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John Quiggin 
http://www.theguardian.com/commentisfree/2014/jun/11/the-evidence-is-clear-increasing-the-minimum-wage-doesnt-cause-unemployment
3rd post in a row on minimum wages. Even the rather rightist Forbes has an article that says;
“The results of economic studies of the effect of minimum wage laws on employment are actually very mixed. Some show that employment rises, some that it is unaffected, and some that it falls. Furthermore, they are often statistically insignificant (see for example Minimum Wages and Employment: A Review of Evidence from the New Minimum Wage Research). This is consistent with the above argument. Changes in wages are secondary factors in the national labor market; demand is, by far, the primary one. The falling unemployment of the 1920s was a result of the booming economy (driven in particular by the automobile industry), not a fall in wages; the Great Depression occurred not because wages suddenly jumped, but due to the fact that investment spending collapsed; World War II reversed this not with lower wages, but with rising demand created by the wartime economy; et cetera, et cetera.
So why all the fuss about the minimum wage? System Dynamics Modeling (The Field of System Dynamics) argues that our brains tend to focus on straight-line causation in thinking about social problems and that we have a difficult time seeing the feedback effects that are actually dominant. Because of this, we concentrate on symptoms and not causes and we thereby create policies that are ineffective, at best. For example, in the 1960s, the housing shortage in the inner city led analysts to the “obvious” conclusion that the government needed to build more houses.” – Raising Minimum Wage Is Not The Answer.
You can see the title of the article does not tell the full story. The title and final prescription of the article follow standard right wing dogma even though they admit the evidence does not support low minimum wages as reliably achieving anything good. Low mimimum wages do not reliably create more employment yet they reliably create more working poor. The net effect is obviously negative if you care about equity.
Megan:
You definitely need to get a referral to a good psychiatrist. I’m not kidding.
High minimum wages drive efficient use of labour: high costs of labour drive usage of substitutes for labour, same as anything else. Increase in cost of X Makes X-substitutes relatively cheaper.
… but labour is special, it’s the only factor of production that’s also a factor of consumption. So we care more about efficient use of labour than we do about efficient use of wheat factories and car-growing land. We are labour, and we run the economy for us. We want labour — our lives — to be used as efficiently as possible, to produce as much as possible for as low a cost in our lifespans as possible, and strategies that encourage a minimal use of human labour are what we want to get there.
[alternatively, an increase in nominal wages is an exactly matching increase in willingness to pay nominal prices… a wage subsidy, then, is a subsidy for businesses that produce product that — literally — noone is willing to pay for. Businesses that produce desireable product will be able to charge matching increases, and the only businesses that won’t will be the ones that can’t attract increased willingness to pay are the ones that, you know, don’t produce a product that people are willing to pay for under the new economic circumstance of “a reduction in inequality in the ability to control what goods are produced”. Subsidising people to produce at huge human and opportunity cost product that noone’s actually willing to pay for is pretty clearly a terrible idea. Hence the general opposition to subsidies; shitty low-paying jobs aren’t economically neutral/indifferent, they actually consume resources without producing anything worth the money. There is basically no circumstance where that’s a good macroeconomic idea: Terje — and this shouldn’t be news to anyone — is, or is pretending to be, a terrible economist.]
Ikonoclast – I’m told by people I trust that the best estimates for the link between the minimum wage and employment for Australia comes from work by Andrew Leigh (Economist and now an MP) who found an elasticity of -0.29 with a sensitivity range from -0.25 to -0.4. So a 1% increase in the minimum wage creates a 0.29% decline in the demand for labour. With a workforce of 11 million a 3% decrease in the minimum wage would create 100,000 jobs. Roughly.
Click to access Minimum%20Wages%20Erratum%20(AER).pdf
Whos estimate are you relying on?
@TerjeP
All of my ‘shots’ are expensive. The rounds were paid for by the public purse, both undergrad and postgrad, and I feel a civic responsibility to spend them well.
