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National disses minimum wage

Written By: - Date published: 2:01 pm, December 20th, 2007 - 118 comments
Categories: same old national, workers' rights - Tags: ,

National’s comments on the minimum wage show a party that has no answers on how to close the wage gap with Australia.

Just a day after the Government announced plans to increase the minimum wage to $12 next year – an increase of more than 70% since 1999 – John Key’s industrial relations spokesperson Kate Wilkinson has made it clear increases to the minimum wage will not be a priority under National:

National Party labour and industrial relations spokeswoman Kate Wilkinson said National did not oppose the minimum wage but preferred tax cuts.

“Our policy will be on a broader scale and looking at the bigger picture rather than just relying on this artificial solution of having an arbitrary level of what some people think is a fair wage and some people think is not.”

So there you have it: National sees a fair wage not as a right but as an “artificial” restraint on the free market of labour. Their plan is to remove instruments the Government can use to lift pay and instead use the tax system to subsidise employers who pay low wages.

This is the same old line we heard in the 90s, and it led to a real decrease in wages for the New Zealanders who could least afford it:

min-wage-inflation-450.jpg

National are right when they say wages are far too low in New Zealand, but they don’t have any answers on how to fix it – just the same market-driven ideology that put us here in the first place.

[Hat tip to Kiwiblogblog for the graph data]

118 comments on “National disses minimum wage”

  1. Sam Dixon 1

    The born to rule tories have no idea what it’s like trying to survive on the minimum wage.

  2. Daveo 2

    When I heard Wilkinson talking about the minimum wage as an “artificial solution of having an arbitrary level of what some people think is a fair wage and some people think is not” I just wanted to punch her.

    The thought of having this woman as our Minister of Labour is truly frightening.

  3. Kimble 3

    Ummm, a minimum wage rate IS both artificial and arbitrary. Perhaps you need to look up what those words mean.

    In the quote you provided National did not even address whether they considered a “fair” wage is a right.

    Look at these two quotes,

    “National did not oppose the minimum wage…”

    “Their plan is to remove instruments the Government can use to lift pay…”

    One is Nationals position, the other is evidence of a deranged imagination.

  4. Matthew Pilott 4

    Kimble, I suppose you think the free market is ‘natural’ if minimum wages are ‘artificial’. And therein lies your problem.

  5. Kimble 5

    “The born to rule tories have no idea what it’s like trying to survive on the minimum wage.”

    First of all you are wrong, I myself had to survive on the minimum wage for a decent part of my life. In fact, it probably explains why I hold the views I do today.

    Second of all, I didnt realise that the school teachers and union officials (who make up 95% of the Labour party) were paid the minimum wage.

    “I just wanted to punch her.”

    Nah, you only want to strike out because you are a simple minded dickhead. You dont have the first clue what she was talking about.

    A minimum wage is both artificial (all price controls are) and arbitrary (it can be argued to be too low as well as too high).

  6. Tane 6

    Kimble, our entire economy is artificial and arbitrary, but you don’t hear the likes of Kate Wilkinson describe limited liability or private property rights in those words – to those who are born to rule such things are natural and eternal.

    Look at these two quotes, “National did not oppose the minimum wage.” “Their plan is to remove instruments the Government can use to lift pay.” One is Nationals position, the other is evidence of a deranged imagination.

    Note that all she could say was that National would not abolish the minimum wage. She did express opposition to increasing it and using tax cuts instead. Wilkinson clearly wants to remove from the equation any instruments the Government can use to lift pay and rely instead on the market.

  7. The PC Avenger 7

    In a way I agree with Kimbles comment about the position National is taking. It’s a bit too early to make assumptions about exactly what they will do if they get into Government.

    That will have to wait for one of those magical and hilarious days where they announce policy specifics. (by accident or on purpose)

  8. Daveo 8

    PC – It’s clear as day what National will do. Look at their past record then look at what they’re saying now:

    National Party labour and industrial relations spokeswoman Kate Wilkinson said National did not oppose the minimum wage but preferred tax cuts.

    “Our policy will be on a broader scale and looking at the bigger picture rather than just relying on this artificial solution of having an arbitrary level of what some people think is a fair wage and some people think is not.”

    Don’t expect any minimum wage increases under National. It’s just tax cuts, tax cuts and more tax cuts for them.

  9. Kimble 9

    A market is natural in its purest form, but not very efficient without certain controls, such as property rights, consumer protection etc.

    Enforced property rights are artificial. They would not exist without interference. Consumer protection would not exist unless an entity expressed control over the market. And minimum wages certainly wouldnt exist without government interference.

    So they are ALL artificial, in that sense. Because something is articial, doesnt mean it is bad. You need to get out of that mindset (Greenies always have problems with this too). When someone refers to something as artificial they are not necessarily saying it is bad, it can merely be a factual description. (Though when a greenie says something is artificial they almost ALWAYS mean it is bad.)

    Show me how a minimum wage IS natural. If you can’t then I must be right.

  10. Kimble 10

    Daveo, and what if they DO cut taxes for the lowest paid over and over again. Why is that bad?

    The poor get more money to spend. Their nominal wages may stay the same, but their take home pay improves. And this would be happening for EVERY low wage worker, not just those on the minimum wage or those with their current wage set in relation to the minimum.

    Increased take home pay, for more people. Yeah, what ARE National thinking?

    Lets look at what has happened. The gap between wages in Australia and New Zealand is WIDENING, this is a fact. This is happening during a period when the real minimum wage has increased almost 50%. Also a fact.

    If increasing the minimum wage is Labours only tool in their quest to reduce the gap, then it, and they, are obviously not up to the job.

    captcha: bombed admiral

  11. Tane 11

    I’m not saying the minimum wage is natural, of course it’s artificial – our entire economic system is.

    It’s just interesting that Wilkinson describes the minimum wage as ‘artificial’ and ‘arbitrary’ to contrast it with tax cuts and a free labour market. If this is to make any sense then she must also be saying that these things are not artificial – natural, if you will.

    Unless of course she’s just talking complete nonsense, which is pretty much par for the course with Wilkinson.

  12. Billy 12

    “a party that has no answers on how to close the wage gap with Australia”

    Back at ya.

    So the answer to how to close the wage gap with Australia is to legislate to require peope to be paid more? Problem solved.

  13. John 13

    Another fine example of National’s parsing. They have no desire to really address the issues of concern to most New Zealanders.

    This is a fine example of their raising an issue to give the impression that they want to solve it, but really have no intention of solving it. They just hope it gets them elected and IF elected, let the voters be damned.

    It will be interesting to see what the National policy that Wilkinson refers to will be. But my guess is, we will never see a policy just more false concern.

    John Key and the National Party must think the average New Zealander is completely stupid!

  14. Billy 14

    “John Key and the National Party must think the average New Zealander is completely stupid!”

    John (if that’s your real name), you’ve identified the problem. The reason that the Labour Party’s support is plummetting and National’s keeps rising is that Labour insists on treating the voters like they are stupid and ramming unpopular legislation through because “we know best”.

  15. Tane 15

    So the answer to how to close the wage gap with Australia is to legislate to require peope to be paid more? Problem solved.

    Billy, stop being simplistic. The minimum wage is just one lever the government can use to lift wages – it’s clearly not enough on its own but it’s a vital part of the mix and crucial on a human level for those at the bottom of the heap.

