The UN has spent its existence conjuring up a whole range of what it perceives as “rights” but are in fact values which merely reflect the political persuasion and aspirations of the institutions inhabitants. The elastic & ever expanding language of rights has inflated the role of the state, lead to the erosion of trad liberty and has provided perverse outcomes. The establishing of these “rights” as law or the pursuit of these “rights” through social policy has often entrenched dependency, undermined social responsibility & disempowering huge sections of the popn. “Social justice” &other concepts which emanate from the bien pensant are not rights; the are merely reflections of the values of that particular class. If you don’t accept this look no further than the absurd rulings that come out of the European Court of Human Rights (Lord help us). A living wage is not a right!

You confuse values with human rights 🙂 How can you say “no one has a human right to a living wage?”. Given that human rights are socially constituted (whether positive or negative), we can decide what they are. In fact, this debate has been going on for thousands of years, culminating in a raft of human rights charters around the world from 1948 to today (or 1919 if you regard the initial articles of the ILO as a rights charter). Values can reflect rights or even lead to them but rights are not values.

Hi Luc,

Indeed, a minimum wage in of itself may have a justification. As a economist I would note that it at least provides a second best solution when we face:

1) A monopsony purchaser of labour (or a similar concentration)
2) Homogeneous labour with a generally weak bargaining position

Also, at say the level we have the minimum wage now it is not terribly binding – instead of seeing employment or hours decline, it is generally an issue of bargaining power. Now, I would add that at the margin of some groups it may be binding (such as with youth unemployment), but it isn’t necessarily given.

However, we are talking about an issue of equity (so pulling in value judgments on top of a more objective economic analysis), and this is where looking at this solely through a minimum wage gets me. At $18-20 we will have negative employment effects, and we are doing this solely because we are trying to “solve” an “issue” of income adequacy. This involves morally valuing the people who are able to get work in that situation about those that can’t. I find this inappropriate.

“One problem I have with your dissing of the living wage concept in
favour of the minimum income idea (which I support, as well) is that the
former appears at least attainable in the short to medium term, while
society is a long way from the massive tax restructuring programme
needed to implement the latter.”

I find this an interesting thought. We currently have a benefit system, and we have targeted support for groups based on equity judgements. Surely we already have a minimum income scheme, we just refuse to call it that!

There are two differences between a true NIT and what we do:

1) Benefit claw backs see effective marginal tax rates sit at very high levels for lowish levels of income

2) The tax system is still “progressive” in a strict sense, when in a NIT the tax system itself is flat. Where the burden falls for this is a difficult issue.

However, we already have a lot of what is in place – by pushing a NIT I’m mainly just asking us to make our value judgments about the support system more transparent, and also suggesting we stop bullying people who aren’t working … as that is a bit morally weird for me (I strongly suspect that I am in a tiny minority here though).

“We seem to forget the past readily, but minimum wages have happily
coexisted with unemployment close to or at a bedrock level, even quite
recently. The setting of the level of payment seems to to me to rely
more on moral precepts than economics.”

Yar they did, in a setting with large monopsony employers and homogenous labour – but the world has been changing 🙂 . I just can’t help the fact that, I want our equity efficiency trade-off to be dealt with in a Kaldor-Hicks type manner, rather than choosing what is politically expedient 😉

“And just a note, I really appreciate the opportunity of running this stuff past you and getting your informed views in return.”

Cheers. Just remember to remain extremely critical and always ask why – if I’m not explaining things clearly it is my fault not yours, and your argument could well be better than mine!

Or, if those jobs aren’t out there because of a general lack of AD, and a government in power generally unwilling to use fiscal policy to generate it, a boost in wages for the percentile of the population who reliably spend all their income may be just the medicine our economy needs.

One problem I have with your dissing of the living wage concept in favour of the minimum income idea (which I support, as well) is that the former appears at least attainable in the short to medium term, while society is a long way from the massive tax restructuring programme needed to implement the latter. It’s the old bird in the hand principle 😉

If the injustice you speak of does arise – and I have my doubts about that – then we can address that separately. Benefit levels actually aren’t set in concrete and the extra taxes paid under the living wage will accrue to the treasury coffers and maybe some bright young thing working there will come up with a stunning plan on how to spend it!

We seem to forget the past readily, but minimum wages have happily coexisted with unemployment close to or at a bedrock level, even quite recently. The setting of the level of payment seems to to me to rely more on moral precepts than economics.

(But this year I’m doing Stage I and Stage II microeconomics so maybe I’ll have changed my mind by the end of that!)

And just a note, I really appreciate the opportunity of running this stuff past you and getting your informed views in return.

A brave call from whom? It is a soft and short sighted proposition offered up by the bien pensant and the attendant soft left. Pressure placed on businesses to pay a “living wage” would be a disaster for the increasingly uncompetitive NZ economy furteh damagign productivity and distorting the labour market. If NZ is serious about dragging itself away from permanent economic decline then such propositions should be dismissed before getting to base one.

I think you confuse human rights with values. No one has a human right to a living wage (whatever that is as I’m unsure anyway). They have a right to sell their labour and to reject offers to purchase that labour if they think the compensation is insufficient. End

Whilst we would all like to see people paid more and there are undoubtedly some genuine cases where certain people or occupations might ideally receive higher salaries (e.g. many would claim the nurses should be paid more because of the supposed virtuous nature of their work) the fact remains that businesses do not operate in a void and must therefore respond to the economic conditions in which they seek to compete. Businesses do not achieve profitability by merely paying people more. Profitability is linked closely to the productivity of employees and income generating ability of the institution or business (i.e.it must have a suitably large market for its wares that ensures that it can provide those products or services without bankrupting itself). The proposition of a Living Wage is highly discriminatory; it works in favour of largely unaccountable bodies (such as local authorities) who do not have to face the rigour of the market or big business such as Tesco (who have I think signed up to such in the UK) who can absorb such increases more easily than small businesses which are highly reliant on employing low skilled workers. It can be argued in fact that the minimum wage and its metamorphosis into the living wage actually destroy jobs as it becomes more and more expensive to take on labour. It also pays little attention to the particular circumstances of an individual; clearly an 18 year old does not need the same amount of money as a 35 year old with 4 children (who will acutally only recieve a small amount of the increase anyway as there tax credits etc erode). Employers should be responsive to the needs of their employees but they should also pay them a wage that reflects what they think that employee brings to the business , the cost of employing a replacement (i.e. the cost of labour) and reflects what the business can bear. There is nothing righteous about paying someone a Living wage if it busts the business.

I agree – it is a conversation we need to have now, and openly. We can’t predict the future, but we can talk about risks and trying to make sure society is prepared to make educated trade-offs.

The papers sound interestingly, I’d be keen to read them some time if you wouldn’t mind 🙂