@Candy Pants
I’ll take that as: “Yes, it’s plausible. In fact, it is so plausible that it is best to simply insult anyone suggesting that it is rather than making an argument why it isn’t.”
Senator Leyonhjelm “described as “conjecture” that the Aboriginal people were the first to occupy the Australian continent and said describing their traditional link with land and water was “stereotyping”.”
He said “Archaeologists might prove that another people lived in Australia before the Aborigines.”
Poor David could also have said that archaeologists might prove that aliens from another planet might have lived here before the Aborigines.
David “also argued that some Aboriginals do not have a relationship with traditional lands and water.”
But he forgot to tell us how that is relevant to the need for constitutional recognition that they did indeed have a very significant relationship to the land when it was stolen from them.
Seriously Terje your man DL is so ignorant he makes Jacqui Lambie look like an intellectual.
@jungney
So you’re educated but not refined. Fair enough.
TerjeP, check the r-squareds in Leigh’s model. Waste of time.
Julie – his full speeech is online if you care to watch. He is spot on.
I don’t swear at you, I don’t abuse you. I bring my cultural and intellectual capital to bear in order to show you what a good, public education and free tertiary education can do for those who persevere regardless of their backgrounds. If you find my comments acerbic, tough, because I won’t take a position on anything if I cannot back it up with evidence and rational argument. You get treated by me as an equal but only in so far as you show qualities or ideas worthy of respect; less than that and you get the scorn you deserve. If you want a refined discussion amongst bourgeois gentlemen and women who tolerate mere opinion because they have to, then try the Lions Club.
@TerjeP
Income supplements, funded by taxpayers in general, are a better market intervention than higher mandated minimum wages that create unemployment. However cash would seem more sensible than food stamps. Both because cash is fungible but also because it carries less needless social stigma.
Don’t know what happened there, but reverse the quoted and unquoted paras.
Megan
Nope, if you seriously believe the executive, the APS, the military and the police would collude in such a conspiracy you are a complete nut case.
Quiggin attracts a wierd following.
@Candy Pants
Children overboard.
Brain overboard.
No such conspiracy occurred although there is a reasonable suspicion that the executive lied. You really do need help.
@Candy Pants
You aren’t doing very well, are you.
Let’s try again: “Why isn’t it at least plausible?”
The government secretly spends millions of dollars to commission “refugee boat” look-alikes, in an 18 week timeframe, when it already has a cheaper vessel (which is a real life boat) to send refugees away from Australia and also regularly does ‘tow-backs’ anyway.
There are all sorts of plausible explanations. Maybe you can suggest the one you find most plausible.
While we’re waiting, the Senate “Scrafton” report is good reading.
Particularly Chapter 2, ‘The “Children Overboard” Incident’.
You’ll find lots of evidence of collusion in a politically motivated lie (on the eve of a “refugee” election) involving the ADF, the APS and the executive.
@Julie Thomas
I posted a link to the senators full speech. However it is stuck in moderation. If you’re interested in going to the source you will find it on YouTube by searching “leyonhjelm”. You may still disagree but at least you will have it in context. For the record I agree pretty much entirely with what the senator said and I think it is long overdue that somebody said it.
The effect of an increase in price for a factor is to push people to look for substitutes for that factor: high minimum wages drive capital investment and productivity growth. As a first-order effect, “employment” falls becacause as wages increase people don’t need to work as long. Which is kind of the point of economic management, I would have thought, getting us the same stuff for less personal effort.
Pretty basic, same effect as the carbon tax.
[“High labour costs drove my business under” is actually, “noone wanted my product enough to pay the cost in human lives”. If the demand were there, the wage bill would be covered.]
Going back to charity; perhaps conservatives need to privately give to charity to atone for the unshared entitlements of their group.
When people join with a mob they surrender a portion of their individuality – a human paradox.
@TerjeP
The ABC report of Leyonhjelm’s speech.
Apparently Leyonhjelm also is a foot dragger on climate change….”evidence not in yet…market solutions…opposed to direct action…costs too much…nature not worth it”.