    I’ve been through it enough times, but here’s a start:

    National and the wage gap

  16. Kimble 16

    No Tane, what you are saying is,

    “National sees a fair wage not as a right but as an “artificial” restraint on the free market of labour.”

    Do you concede now that they are correct? Yes, you do. “I’m not saying the minimum wage is natural, of course it’s artificial”

    You are also saying,

    “[National’s] plan is to remove instruments the Government can use to lift pay…”

    You say this even though National has not shown ANY inclination to remove the minimum wage. Is your defense of this invention going to be “Well, they probably will do it, even if they havent said anything like that yet”?

    The fact is that decreasing tax rates DOES lead to instantly higher after-tax income.

    PS. See how the [] thing works? You should take note.

  17. Billy 17

    Tell me then, Tane, what are levers is the government using to lift wages and get us back into the top half of the OECD?

  18. Billy 18

    Can I try that again:

    Tell me then, Tane, what levers is the government using to lift wages and get us back into the top half of the OECD?

  19. Tane 19

    Kimble,

    * I never said National plans to abolish the minimum wage. I’ve said they plan to remove instruments to increase the minimum wage.

    You can read that as me saying they’d abolish the minimum wage, but I was actually pointing out that National have indicated they will not be increasing the minimum wage – i.e. removing from the equation an instrument to increase wages.

    * I never said the minimum wage was natural – that’s absurd. I just thought it was interesting Wilkinson thought tax cuts and the labour market are any less artificial and arbitrary themselves. Why did she choose to use that language?

    * The fact is that decreasing tax rates DOES lead to instantly higher after-tax income.

    Sure, but it doesn’t increase wages. There’s no way a tax cut could have increased a minimum wage worker’s income by 70% in the last eight years. For those at the bottom a tax cut provides bugger all and is quickly eaten up by increases in user-pays. If I were a minimum wage worker I know which party I’d rather have in government.

  20. Kimble 20

    I will answer that one for you, Tane.

    Billy, the government is putting pressure on employers to increase the rate of pay for workers by increasing the very bottom of the scale.

    You see, New Zealand is currently not a low-skill economy. Our workers find that getting employment overseas it very easy. Labours plan is for skilled local workers to relocate elsewhere, leaving behind the lesser skilled ones and a growing army of government employees.

    This job is hampered by the immigration of some skilled workers to this country. However, Labour’s plan is to make this country so unpalatable to potential immigrants (though a complicated process that includes heavy restrictions on free speech) that they will stop coming.

    Labours plan is to reduce the skill level of workers in our the economy to the point where most of the population is on the minimum wage (ie. the ONE weapon in their arsenal). Then every increase of the minimum wage will have a greater impact than it currently does.

  21. Tamaki resident 21

    quote from Wilkinson “…of what some people think is a fair wage and some people think is not.”

    Kimble – Your comments seem to imply that the minimum wage is ABOVE what a fair wage is. I guess it just shows that you aren’t concerned with the plight of others, but just how much tax cut you can put in your pocket.

  22. Tane 22

    Tell me then, Tane, what levers is the government using to lift wages and get us back into the top half of the OECD?

    The Employment Relations Act was a start, and actively working to decrease unemployment to reduce the reserve army of labour has been good too. They’ve also raised the minimum wage every year they’ve been in Government, which has put upward pressure on wages for people on low incomes.

    Of course there’s far more that needs to be done to recover from what happened to wages in NZ during the 1990s, and it’s Labour’s job this election to take the next step.

  23. Kimble 23

    “Your comments seem to imply that the minimum wage is ABOVE what a fair wage is.”

    Tamaki resident, no, they dont. That is what you infer from them. If you can provide a single quote of mine which shows that I do think that, then do so.

    Otherwise, stop talking out your arse.

  24. Tane 24

    Kimble, your last comment is just stupid.

    [The one that goes on about “Labour’s plan is to make this country so unpalatable to potential immigrants (though a complicated process that includes heavy restrictions on free speech) that they will stop coming.”]

  25. Sam Dixon 25

    Kimble bro – Tane is one of the cleverest thinkers you can hope to meet on the nature of the artifical constructs on which our cpatiialist economy is based. You’re some guy who seems to think that capitalist markets (a system of property rights, transaction systems, employment relatiionships, all guaranteed by the State via the mechanism of the law) are more ‘nautral’ than any other human institution.

    Give it up: you won’t come up with anything even mildly surprising, let alone anything that will challenge Tane.

  26. Robinsod 26

    Yes Kimble, and soon Labour will bring in martial law and freedom loving people like yourself will be persecuted and locked up in secret reeducation camps hidden in complex state of the at underground complexes (they’ll have to shift some of their Alien autopsy operations to make room for them) but don’t worry Kimble someone from the future (perhaps even one of your great grandchildren!) will return through time to free you and your fellow freedom lovers. You should start breeding now Kimble, NOW! Or we may never be saved! Oh and it might give you a more fruitful outlet than venting your crazyarse spleen all over the blogosphere.

  27. Kimble 27

    Tane, this shows that you cannot see the forest for the trees.

    “Sure, but it doesn’t increase wages.”

    So what? Why do we want wages to increase? So people can have more money to spend. The same can be achieved by cutting taxes. Labour could put pressure on wages by increasing tax rates. Would that be a good thing? Wages would increase, but the take home pay would remain the same.

    “For those at the bottom a tax cut provides bugger all and is quickly eaten up by increases in user-pays.”

    Are you suggesting that a reduction in taxes HAS to be accompanied by an increase in user-pays? I expect that yes you do, but only under a National government.

    BTW, I have always supported the first $20k (or thereabouts) being tax free.

  28. “Your comments seem to imply that the minimum wage is ABOVE what a fair wage is. I guess it just shows that you aren’t concerned with the plight of others, but just how much tax cut you can put in your pocket”

    It depends what you believe is ‘fair’ Tamaki resident. Do you think it is fair that small local business’s that barely break even are being forced to increase their costs further by the mandate of the government? Do you think it is fair that someone who is willing to work for less than the minimum wage may be unable to get a job because the small business that would have hired them has shut down?

    A minimum wage is a good idea, in so far as it helps workers who are in a situation where they have no bargaining power. However, at $12 an hour I feel that the minimum wage is more than sufficient.

    Furthermore, don’t we have a benefit system that ensures that people have an income that is sufficient. If this is the case why do we need to set a minimum wage? After all, in this case no-one is being forced to work, they only work because they want to increase their income, or receive some satisfaction from working.

  29. Billy 29

    Sam, you are the greasiest bum lick I have ever encountered.

  30. Kimble 30

    “You’re some guy who seems to think that capitalist markets … are more ‘nautral’ than any other human institution.”

    Ummm, no, you idiot.

    I never said anything of the sort. In fact I said that protection of property rights et al were ARTIFICIAL. I never said they were more or less artificial than anything else.

    Sam, why dont you just leave it up to Tane to do your talking for you from now on.

    “The Employment Relations Act was a start”

    Did the ERA do what is was supposed to? How has it helped? Specifically.

    “actively working to decrease unemployment to reduce the reserve army of labour has been good too”

    Actively working by doing what? That was his original question.

    “They’ve also raised the minimum wage every year they’ve been in Government”

    Uhuh, yeah, now tell us how all that has worked out for us?

