Wednesday, 21 March 2007

Minimum Wage

Can Jack Layton say anything that doesn't end in an exclamation point?

A national minimum wage sounds like a bad idea to me. The NDP is poised to label any opposition to the initiative as connected to the business community. I like to think I can appreciate socialism in all its glory but this strikes me as bad socialism. There are too many other things that could be done instead to help the impoverished, though admittedly difficult for a marginal opposition party.

Minimum wage is a lingering form of the archaic governance of price controls. Most policy makers have come to acknowledge the adverse effects of rent controls, and they don't tell farmers how much they can sell a potato for, but they feel the need to limit what can be done with labour.

Price controls are anomalies in public policy whereby we don't know exactly where the money is coming from, where it is going to, or what it does to the market place but we like to assume it does some good.

If the goal is to help the working poor doesn't it make more sense to help them directly, perhaps through tax breaks, vouchers, subsidizing essential services, etc, than to legislate a third party into giving them more money. In this case the business community.

A minimum wage hike makes less sense when even the NDP agrees it will cause job loss; introductory economics predicts extra stresses on Employment Insurance, disproportionate to the job loss; and it generally takes away a freedom in the marketplace, ie the worker no longer has the freedom to agree to sell his labour for less than this minimum regardless of need or disposition.

While the magnitude of these effects is under scrutiny, the debate becomes somewhat pointless when you consider that the alternatives - tax breaks, vouchers, subsidies - have none of these pitfalls. They can be engineered to break cycles of dependence, energize the work force, and align the interests of industry and labour rather than divide them. That's more than I expect from tinkering with price controls.

2 comments:

_ TROLL said...

Just a question right now not so much a Comment. When you say even the NDP are opposed to it, do you mean that for once they are opposed to something or that a lot of people/groups are opposed to it?
If so, isn't it likely then that it won't happen?

You know me though I am not very "with it" on politics so bare with me ^_^

Ashley Johnston said...

"Bare with" you? Pscha!
Most bloggers *hope* they get to a point where like-minded people will read what they have written. If you want me to help with your political uncertainties that is almost a dream come true.
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The NDP is the engine behind the national minimum wage inititive in parliament.

They are called an opposition party because they don't form the government.

As to whether it will happen... The NDP got a minimum wage hike in Ontario, but I don't think they have that much pull nationally. The Liberals might jump on board if polls show it will make them popular. But then again, maybe not as the economics behind the idea are really bad.

Thx for the comment _troll.