Do you agree with him on that as well?
@TerjeP
Yes I knew you agreed with your latest hero but I’d like to know what evidence you have for your belief. I don’t care to know about your beliefs. What you need to do is provide some knowledge, some evidence that supports your position.
Which archaeologists support the idea that there is any possibility that there was a ‘race’ of people here before the Aborigines. Name them and cite some published research. That is all you have to do. Is this is another of those anti-science things that you right wing people do?
The making fun of you is the only thing I can do when you continue to ignore the rules about making a rational argument to support your beliefs.
Next request for a rational argument that supports not acknowledging that the blackfellas were here when we came and their property and culture was stolen and destroyed so that we were able to prosper? All you need to do is provide a proper argument and this does not take the form of posting a vid of man with no qualifications.
I cannot listen to your man because he is irrational, his arguments are flawed and that is so irritating and also I really can ‘hear’ his personality in his voice and it is not pleasant.
I am happy to admit to being strange or weird as Candy Pants notices – lol hilarious to imagine a Candy Pants pronouncing that people here are weird but whatev … But you know weird is still human and quite clearly I am not stupid.
I have a very high IQ as measured by the real IQ tests administered by a psychologist. I graduated with distinction in my undergrad psych degree, was awarded the APS psychology prize two years and achieved 1st class pass in my honours degree and was asked by a professor with a very good track record in research to be his PhD student. I earned an Australian Research Council post-grad grant to do that. My honours project and my Phd research were the basis of published articles in Brain and Behaviour and other highly ranked psych journals. And apparently, my honours thesis publication is still referenced by an awful lot of people who are doing work in dynamical systems theory as applied to human behaviour.
So please please don’t think I will listen to any vids you post; I’d read a transcript but I have read lots of David’s words and I think he is not very bright. So please don’t do it any more. It is counter productive…….. honestly. And I am not the only one who finds him unattractive in manner and attitude. it is similar to the way women don’t like Tony Abbott, and from what I hear a lot of the men out here in the regional area think he is a dick.
So Terje respond in the way that the rules of intellectual exchange require. Provide your reasoning and explain why is it the case that you “pretty much (agree) entirely with what the senator said and I think it is long overdue that somebody said it..”
What is your reasoning? We know your prejudices.
@rog
I’d agree with that – for sure private charity giving is a very good thing for the giver but I also think there could be better ways for organising society so that these people do not need to atone for anything.
I think we do need to give up some of our individuality to be part of a society – but why is it seen as giving up something rather than gaining something? I think that giving up something is the essential message of becoming human – women give up freedom to nurture a new life.
I don’t know of any. How is it relevant? The senator was not saying somebody else was first. He was simply pointing out that facts should not be decreed. We don’t need a law that says Aboriginies were here first any more than we need a law telling us what the number pi is or what the colour of grass is.
p.s. Grass is green by the way. Can you name anybody that disputes it?
@jungney
I agree with the senators broad perspective on climate change. But the quote you offer is not a literal quote. It’s you projecting.
@TerjeP
It is a fact that there were Aborigines here first and when white people came and took their land and their way of life. This certainly does need this to be acknowledged and there are many reasons why this is the case. Do you want references to some good arguments complete with premises with facts and evidence that lead to the conclusion that a great deal of good things would happen if this acknowledgement took place?
Why are you introducing ‘laws’ to the discussion, which is about recognition of the history of our country; that *they* were here first, they were the original carers and owners of this land.
So Aborigines are flora and fauna then – like grass? And pi? Perhaps you could read that book “The life of Pi”. Do you read literature Terje? It is good for people to read stories.
Your bourgeoise ‘commonsense’ sayings are so revealing of your commonplace prejudices. Like; “We don’t need a law….”
Who is the *we” you speak for? Not the aborigines and not me.
@TerjeP
What? You really think that is an argument?