    How much longer do they need? Eight years is not enough? Why isnt it enough? Surely we must be seeing SOME benefit by now?

  31. Kimble 31

    “Furthermore, don’t we have a benefit system that ensures that people have an income that is sufficient.”

    Interesting point, Matt.

    Would it be fair to view the benefit as the “fair” wage for zero work?

  32. Billy 32

    Tane said: “The minimum wage is just one lever the government can use to lift wages”

    When asked what other levers the government was using to lift wages he provided the following extensive list: ERA, reducing unemployment and increasing the minimum wage.

    So three levers then.

    So maybe it’s not as complicated as Tane was making out. Let’s go back to my idea and simply outlaw anyone paying less than the average Australian wage.

  33. Kimble 33

    Oh, and I think Tane’s and Robinsod’s comments PROVE that lefties have no sense of humour. They wont get a joke unless you say to them, “The following is a joke”.

  34. Kimble 34

    Actually, reducing unemployment would put downward pressure on wages.

  35. Robinsod 35

    Kimble – it’s just you’re not funny. Oh and there’s only so many time you can use the “joke” card when you realise you’ve been frothing.

  36. Rene 36

    Sam Dixon and Tane:
    Clearly you guys have little knowledge of economic concepts, and as such, anything you say is not only highly irrelevant, but dangerous to the uninformed reader. It is for this reason that I suggest you never “voice” you opinion ever again.

  37. Billy 37

    ‘sod/MikePorton, how do you decide who you will be, and what difference (if any) does it make to what you say? Maybe I will get me an alter ego.

  38. Tane 38

    Wow, you sure have a lot of time on your hands Billy and Kimble. Sorry I can’t respond to every post – I have a job to do – but I’ll follow up on a couple of points:

    * So what? Why do we want wages to increase? So people can have more money to spend. The same can be achieved by cutting taxes.

    Sure, to a point, but when your answer to everything is ‘cut taxes’ then you get a) increases in inequality, and b) at some point a reduction in public services.

    * Did the ERA do what is was supposed to? How has it helped? Specifically.

    Employers can no longer refuse to bargain with unions, they can no longer refuse union access to the site, they have to bargain and operate in good faith, it’s harder to pass-on union wins in order to undermine union membership. Those are just a few elements, I’m not going to go through the entire Employment Relations Act for you. It’s nowhere near enough as I say, but it’s certainly made a big difference to NZers’ wages:

    National: it’s not worth the pay cut

    * Re: minimum wages, Uhuh, yeah, now tell us how all that has worked out for us?

    It’s increased 70% since 1999. Low income workers are a lot better off.

    * How much longer do they need? Eight years is not enough? Why isnt it enough? Surely we must be seeing SOME benefit by now?

    There has been plenty benefit as the above link has shown you. I think there needs to be far more done though. Certainly even the status quo would be preferable to going backwards under National.

    * So three levers then. So maybe it’s not as complicated as Tane was making out. Let’s go back to my idea and simply outlaw anyone paying less than the average Australian wage.

    Billy, are you going to engage seriously or are you deliberately making an idiot of yourself?

    * They wont get a joke unless you say to them, “The following is a joke”.

    Kimble, you’re just not that funny and your insane right-wing parodies sound a lot like your regular posts.

    * Actually, reducing unemployment would put downward pressure on wages.

    No it doesn’t. Low unemployment means there’s less supply of labour, meaning each worker is in more demand. That means the price of labour – that’s wages – goes up.

    While we’re at it, let’s take a look at National’s record on unemployment:

    National’s hoax on unemployed workers

  39. Robinsod 39

    Rene – I notice you offer zero evidence for your opinion (unless phrasing everything in the imperative is all you need to do to be authoritative nowadays) and you also fail to state any qualification you might have for making such a statement. Without these things your comment boils down to “nyh, nya, nya”

    Billy – I just kinda run with whatever I feel like. Thanks to Whale’s failure to respect my privacy (ironic really considering how angry he got when his “outing” of his mate was pointed out) everyone knows who I am so I don’t feel the need to distinguish apparently. And I’d recommend you don’t bother creating an alter-ego Billy , you’re struggling with the one you’ve got now.

  40. Sam Dixon 40

    Sometimes I think that we’re dealing with counterparts when debating with the Right then you see Kimble asking what the ERA does and remember these guys actually have no idea what they’re talking about, no facts bethind them, no knowledge.

    And they’re probably future national mps

  41. “these guys actually have no idea what they’re talking about, no facts bethind them, no knowledge”

    To be fair, I don’t think either the left or the right have brought out a barrage of facts that are indisputable. In these situations people have differences of opinion, as what we everyone is discussing is subjective.

    Also no-one has answered my question:

    “Furthermore, don’t we have a benefit system that ensures that people have an income that is sufficient. If this is the case why do we need to set a minimum wage?”

    I’m not trying to say that the minimum wage is pointless, I’m just interested in finding out the reason why people support it in this case.

  42. Rene 42

    I am a member of ERSA – the highest qualification you will never hear of

  43. Kimble 43

    ” when your answer to everything is ‘cut taxes’ ”

    Look our answer to everything currently is tax cuts because the question is, what Labour has done hasnt worked, what is left to try that might work?

    Reducing unemployment means there is an INCREASE in supply, which puts downward pressure on wages. It does nothing to demand.

    “then you see Kimble asking what the ERA does”

    I didnt ask what it does, I asked if it did what it was intended to do and specifically HOW this has helped things.

    You are out of your league, Sam, as I said, perhaps you should let Tane do your talking for you from now on.

  44. Robinsod 44

    Well done, Rene. You’re half way there (and you’re right I’ve never heard of it – perhaps you can do me a favour and explain). Now let’s see you finish the job with some evidence.

  45. Tane 45

    Look our answer to everything currently is tax cuts because the question is, what Labour has done hasnt worked, what is left to try that might work?

    Kimble, Labour’s industrial relations policy has lifted median wages at a far greater pace than National’s ever did. If that’s what you mean by ‘working’ then there’s your answer.

    Reducing unemployment means there is an INCREASE in supply, which puts downward pressure on wages. It does nothing to demand.

    Reducing unemployment means there are more workers in jobs, but the supply of people who are unemployed and looking for work decreases, thus pushing up the price of labour. This is pretty orthodox economics Kimble.

    I didnt ask what [the ERA] does, I asked if it did what it was intended to do and specifically HOW this has helped things.

    I’ve answered you and I’ve given you some figures to demonstrate my point. What have you got other than right-wing prejudice?

    Matt, the answer to your question is quite long and complex. I haven’t got time now but if I’m around later I’ll try to give you a decent response, because it deserves one. And frankly I’m sick of going around in circles with Kimble.

  46. Kimble 46

    Oh and it WAS funny, you guys are just too uptight to realise it.

  47. Sam Dixon 47

    Matt – some premises:
    we don’t want to have families starving in the street or the broader negative social repercussions (most of which we call crime) that result from poverty. Therefore, everyone needs some money.
    We want to encourage people to work because that generates wealth.
    we want people to feel free and valued, that means they need to receive a wage that allows them to live in better than substitance conditions and acknowledges that they have a right to a dignified life as human beigns, that they are not mere cogs in the bosses’ machine. It is especailly important to protect the most vulnerable workers, those with low skill levels who face the most compeition from others for work.

