GFC has shown that’s a pretty dicey thing to assume.

    For your first paragraph, I did note the points in that cartoon, and they are wrong in the ways I outlined. The cartoon explicitly states: “My theory about the minimum wage. Isn’t it shiny and elegant? It proves that the minimum wage hurts poor workers by raising unemployment!” When the cartoon acknowledges the discrepancies, it is to highlight that that theory does not fit the facts. But, as I pointed out, even the theory in an undergraduate textbook was more sophisticated than that and covered different cases with different outcomes. The cartoonist is probably right to mock those who offer such a simplistic theory – but it is wrong to take that cartoon and then use it in support of knocking down any theoretical description.

    On the other paragraphs, I think you are doing what has been called “furious agreement”. That is, I was pointing out that we can indeed have different numeraires and so on, with free and under-determined variables around, and that that is what is happening (under-determined by the internal logic, that is; of course outside bargaining power comes along too). So you can’t use the idea of stuff not being determined as a reductio ad absurdum to “prove” that you have to constrain wages to get all the variables determined; it is quite possible for them not to be all determined (internally, endogenously), so it is quite possible for wages not to have that sort of constraint after all.

  53. April 16th, 2010 at 19:56 | #53

    Alice :
    @P.M.Lawrence
    I dont know PM – I work for a company that seems to employ a lot of local northern beaches people in a service that runs 24/7 but its usually below the payroll tax threshold. There are lots of employers like that. Im not so sure its much of an incentive. Frankly I dont agree at all with payroll tax given that Im loathe to give the desperately incompetent NSW state labor a single solitary cent.
    They have privatised veryting under the sun that used to bring them income because they are too laxy and bungling to administer things and like heroin addicts they want a short quick high from a sale, but they have almost privatised their revenue sources in entirety and are still looking for sales.
    What do you do with such an incompetent lot of morons?. Not give them payroll tax at all? Im all for it.

    I was talking about a negative payroll tax, by analogy with negative income tax, not the payroll tax that is around at the moment. That is, just as a negative income tax takes money from individual people on higher incomes but actually pays out to those on low or no (other) income, so also a negative payroll tax would credit employers a base amount for each employee (say, A$10,000 p.a. for each full time employee and pro rata for part-timers), which would reduce their tax bills (say, their GST) and put a premium on hiring people for that much rather than creating a disincentive like a mandated minimum wage (regardless of whether other things actually override the disincentive, it’s still there). Others like Professor Kim Swales of the University of Strathclyde and his colleagues and Nobel winner Professor Edmund S. Phelps, McVickar Professor of Political Economy at Columbia University have researched this area as well as me, so it isn’t half-baked. It works out like TerjeP’s suggestion about subsidies at comment number 50, but with some details that help it work (like, not needing to get and then churn funds for it).

  54. Alice
    April 16th, 2010 at 20:52 | #54

    @P.M.Lawrence
    Well – PM – maybe that would be an incentive for thosen who a coterie of employees who lie below the payroll tax threshold…perhaps a redistribution of payroll tax from employers who have a lot of employees to those building businesses with not many employees is sort of what you had in mind? I think maybe this is a good idea…if payroll tax isnt going to the coffers of the inept State Govt (and yes…Im all for Federal takeover at NSW level in entirety)…is this the sort of thing you had in mind? It would act as incentive to put more on …however it could also act as an incentive just to save it as profit. Im not so sure a negative payroll tax in our hands would see more employed (it could just be retained to increase profits rather than hire new people – wages so often depend on time and are already under the microscope of cost cutting – Im wondering if the assumptions re redirection of additional profits would automatically be redirected to additional hirings – ie the psychology of lowering wage costs is already there – can it really be mitigated against by tax changes?).

  55. Alice
    April 16th, 2010 at 20:53 | #55

    should read “those with a coterie of employees”

  56. Alice
    April 16th, 2010 at 21:00 | #56

    @TerjeP (say tay-a)
    Terje – Im not worried about him either – he said to me “Mum – if I go to tafe and get a certificate no-one will pay me. If I work here I can get that certificate and I get paid (bad pay but if I went tob Tafe Id get no pay…and Im getting experience and next year I can go to uni).

    Terje – it was enough logic for me to throw $50 extra his way a week for living expenses.Its his 18th birthday present….as well part of a damn Iphone contract. That better not kill me or it will be confiscated by me (who doesnt have one and wants one).

  57. paul walter
    April 16th, 2010 at 21:07 | #57

    No doubt about it, mums are a young fellas best friend.
    gee, when I think of the times my poor late mum bailed me out as to the accidents of youth, I certainly wouldn’t be here otherwise, I suspect.
    ouchh!

  58. Alice
    April 16th, 2010 at 21:21 | #58

    @paul walter
    Me too Paul..though I must admit my parents could afford no bailouts and neither could my partner’s…we were both on our own support mechanisms from age 16 him and 18 me!
    My partner bought and sold cars out of his garage to help his sole parent Mum…from age 16 (lived on legacy support in an age where Mums didnt work and his dad died tragically young – not much to get by on apart from his grocery stealing and the occasional bike or car he sold – true).
    Mine…public servants and a few kids…just getting by with the mortgage ..not much for extras and kids over 18 got billed promptly!! I moved out and paid my own way…but rents were cheaper back then. I can afford a bit more of a bailout but I have my limits and they arent that high.

  59. paul walter
    April 16th, 2010 at 22:48 | #59

    Alice, that’s right. In my case, came the time, mum stood back and I had to stand on my own two feet; accountable.
    “tough love”, I suppose.
    But for that , I have the priceless gift of ownership of both my own accomplishments and failures.

  60. April 17th, 2010 at 10:39 | #60

    @Alice

    “[M]aybe that would be an incentive for thosen who a coterie of employees who lie below the payroll tax threshold” doesn’t come into it, because you are referring back to current payroll tax and how that operates. But I pointed out that this is not that, this is a set of tax breaks connected to all employees, regardless – there isn’t any separation off according to how current payroll tax operates. For more detail on what I have in mind I gave a link (and other links to other people’s related work). It wouldn’t just operate as an incentive to hire while the the employers kept the gains; they would have to offer at least that much in wages because people could offer to work for anybody in name only, just to let the employer put them down on the tax returns (which isn’t ripping off the tax, because outgoings on unemployment benefits drop to match). Everybody would have an actual value even for zero productivity, but it would make more sense to do more than that and get paid more than that. Only, no employer would have enough bargaining power to offer less than the tax break and find any takers (they might offer less in cash, say with work for the disabled, with the rest going on benefits, facilities, etc.).

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