Here is a song for you. https://www.youtube.com/watch?v=Dk6Y9uIwiMI
Terje I just posted a vid for you of Leadbelly singing Bourgeois Blues but it went into moderation.
Here is one simple question. See if you can answer rationally.
Why is it “long overdue” that somebody said what your good Senator said?
perhaps you really don’t understand my question. I want to know what cognitive processes you go through when you come to that conclusion. What assumptions are you making? What problems have been caused for you because apparently nobody has been telling it like it is?
@TerjeP
I am no expert on the topic of minimum wages. If I trawl the interent I can find economists writing polemical pieces with cherry-picked data which “prove” that having lower or no minimum wages increases employment. If can also find other economists writing polemical pieces with cherry-picked data which “show” that having a minimum wage or raising it when it is very low does not increase unemployment. I can find a third set of economists who say the data are mixed and that unemployment depends on so many factors (including quite a few factors idiosyncratic to each country, state or region studied) that it is hard to separate out the minimum wage effect. I can find a fourth set of economists who can advance theoretical models demonstrating that lowering the minimum wage increases employment. I can find a fifth set of economists who can advance theoretical models demonstrating that increasing the minimum wage does not increase unemployment and might even increase employment in some cases due to the increase in effective demand from the raised wages.
This article “The evidence is clear: increasing the minimum wage doesn’t cost jobs” by Dave Oliver, has links to studies which apparently demonstrate exactly that.
As I say, the data are ambiguous. Also, the question is so ideologically charged that it is difficult to impossible to find a truly academic and unbiased study which in addition is broad enough and robust enough in method to correct for all other factors.
In a sense, I feel it is pointless for me to be arguing about unemployment when I consider the whole system (capitalism) to be mal-designed. It is like arguing about which type of car is the best to carry commuters in a big city with no buses and trains.
@TerjeP
I have answered you above on unemployment and minimum wages. This answer below is about aboriginal ownership of Australia and related issues.
As Libertarians consider property ownership so important, why will they not concede that the aboriginalswere the rightful owners of Australia? The aboriginals were in complete occupation of Australia for about 20,000 to 40,000 years before white people came here and they did improve and manage the land with fire-stick farming, extensive fish trap earth-works etc.
Why do Libertarians, who consider the use of force unacceptable, want to, after the fact, accept that forced dispossession of aboriginals from their land? Why do Libertarians advocate that no apologies, no recognition, no concessions and no restitution are due?
This situation is actually a perfect test of whether Libetarians are sincere in their morals, beliefs and political philosophy. This is because it relates to land ownership on the basis of original occupation and improvement and also relates to a use of force to overturn that position. The reaction of Libertarians in this matter proves that they are completely insincere and do not stand by the principles they advocate. As soon as they face a tough test which means giving recognition, recompense and even some returned property rights to unjustly dispossesed people turned into outcasts, they (the Libertarians) fail this real world test completely and utterly.
@Julie Thomas
Julie – in case it is in any doubt let me say that when Europeans arrived in Australia the Aborigines were already here. And that as Europeans colonised Australia Aborigines through violent conflict, introduced diseases, various attrocities and institutionalised acts of racism and indifference, were in nearly all instances dispossessed of their land. Their culture and traditions were disrupted and a massive amount of individual suffering occured. The ramifications of these events remain with us today.
However if you proposed to create a law that decreed these to be the facts of history then I would oppose you. History is written by scholars not by the legislature. We should write laws informed by our inquiry into evidence and our best understanding of the facts. Not legislate to dictate what the facts are.
You asked for scholarly evidence that the Aborigines were not the first people in Australia. If I could point to a law that said they were not the first people in Australia then would you concede the point or would you be indignant and reject the meaningfulness of my evidence? Hopefully the latter. And you would do so for the simple reason that laws do not establish facts. And in fact we bring the law into disrepute when we attempt to use it in such a way.
But if we reject this principle then we allow ourselves the lattitude to write laws that say pi is 3, that water is wine, that the earth is flat and that everybody in our nation is rich and happy.