    Given these things – you want some system that will give a minimum income whether people can work or not, but you don’t want that income to be too close to wages otherwise there are big disincenties to working at the margin. In New Zealand, we have that with unemployment and other benfits being $200 a week and the min wage being $450 fulltime.

    you want to move the minimum wage as high as possible with out destroying jobs because minimum wage workers are highly vulnerable to expolitation, the relationship is so inequal that wages will fall in real terms if left to the market (as they did in the 1990s for low paid workers).

    Matt – I know you don’t cosinder yourself right or left, and that’s why I didn’t exlcude you from that comment I made about right wingers being uninformed because you are informed but look at Billy and Kimble etc: where are their graphs, where are their references to legislation, economic, poitical, and philsophical theory (above the ‘market is right’ or ‘i love Ann Rynd’ level) all they’ve got is nonsense about the market being natural.

  48. Robinsod 48

    Reducing unemployment means there is an INCREASE in supply, which puts downward pressure on wages. It does nothing to demand.

    WTF?

  49. Robinsod 49

    Oh and it WAS funny, you guys are just too uptight to realise it.

    Sadly, Kimble, the consensus is no. Perhaps we could throw the question of how funny (and I mean funny-Haha, you’re certainly funny-peculiar) you are to the floor. So far I count Tane and me as “no”. Does anyone here actually find Kimble funny? (remember we’re talking funny-haha here).

    Ha, cap is “Tragedy and”. And what? I wonder…

  50. Pascal's bookie 50

    Rodinsod

    RE: WTF?

    I think it’s a cognitive block of some sort, he’s typing the words, and knows what he means, but it’s coming out all wrong, and even when he reads it he can’t see his mistake.

    I hope he does it again, it’s rully funny.

    Maybe that’s his joke, I couldn’t see one elsewhere. Could someone link to Kimbles joke please? I’d like to see it.

  51. Kimble 51

    Tane, the question is what has labour done to improve the situation?

    To answer it you need to do more than just say, this is what labour did, and this is what has happened. You need to prove that what labour did CAUSED what has happened. Show us how the actions that Labour has undertaken, logically leads to the outcome we are seeing.

    Oh, and when you said that labour had reduced unemployment, I took it to mean that they have increased labour force participation, hence the downward pressure thing.

    Of course Labour can only reduce unemployment directly by hiring staff (sure they have done that, score one for the Big Government proponents). Labour relies on businesses hiring people to reduce unemployment. So you need to show how labour has enticed businesses to hire more people.

    You havent answered shit up to this point.

  52. Leftie 52

    All these economic theories. Righties showing us again how much they care about workers at the bottom.

    Tell me how a tax cut will close the pay gap with Australia? Bottom line, it won’t.

    1990 to 1999 – we tried it your way, it didn’t work. There has been a lot of evidence provided on this site to show that pay has lifted more under Labour than National. Labour must be doing some things right with respect to lifting pay, can you concede that?

  53. Kimble 53

    “all they’ve got is nonsense about the market being natural.”

    Sam, you have nothing.

  54. Pascal's bookie 54

    OMG it wasn’t a cognitive mistake, I’m sorry Kimble for the unintended slight.

    Just so that I am clear, are you saying that the fact that more people are working, forces those working people to compete for avilable jobs, which drives down wages?

  55. Kimble 55

    “There has been a lot of evidence provided on this site to show that pay has lifted more under Labour than National.”

    So? Unless you can show what Labour has DONE that has logically lead to improvement then all you have is a coincidence. YOU NEED TO PROVE OTHERWISE.

    The following line exemplifies how simpleminded you guys are:

    “Labour must be doing some things right with respect to lifting pay, can you concede that?”

    Wow. So in the absence of any proof that Labours efforts are wortwhile we have to assume they are? You sure are a critical bunch, aren’t you?

    You lot never even consider that maybe Labour just hasnt done enough wrong to balls up a good thing. Bunch of sheep.

  56. Sam Dixon 56

    Kimble – you ask what labour has done and yet we know perfectly well you’ve seen the graphs but a refresher –

    go to the workers’ rights catagory on the standard, go to kiwiblogblog and look back, bllog at all those grpahs so employment going up, incomes going up under labour when they stagnated or fall under national, look at crime rise under national and fall under labour in the crime catagory here,

  57. Kimble 57

    “are you saying that the fact that more people are working, forces those working people to compete for avilable jobs, which drives down wages?”

    An increase in labour force participation (which is not necessarily a good thing in a practical sense, ie, more mothers having to work to support their growing mortage..ahem… family) increases the pool of available labour. This increase in supply will have “downward pressure” on prices.

    Note I said downward pressure. The reality may be something quite different due to a whole bunch of other factors. It simply be that wages dont rise as much as they would have.

  58. Sam Dixon 58

    Kimble – the government emplooys less than 10% of the workforce, and increase in the government workforce has only accounted for a fraction of the meployment growth under the last 8 years – look it up at stats.

  59. Robinsod 59

    PB – that’s what he’s saying. He’s as economically literate as he is funny.

    Kimble – http://www.amazon.com/Economics-Dummies-Sean-Masaki-Flynn/dp/0764557262

  60. Simeon 60

    Just look at the graph,

    We have had 8 years of Labour Constantly raising the minimum wage and the country keeps falling behind Australia.

  61. Hi Sam,

    I agree that a low income people are the most vulnerable in the workforce. As far as I can tell there are two reasons for this:

    1) They have a low reservation level for work,
    2) They are in a weak bargaining position given that they lack many ‘specific’ skills which could give them bargaining power.

    By setting a minimum wage we are saying what the wage for people in this situation should be, this should put a binding floor on the income people receive, and so circumvent these problems.

    However, the majority of work that receives the minimum wage is part-time work, implying that the weekly income people receive is still quite small. If we were to reduce the minimum wage, firms may be willing to hire these workers full time, providing workers with a greater weekly income.

    Beyond this, it is difficult to figure out the level with which the minimum wage becomes distortionary and prevents people from entering the labour market. In fact even if people get into the labour market, as they currently have, we can end up with a situation where lots of people are being ‘under-employed’ as a result of the minimum wage. This is as serious a problem as unemployment, but it is nearly impossible to measure.

    By just giving people a minimum wage, we ensure that people can live freely and make choices. Giving people the dole, but not guilt tripping them about it (something I thought was a bit counter-intuitive when the unemployment rate was high) will increase peoples ‘reservation value’ for work, thereby increasing their wage in the first place. Furthermore, if we give people equal opportunities to develop skills, then we can ensure that people make the optimal choice between the extra bargaining power that comes with these skills and the cost of acquiring the skills.

    Peoples incentive to work will depend on the abatement rate of their benefit. If we want more people to offer there labour supply at a given wage rate we just need to reduce the abatement rate, and more the labour supply problem further up the income chain.

    The reason economists don’t like price controls is because we are uncomfortable with the idea that two people may want to trade at a lower price, but are not allowed to. This is what the minimum wage does in some situations.

  62. Kimble 62

    Sam, once again you miss the point completely.

    I know what Labour has done, I know what has happened, but until it is shown that one thing lead to the other, I dont have to concede that Labour is the thank for the situation.

    You have the luck of being in the position that needs proving, not me.

    National brought in the ECA back in the 1990’s. I could say that the impact of the ECA has taken a decade to flow through and to be felt today.

    I COULD say that (note: I am not actually saying it), but I would need to show how this was the case before I could expect anyone else to believe me.

    Labour and its supporters do not get a free ride simply because they are the government when good things happen.

  63. Kimble 63

    Sam,

    “the government emplooys less than 10% of the workforce, and increase in the government workforce has only accounted for a fraction of the meployment growth under the last 8 years ”

    That was my point.

  64. Tane 64

    Simeon, if you want to look at where NZ started falling behind Australia check out this graph on productivity over at No Right Turn.

    http://norightturn.blogspot.com/2007/12/productivity-and-wage-gap.html

    Note it correlates very well with the introduction of the Employment Contracts Act. It’s not a king-hit, but it gives you some indication that things are far more complex than John Key’s talking points might suggest.

    Kimble, I’m not sure what you want. We’ve done our research and provided some figures and you’ve given us nothing but “PROVE IT I DON’T BELKIEVE YOU B”Y THE WAY I”M FUNNY AND I”M ONLY JOKING YOUY DON”T GET IT YOU”R TOO UPTIGHT”. I’m sorry, but engaging with you is getting kinda unrewarding.

  65. Pascal's bookie 65

    Yeah, well..

    Perhaps rene from the European Regional Science Assoc can help?

  66. Leftie 66

    How will a tax cut close the pay gap between us and Australia Kimble?

  67. Kimble 67

    Tane, I dont know how many more ways I can say this,

    YOU NEED TO SHOW CAUSATION AND NOT JUST CORRELATION

    Do you watch Southpark? If so do you recall the underpants gnomes? They had a process they based their lives around.

    Step one. Steal underpants.

    Step two. ???

    Step three. Profit!

    You guys have shown that Labour stole the underpants, you have shown Profit, but it is step two that is the important one for your argument?

    How were stolen underpants transformed into profit?

    Matt, am I making sense here (well, not here obviously but in general) in asking for an explanation of how Labours actions have translated into the changes we have seen?

  68. Tane 68

    Leftie you’ve hit on it – National confuses its tax policy for an incomes policy. It’s not.

  69. Simeon 69

    Tane,

    Your graph does not give me the full picture.

    What happened since labour came to power?

  70. Kimble 70

    “How will a tax cut close the pay gap between us and Australia Kimble?”

    It wont do much to lessen the GROSS wage gap, but it will decrease the after tax wage gap.

    captcha: paris will

    yeah we know she will.

  71. Tane 71

    Kimble obviously one has to make assumptions in arguments like this. But let’s go through what we’ve got.

    National said: “We’re going to have employment law that encourages individual bargaining, cut taxes, keep the minimum wage low and the market will create the best outcome”. It didn’t. Wages stagnated and unemployment grew.

    Labour said: “We’re going to rebalance employment relationships to promote collective bargaining, increase the minimum wage and work to reduce unemployment, and we believe these policies will increase wages”. They did. Wages are higher and unemployment has fallen to record lows.

    One of these policy settings worked and one of them didn’t. You can blame whatever outside factor you like, but in the absence of any better explanation I’d be inclined to accept Labour’s story for now. Why can’t you?

  72. Kimble. Yes, you do have to show causation rather than just correlation. That is why I was saying earlier that I didn’t believe either side was expressing ‘facts’ (much like my blog doesn’t present any facts, just wild economic conjecture 😉 ). However, if people want to say that a certain government policy caused a certain outcome they need to prove it, by using some beautiful econometric models.

    Leftie, a tax cut will definitely increase peoples disposable income, which means that our disposable income will be closer to Australia’s.

    Tane, I believe tax is part of income policy, they are not separable. When looking at income people care about the distribution and the size. All arguments are about potential trade-offs between those two factors.

    Also I think we should all remember that we care about the income people have because we care about the bundle of goods they can buy, that is why their disposable income and there allocation of public goods are the main two issues we should look at.

  73. Tane 73

    Your graph does not give me the full picture. What happened since labour came to power?

    I don’t have that graph Simeon. I don’t expect it will be much better – for the improvements Labour has made it hasn’t gone far enough and we are still a low wage economy. I was merely pointing out that the issues are a lot more complex than your comment suggested.

    [Tax cuts] wont do much to lessen the GROSS wage gap, but it will decrease the after tax wage gap.

    So how do we increase wages?

  74. Kimble 74

    Tane, you’ve hit on it – Labour refuses to see tax as a component of peoples income.

    There exists a fabled creature: taxes that be inextricably linked to a being called in-come.

    They be called IN-COME taxes.

  75. “So how do we increase wages?”

    Increase labour productivity. The question is, how do we increase labour productivity?

  76. Tane 76

    Tane, I believe tax is part of income policy, they are not separable.

    Sorry, I should have been clearer. I meant to say that a tax policy is only part of an incomes policy, not a substitute for an incomes policy as National likes to think.

  77. Tane 77

    Tane, you’ve hit on it – Labour refuses to see tax as a component of peoples income.

    Kimble, read my comment at 5:26. I should have been clearer – I meant to say tax is a part of incomes policy, not a substitute for an incomes policy.

    Increase labour productivity. The question is, how do we increase labour productivity?

    Matt, good question, but it’s not one I have time to discuss right now as I’m packing up and heading home. NRT’s piece over here – http://norightturn.blogspot.com/2007/12/productivity-and-wage-gap.html – is a good starting point, but it is a complex issue. What are your views?

    captcha: paris will

    yeah we know she will.

    Ha, I just got “dispense Hilton”. I think I prefer that one.

  78. “how do we increase labour productivity?”

    If that was our only interest there are a number of ways to increase labour productivity:

    1) Kill some our labour force
    2) Sack some of our employees
    3) Set wages at a high level, leading to a reduction in the number of employees, and as a result higher wages
    4) Build lots of capital, as capital increases the marginal product of labour.

    The question has to be though, will any of these options actually increase welfare?

    Personally I’d like to see the price of the commodities we sell the rest of the world increase by a lot. This would definitely lead to higher incomes and higher welfare. In fact, that has been happening over the last few years, and I’m happy with it.

    The goal is not to increase peoples wages, its to increase the size of the bundle of goods our citizens can buy. This is why we need productivity to rise with wages to avoid inflation.

    But even then we have to ask, is that the sole purpose of life? Maybe some people will be willing to give up some goods in order to stay at home with the kids, or play some sport. If this is the case, income and wealth statistics will be even more misleading then they currently are.

  79. Pascal's bookie 79

    “So how do we increase wages?”

    Increase labour productivity.

    Depends on what gets done with the increased profits. You could increase wages. Or not. Surely?

    I agree that over the long term you can’t keep on raising wages without increasing productivity, but everyone else is being pedantic so I thought I’d play too.

    Matt, what do you think about Kimbles stuff on higher unemployment putting downwards pressure on wages?

  80. Pascal's bookie 80

    sorry, kimbles point was

    “Reducing unemployment means there is an INCREASE in supply, which puts downward pressure on wages”

    For some reason I got it round the other way

  81. Kimble 81

    So Labour “work[ed] to reduce unemployment”, by hiring more people to work in government. Nice. Keynesian isnt it, Matt?