@TerjeP
I have to say that I agree with Terje on the Aboriginal issue. For far too long they have received too much special treatment
I agreed with the Mabo decision. And whilst I’m not across every detail of the subsequent native title act I agree with the general thrust of it. I think native title is however a weak form of property right and where it is practical and does not create undue further injustices then people should have a mechanism for upgrading it if they so choose.
@jungney
I think your dishonest attempt to put words in my mouth further demonstrates your disinterest in any reasoned discussion.
@TerjeP
Sorry mate, that is pure sophistry on your part. Law does not decree empirical facts but it does recognize (or not recognize) empirical facts all the time. Consider the legal history of the concept of “terra nullius” in Australia.
“European settlement of Australia commenced in 1788. Prior to this, indigenous Australians inhabited the continent and had unwritten laws, as documented[by whom?] in the case of the Yirrkala community.
However, the indigenous Australians did not have any form of political organization that Europeans could understand as being analogous to their own institutions, and the British could not find recognised leaders with the authority to sign treaties, so treaties were not signed (in contrast to British colonial practices in many areas of North America, Africa, New Zealand, etc.).
The first test of terra nullius in Australia occurred with the decision of R v Tommy (Monitor, 29 November 1827), which indicated that the native inhabitants were only subject to English law where the incident concerned both natives and settlers. The rationale was that Aboriginal tribal groups already operated under their own legal systems. This position was further reinforced by the decisions of R v Boatman or Jackass and Bulleyes (Sydney Gazette, 25 February 1832) and R v Ballard (Sydney Gazette, 23 April 1829).
Prompted by Batman’s Treaty (June 1835) with Wurundjeri elders of the area around the future Melbourne, in August 1835 Governor Bourke of New South Wales implemented the doctrine of terra nullius by proclaiming that indigenous Australians could not sell or assign land, nor could an individual person or group acquire it, other than through distribution by the Crown.[3]
The first decision of the New South Wales Supreme Court to make explicit use of the term terra nullius was R v Murrell and Bummaree (unreported, New South Wales Supreme Court, 11 April 1836, Burton J). Terra nullius was not endorsed by the Judicial Committee of the Privy Council until the decision of Cooper v Stuart in 1889, some fifty-three years later.[4]
In 1982, Eddie Mabo and four other Torres Strait Islanders from Mer (Murray Island) started legal proceedings to establish their traditional land ownership. This led to Mabo v Queensland (No 1). In 1992, after ten years of hearings before the Queensland Supreme Court and the High Court of Australia, the latter court found that the Mer people had owned their land prior to annexation by Queensland.[5] This ruling overturned the long-established legal doctrine of terra nullius. The ruling thus had far-reaching significance for the land claims of both Torres Strait Islanders and other Indigenous Australians. The controversy over Australian land ownership has erupted in the so-called “History wars.” Historian Michael Connor, in his critique of the legal fiction, has claimed that the concept of terra nullius was a straw man developed in the late twentieth century:
By the time of Mabo in 1992, terra nullius was the only explanation for the British settlement of Australia. Historians, more interested in politics than archives, misled the legal profession into believing that a phrase no one had heard of a few years before was the very basis of our statehood, and Reynolds’ version of our history, especially The Law of the Land, underpinned the Mabo judges’ decision-making.[6]
There is some controversy as to the meaning of the term. For example, it is asserted that, rather than implying mere emptiness, terra nullius can be interpreted as an absence of civilized society. The English common law of the time[when?] allowed for the legal settlement of “uninhabited or barbarous country”.[7]
In 1971, in the controversial Gove land rights case, Justice Richard Blackburn ruled that Australia had been considered “desert and uncultivated” (a term which included territory in which resided “uncivilized inhabitants in a primitive state of society”) before European settlement, and therefore, by the law that applied at the time, open to be claimed by right of occupancy, and that there was no such thing as native title in Australian law. The concept of terra nullius was not considered in this case, however.[8] Court cases in 1977, 1979, and 1982 – brought by or on behalf of Aboriginal activists – challenged Australian sovereignty on the grounds that terra nullius had been improperly applied, therefore Aboriginal sovereignty should still be regarded as being intact. The courts rejected these cases, but the Australian High Court left the door open for a reassessment of whether the continent should be considered “settled” or “conquered”. Later, on 1 February 2014, the traditional owners of land on Badu Island received freehold title to 10,000 hectare in an act of the Queensland Government.[9]” – Wikipedia.