    But wait, I heard somewhere once that “the government employs less than 10% of the workforce, and increase in the government workforce has only accounted for a fraction of the employment growth under the last 8 years”.

    So what did Labour DO to decrease unemployment?

    “in the absence of any better explanation I’d be inclined to accept Labour’s story for now.”

    Look Tane, we thought you weren’t the best at critical thinking, thanks for admitting it. Saves a bit of time. It is obvious that you dont need proof of Labours competence at economic management, you assume they are by default.

  82. Leftie 82

    Kimble
    My understanding is that many people are leaving NZ for Australia because they will be able to earn a higher hourly rate. The starting rate there must be higher than the length of service pay they are getting here for the same type of work (otherwise why else would they go if it’s about money). A tax cut will not close this gap.

    Productivity – higher pay will encourage employers to update their old equipment and invest in technology to make their processes more efficient.

  83. Kimble 83

    Leftie, the length of service pay isn’t there simply to reward people for enduring the bad coffee in the break room. It is there because there is an assumption that the longer somebody works for you, the better they get at their job, therefore, the more valuable they are as employees.

    People leaving NZ for work overseas will generally not be on the “starting” wage. They will be paid for their experience in their NZ job, as that experience is of value to their employer. You can make the argument that their experience is more valuable to people overseas than it is at home.

    A reduction in tax will instantly decrease the after-tax income gap with Australia.

    “higher pay will encourage employers to update their old equipment and invest in technology to make their processes more efficient.”

    Yup, and then they will be able to save a few bob and get rid of their surplus workers. Bring on the Rise of the Machines.

  84. Lampie 84

    “Reducing unemployment means there is an INCREASE in supply, which puts downward pressure on wages”

    that has to be the biggest bullshit statement i ever heard. What is another term for unemployment in economic terms Kembly?

  85. Lampie 85

    Also the gap between wages in australia and NZ will not be solved by tax cuts. Your take home pay may be greater but not as much as in Oz until you get to a certain threshold. Go do some sums Kimble and give the folks an example. Your good opening your mouth but you need to educate yourself in walking the walk

  86. Dean 86

    Tane, you SERIOUSLY need a reality check if you think limited liability leads to a born to rule attitude. Honestly, you’re better than that. Are you getting these off the back of a weet bix packet or something?

  87. Dean 87

    Daveo said:

    “PC – It’s clear as day what National will do. Look at their past record then look at what they’re saying now:”

    Oh, past history.

    Let’s talk about Labour’s past history, where they slashed government spending and went the free market path.

    Or is that just too inconvenient for your argument?

  88. Lampie 88

    someone asked why we need a minimum wage, as people have said, it is a price control set by the Govt. of the day. The objective is to
    “seek to protect workers whose wage rate determined in the market falls below that adequate to maintain a resonable standard of living. This is achieved through the establishment of minimum wage rates.”

    Remember that in theory, wage and employment levels are determined in the labour market through the free interaction of the forces of demand and supply.

    We have a skills shortage, not a labour shortage (bloody close) and that forces pressure on employers to a)retain staff by rewarding better and b)attract staff with competitive packages.

    Found the word I’m looking for yet Kimbley? I mentioned it the other day. Are you a 1st year student? Remember that a little bit of knowledge can be a dangerous thing.

    Now the Labour market, hmmmm what is it called again?, that economic theory? ummm that supply and demand one, starts with M Kimbley, can you name it?

  89. Lampie 89

    How we increase productivity hmmm Factors that affect growth, work force more skilled, better use of technology, better technology, education, added value to assets instead of raw products (break down in trade barriers to foreign markets i.e. what we are doing now big time) offshore investments such as beacheads (help fund NZ compainies ventures overseas), good move there. Been more efficient (doesn’t necessary mean you will be more productive). Something like that hey Tane?

    Can be very in depth.

  90. Lampie 90

    Also forgot, tax incentives for R&D. (possibly done already??)

  91. peter 91

    Just to clarify, more unemployed people means that there is greater competition between unemployed people for work. As such employers can offer lower wages and still attract employees, simply because workers cannot afford to be choosy/have less bargaining power.

    Okay, now that’s normally quite obvious I would have thought.

    But just to clarify, because I’m a bit confused, is Kimble saying something different?

  92. Wayne 92

    Tane, you SERIOUSLY need a reality check if you think limited liability leads to a born to rule attitude. Honestly, you’re better than that. Are you getting these off the back of a weet bix packet or something?

    I don’t think he ever said that. Read it again.

    But just to clarify, because I’m a bit confused, is Kimble saying something different?

    You’re right, high unemployment leads to lower wages. Kimble said the opposite: he said low unemployment leads to lower wages. “reducing unemployment would put downward pressure on wages.”

  93. Lampie 93

    But just to clarify, because I’m a bit confused, is Kimble saying something different?

    You’re right, high unemployment leads to lower wages. Kimble said the opposite: he said low unemployment leads to lower wages. “reducing unemployment would put downward pressure on wages.”

    That’s why I asked him/her this question Peter

    Now the Labour market, hmmmm what is it called again?, that economic theory? ummm that supply and demand one, starts with M Kimbley, can you name it?

  94. Tane 94

    Tane, you SERIOUSLY need a reality check if you think limited liability leads to a born to rule attitude. Honestly, you’re better than that. Are you getting these off the back of a weet bix packet or something?

    Hi Dean, yes, that would be an absurd proposition, but it’s clearly not what I said. Have another read over my original comment.

  95. outofbed 95

    I think we should have a maximum wage

    “runs for cover”

  96. Matthew Pilott 96

    Kimble, perhaps I can understand where you’re coming from, but I’m sure you realise what you are asking is thoroughly unachievable.

    Given the complexity of the global economy, it is impossible to point to a single factor and say “that was it” in any singular economic system. The only exception I can think of is an event such as the ’89 sharemarket crash and the resultant economic downturn. By your reasoning, however, one could say that a government policy 10 years ago led to the econimic downturn that was generally accepted to be caused by the crash.

    This isn’t court, and there’s no set standard of proof required, no threshold of reasonable doubt to be met.

    There are countless examples of Labour employment and other policies that affect it employment in NZ, many have been mentioned here: retraction of the ECA and increased Union bargaining power, the Modern Apprenticeship programme, reduction of the business tax rate at an appropriate time are examples.

    Now as these policies have been enacted, unemployment has decreased markedly.

    The most likely explanation here is that this has been influenced by the Labour government. There are other factors involved, some positive and some negative, but unless you can specifically prove that every external influence has had a sum positive effect on New Zealand’s economy (and this is not possible) you can’t discount the influence of Labour.

    And while I can’t prove to you, explicitly, that it was Labour (I can’t say it was this factor, because it is an impossibily to single out one factor because of the influence of many, many interdependant factors), it is clearly the probable factor in increasing New Zealand employment, given the strong relationship between Government and emplyment worldwide.

  97. Kimble 97

    Lampie, I explained what I meant a few posts after the first. I had assumed that Tane meant that Labour had increased labour force participation.

    (To argue that Labour has reduced unemployment in any direct way would imply that they had simply hired more people.)

    So everything you posted on that topic was based on a misunderstanding that had already been clarified.

    Besides I never said that it would reduce wages. I said it would put downward pressure on wages. Not the same thing at all. But you go ahead and continue to froth and foam.