I admit Wikepedia is not likely to be the best source for this complex legal topic. But note the sentence “the Australian High Court left the door open for a reassessment of whether the continent should be considered “settled” or “conquered”.
It is within the ambit of the legislature to attempt to clarify in law what the High Court has left open for consideration. Such new law could be tested in its turn in the High Court if need be.
@Ikonoclast
Sorry I’m confused. You are saying we disagree but your subsequent discussion of “terra nullius” doesn’t make clear the point on which we apparently disagree. Can you try being specific with a succinct statement and if I disagree with it I’ll try and say why and likewise if I agree with it I’ll try and say why. Or maybe just try a direct question.
@TerjeP
“History is written by scholars not by the legislature.”
The scholars have already written the history and the social scientists are writing that the harm that resulted from the factual things that were done to them. still affects the outcomes and these negative and expensive outcomes can be addressed more efficiently if the ‘facts’ about settlement/invasion are formally acknowledged.
And dude, green is not green for anyone who works with colours; there are many many different grasses and some are yellow and some like the winter frosted grasses up here on the Downs are a sort of taupe colour that is very hard to create and photo’s do not do this colour justice and the ones that are green are never just green.
Green is only a useful category for those ignorant of the diversity of colours and people and how necessary this diversity is for some of us.
here is another song from the black man that Terje might like to listen to.
Terra Nullius was never a law that was legislated. It was an assertion about the state of pre-European Australia on which legal rulings were based. During the Mabo case it was decided that this assertion was flawed so a different ruling was made. The earlier rulings did not bind the latter.
Well we better pass a law to fix that.
@TerjeP
Why? It’s been this way for centuries and no law has been needed. Why do you want to reduce life to tax and law? Is that all there is for you?
@TerjeP
I will try. You wrote;
“However if you proposed to create a law that decreed these to be the facts of history then I would oppose you. History is written by scholars not by the legislature. We should write laws informed by our inquiry into evidence and our best understanding of the facts. Not legislate to dictate what the facts are.”
I wrote;
“Law does not decree empirical facts but it does recognize (or not recognize) empirical facts all the time.”
Thus, a legislated law could formally recognise the aboriginals as “occupiers, managers and modifiers of the land before the arrival of white settlers.” This is a fact not contested in history, anthropology or law. My guess is the high court would not have any difficulties with a formulation like that. Various consequences could be legislated from it. And a formal treaty could follow in due course.
To reiterate, I wrote:
“Law does not decree empirical facts but it does recognize (or not recognize) empirical facts all the time.”
It’s a key point. The point turns on the difference between “decree” and “recognise”. You argue that the law would be decreeing the facts. It would be doing no such thing. It would be recognising the facts based on the best known evidence to date. If new evidence came up (however unlikely in this case) the new law could be tested or re-tested in the High Court.
We can continue discussing the proper function of the law. However just to be clear about the assertion quoted above. It is not something the senator contested. His reference to “conjecture” did not relate to aborigines being here before european settlement. It is well established that aborigines were here before europeans and I’ve never heard anybody claim otherwise.
Did you actually listen to his senate speech?
@Julie Thomas
facepalm
@TerjeP
Well colours were free for ever but now it seems that corporations are trying to say that particular colours are property and deny their use to other people using the law.
Tell us what DL meant by ‘conjecture’. What is the actual real life problem that you fear will occur when recognition of blackfellas as the original owners of this country?
@TerjeP
I can’t find his senate speech in full.
Not sure why others get to post videos and mine get stuck in moderation. 😦