    Matthew, I am not asking for you to point to a single factor and say that was it. What I am wanting is for you lot to explain, following a path of logic, how what Labour has done has lead to the outcomes we have seen.

    It may seem like I am vehemently against the possibility that Labours policies have worked (although Tane himself agrees they haven’t achieved the desired results.) But if you look back over my comments, they have simply been a consistent call for this explanation.

    It is simply not good enough to list a few things labour has done, then refer to a graph showing a change in circumstances, and ASSUME it was because of Labours actions.

    “unless you can specifically prove that every external influence has had a sum positive effect on New Zealand’s economy…”

    Do you realise what you are asking? You are asking me to investigate EVERYTHING ELSE IN THE UNIVERSE before you will accept that Labours policies werent as effective as people assume.

    You can see the fallacy of that argument. Instead of you having to prove one thing, you are demanding the right to believe in that one thing until I prove a number of other things!

  98. Sam Dixon 98

    Kimble – look at all the metrics that have been posted here and on kiwiblogblog – the pattern is clear, social indicators stalled or wrosened under National and have improved udner Labour.

    Can every movemetn of an indicator to attributed to Governemtn policy? obviously now, but the contortions necessary to explain away all those trends without any influence from government policy fails the Ocram’s razor test.

    Moreover, you can often see step changes that result from Governemtn policy. Neoliberal revolution – unemployment spikes: ‘jobs jolt’ in 2002 – unemployment, which was steady, slides to the practical minimum and stays there. For example.

  99. Kimble 99

    Sam, you did it again. You have taken the end result and assumed that because it happened at the same time as something else, it must be attributable to that something else.

    How hard is it to take a couple of Labour’s initiatives and explain their ramifications in logical steps through to the final result?

  100. Matthew Pilott 100

    “unless you can specifically prove that every external influence has had a sum positive effect on New Zealand’s economy.”

    Do you realise what you are asking? You are asking me to investigate EVERYTHING ELSE IN THE UNIVERSE before you will accept that Labours policies werent as effective as people assume.

    That’s why I said it was not possible straight after the request (why did you not quote that part, bit of a peculiar omission) – I was illustrating the absurdity of it.

    I understand what you mean by causality and correlation, but what you are asking is as unreasonable as the comment you are referring to above.

    It is simply not good enough to list a few things labour has done, then refer to a graph showing a change in circumstances, and ASSUME it was because of Labours actions.

    I could say that cutting business tax rates has kept employers in NZ, thus increasing employment, but it is just as easy to say that employers have stayed here for any number of other factors. You are asking for a direct causal relation between two things (Employment and Labour) which is not possible in an interdependent situation.

    What is possible is to investigate the planned and intended effects of certain events, and draw correlations based upon observed effects. Labour has implemented policies to increase employment, and employment has increased. In the absence of proof that the policies have not worked, or clear evidence that other factors were the cause, you are only left with one solution. It is not a huge leap to make.

    You can see the fallacy of that argument. Instead of you having to prove one thing, you are demanding the right to believe in that one thing until I prove a number of other things!

    Quite the contrary. – “All other things being equal, the simplest solution is the best”

    You said earlier that “Unless you can show what Labour has DONE that has logically lead to improvement then all you have is a coincidence. YOU NEED TO PROVE OTHERWISE.

    So what is the simplest solution – that policies intended to increase employment have worked, or that New Zealand has, for no good reason, encountered the lowest unemployment rates seen for several decades?

  101. Phil 101

    Two non-“Labour” factors that have, most certainly, contributed the majority of New Zealands growth since 2000;

    1) Rampant consumer spending
    Driven not by increased wages, but by the wealth effect of residential housing price increases.

    2) Exports
    Despite the exchange rate at post-float highs, the export sector has done remarkably well. A lot of this is driven by the effect of China become a serious world player; they’ve injected huge demand in commodity markets, and our Dairy and Mining sectors espcially have reaped the rewards.

  102. “Besides I never said that it would reduce wages. I said it would put downward pressure on wages.”

    So that was your original point then Kimble? Not really very meaningful though was it? Of course increased LFPR places downward pressure on wages, yet it is undoubtable that the labour market has tightened in the last 6 years, and consequently we have more acute skills shortages in many industries.

    Let’s put it real simple for you. Unemployment is, by definition, the percentage of the labour force out of work, and looking for work – so when it goes down (as it has done over the last 6 years) the increase in demand for labour (reflected in job growth) is by definition outstripping the increase in supply (growth in LFPR). Consequently its market clearing rate moves upward. So you want to be looking at unemployment as the key indicator here, not LFPR. Basic supply and demand really.

    As to proving that labour has been responsible for the higher wage growth since 1999. Well you see kimble – 200,000 (about 15% of the paid work force) have had their wages lifted by statutory means 70% in 8 years. How you can think that this has had no effect on wage growth is inconceivable. Granted just how much of an effect it has had is very difficult to quantify, but that it has had contributed to wage growth is undeniable.

  103. Lampie 103

    So everything you posted on that topic was based on a misunderstanding that had already been clarified.

    Let me have go Roger nome, make room.

    Reducing unemployment means there is an INCREASE in supply

    Try this first part Kimbley, I’m sure Roger nome will agree, oh he did

    So that was your original point then Kimble? Not really very meaningful though was it?

    Again Kimbley, if you think your such an expert, another name for unemployment in economic terms is????
    Give you a clue, it’s two words and begins with e. Name it and we may take you seriously. And this is what Roger in a very in-depth description has said.

    “Let’s put it real simple for you. Unemployment is, by definition, the percentage of the labour force out of work, and looking for work – so when it goes down (as it has done over the last 6 years) the increase in demand for labour (reflected in job growth) is by definition outstripping the increase in supply (growth in LFPR). Consequently its market clearing rate moves upward. So you want to be looking at unemployment as the key indicator here, not LFPR. Basic supply and demand really”

    Wanna take price ceiling and so forth as well?

  104. Lampie 104

    My belief is that we may be jumping the gun a bit on the wage issue difference with Australia. If the labour market remains as tight and we still are unable to meet demand with supply in skill areas, this will hopefully drive us closer to remain competitive with our closest neighbour. Roger nome, any thoughts?

  105. Lampie – Australia will have wages driven up by centralised collective bargaining, where as we’ll have to rely on labour resource scarcity. My pick is that we’ll catch up a bit in the industries where the skill shortages are worst, but in other industries wages will continue to lag behind (especially in low-skilled areas). At least this is the international evidence suggests (i.e. centralised collective bargaining mitigates extreme disparities in wages between high and low skilled workers, where as in free labour markets the disparities just keep on getting bigger and bigger.

  106. Rumpole 106

    Increasing minimum wage to lift average wages is a no brainer, but without productivity increases profitability and tax take diminish if inflationery price increases are not effected. NZ productivity has decreased as the employment rate falls which reflects that the unemployed at these levels are either poorly skilled or workshy or both – management has responsibilty to as they do the employing. Government should do more to encourage productivity increases – fiscal drag is a disincentive for employees & employers alike and trade unions should consider investing their members funds in those industries they reckon their ideas would work better than the existing managements. Failure to do any of these things is the lasting hallmark of the last 8 years.

  107. Sam Dixon 107

    Kentp – proving causality is a logical impossibility for a subjective conscience without perfect information. When we talk of proving causality we are just saying ‘this is the most likely explanation’: and what all these figures and graph shows is a clear tendency for discrete and unrelated indicators to improve under Labour where they got worse or stagnated under National – what’s the most likely explanation?

  108. Kimble 108

    “I could say that cutting business tax rates has kept employers in NZ, thus increasing employment…”

    Yes! SAY IT! Finally someone starts to answer the question!

    “but it is just as easy to say that employers have stayed here for any number of other factors.”

    And then counter THAT argument with further evidence of what Labour has done!

    That is what was needed from the start, BE SPECIFIC! The answer doesnt need to be good, it doesnt need to be a doctoral thesis, it just needs to make sense! If you had answered the fucking question properly in the first place I wouldnt have had to keep asking for you to do it!

    “Of course increased LFPR places downward pressure on wages,” – Nome

    That was ALL I was saying.

    As I said, I thought Tane meant labour force participation, so when I responded I was refering to an increase in LFPR.

    I have no problem with a reduction in unemployment leading to upward pressure on wages. That makes sense. I never said it didnt. All the brain cells you guys have wasted in apoplexy trying to explain this concept to me, died in vain.

    On a differnet point, in simply saying that Labour had reduced unemployment which leads to higher wages, Tane failed to answer the question. Sure unemployment had dropped at the same time as Labour was in government. But what had Labour DONE to reduce unemployment and HOW had it done so?

    It really isnt a difficult question. Labour reduced the business tax rate which encourages companies to stay in NZ and attract companies from overseas, increasing demand for labour. BOOM! It is wrong, but it is still an answer!

    “How you can think that this has had no effect on wage growth is inconceivable.”

    I dont think I said, that, I was asking for someone to state their case.

    Look, the question was asked. It wasnt even asked by me orignally. I was simply asking for an answer. It is inconceivable that it would have taken this long to get one!

    It was a simple fucking question. Why have we had 50 comments containing a total of only one and a half answers? It really looks as if you guys KNOW you cant win the debate so you dont want to participate.

    As for closing the gap with Aaustralia, well, we dont have a hope in hell now that Aussie has a Labor government.

    Workchoices would have helped Australian industry survive the inevitable hard economic times to come by allowing wage growth to slow, with the economy. With a Union-backed Labor government, wage rises are going to continue regardless of productivity or the health of the economy.

    (After having dwindling power for the past decade, do you really think the unions will blow their one chance to show that they really are the best option for the working man?)

    We may get closer on an after tax basis (tax increases in Australia within Labor first two terms [yes – two terms]) but not on a nominal basis. Not now.

  109. One thing that I like about Australia is that there is no tax on the first 6k of income. It’s a bloody good idea, and disproportionately benefits the poor. Labour would be well advised to cut taxes from the bottom, and keep everybody happy. Incidentally, no tax on the first 5k has been Green Party policy for years.

  110. Phil 110

    I agree George – that is a good policy.

    With the working for familes package of Labour though, tax free first $x,000 sits better as a National party policy.

  111. Falafulu Fisi 111

    Tane, I quoted the following peer review study (freely downloadable) to you at Not PC sometime ago to comment on, but you never did. How about you try to debunk the study first (or at least try to refute its finding), before we can debate if minimum wage is a good or bad thing?

    MINIMUM WAGES, LABOR MARKET INSTITUTIONS, AND YOUTH EMPLOYMENT: A CROSS-NATIONAL ANALYSIS

  112. Kimble 112

    FF, is that the study that has been going on for decades and actually traces peoples transition between income groups?

  113. James 113

    Sigh! The very idea that the State can set wage rates without the market facts and varibles is moronic…Wages should be set by the law of supply and demand….meaning how valuable is your skill set to an employer and therefore to his customers?

    Minimum wage laws keep the unskilled and the young out of work by making them less attractive to employ as opposed to older’ skilled workers….simple self interest as an employer see’s it and quite right too.

  114. Phil 114

    I suspect that if you look at NZ’s measures of salary and wage growth (Statistics New Zealand’s “Labour Cost Index”) you’ll find that increases in the wage rates of occupations more likely to be at or near the minimum wage (service and sales workers, plant/machinery operators, elementary occupations, etc) actually PREDATE the comparable rise in minimum wage.

    The logical conclusion, therefore, has to be that minimum wage increases are perfectly logical and yet, paradoxically, totally unncessary

    Captcha: “The undisputed”
    Bow down before me, ye of little faith in numbers!

  115. Kimble 115

    So wage rates go up before minimum wage rises? That would make sense if you view things from a political stand point.

    The government can get the good publicity of increasing the minimum wage, which will satisfy their lap-dogs. But the actual impact will end up being negligible, so they dont actually have to worry about the negative impacts.

    It’s a political free-roll.

    Kind of like signing up to the Kyoto Protocol but never having any intention of meeting its targets. Of course, it would backfire if the figures which showed that the cost in carbon credits could be completely offset turn out to be wrong. Ooops.

  116. AncientGeek 116

    There is also a serious reason for raising minimum wage rates. It is an effective way of performing natural selection on rat shit employers.

    There are always a certain number of employers at the bottom end who for one reason or another are unable to improve the productivity of their organisation. They fall victim to what I refer to as slave-holder economics. Rather than improving the efficiency of their organisation using capital expenditure or improved systems, they simply use more employees while trying to drive wage rates down.

    K- If you dig back into economic history you’ll find a lot of economic theory about this economic system, both on slave labour and various forms of indentured service (effectively the same). Adam Smith, for instance, wrote some interesting material on it. There is a lot of evidence that shows when this type of economic system gets entrenched, it eventually spirals down as close to zero wages as the legal system will allow.

    Of course it isn’t good for the society harboring a slave culture on many levels. The biggest one is the debilitating effect of poverty on the poll of talent and skills in later generations. But even in the short term it prevents people with potential skills being used in more productive enterprises because of constraining techniques by slaveholder employers.

    Slave holder employers use a number of interesting devices to hold their workers – typically debt mechanisms. Thats why there is quite a lot of law in every modern economies about valid uses of debt. It was how those societies crawled out of slave holder systems.

    Of course, any competent employer doesn’t get affected by setting of minimum wages (as pointed out in some of the replies above) – they’re already paying more. The employers who bleat about minimum wage rates are exactly the employers you’d expect – slaveholders who are too damn lazy to work out more efficient ways of running their businesses. The government setting minimum wages is simply correcting a known historical economic trap to drive out bad or criminal employers.

    K- You have an interesting set of delusions about the effectiveness of market economics. I’d suggest you look closer at the history of economic systems. In particular look at the early 20th century history of the Ford Motor Company – the start of ‘modern’ industrial systems. It was as much about how to drive wage rates up so people could afford to buy the gadgets that ford was selling.

  117. Kimble 117

    “K- You have an interesting set of delusions about the effectiveness of market economics.”

    No, you just assume I do. Unless you are anti-market-everything on this site, people will think that you put all you faith in the “holy market” and are some sort of free-market acolyte.

    Note, I haven’t said the minimum wage is an inherently bad thing. Not once.

  118. AncientGeek 118

    Yeah – I figured that might be the case. So I made mine as didactic.

    Actually here is a classic example from the Economist of what I call slave labour tactics… Karoshi – death by overwork.

    There is nothing quite like a 3G and a laptop during a boring car trip.

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