Who the Minimum Wage Hurts

Young People Minimum Wage UK

There's some things that just don't work, but everybody loves them. I've posted before about the NHS, and other such almost religiously-supported institutions and ideas. Those who support them are – to my mind at least – kind-hearted, decent and good people. But good intentions don't make for good policy.

A case in point on this day – budget day: The UK is set to increase its minimum wage. Minimum wage laws hurt those who cannot provide a service as valuable as the minimum-wage. If, due to your circumstances, education, ability, etc. can only provide £5 an hour of value, at say, a resurant or warehouse, then you can't get a job if an employer is forced to pay you a minimum of £6.50 an hour.

The last Labour government were very proud about dispelling the naysayers of the minimum wage: “They said it would cost jobs”, they gleefully retort, “but unemployment went down in the first decade of the minimum wage!”

Yes, unemployment went down. Quite easy to do, if you're into making a massive government, centered around a client-state, where you create a lot of 'fake' government-jobs. But the growth in private-sector jobs at the same time was practically anaemic.

Those who said that the minimum wage costs jobs weren't talking about any old jobs though. We were specifically talking about those sort of jobs that younger, poorer, underskilled people typically take.

So how have, say, younger people done under the minimum wage? Well, you can see the graph above and see for yourself. Before the minimum wage, younger people were finding more and more (real) jobs, and opportunities to get on the ladder, often of their chosen career-path. But it turned almost 180 degrees after that.

I believe that the forthcoming increase in the minimum wage will, sadly, continue this tragic trend.


St Bob, does he really know best?

There’s a great article in the Independent today by the very thoughtful Ian Birrell about the state of Africa and how lots of the aid in the continent hurts rather than helps.

He lays into Bob Geldof a bit (another super-rich, large-scale tax avoider like Bono who, with no hint of irony or self-awareness, complains that western governments are not taking more ordinary taxpayers money by force to fund an engorgement of ‘aid’ packages to the third world):

His [Geldof’s] British homes were found to be registered in offshore companies, a popular measure with the super-rich costing the hard-pressed British exchequer £1bn a year. And his non-domicile status ensures he avoids paying tax on any overseas earnings, which must be nice.

But it’s not just the hypocrisy. Birrell is pleased St. Bob is finally coming around to the idea that trade and the free market helps elevate poverty better than anything else, but if only Mr. Geldof could see and recognise the harm that the government-enforced aid has done to so many in Africa:

Western politicians of all hues, desperate to look sensitive and caring, cravenly pandered to this aid lobby led by Bob and Bono, while journalists put on kid gloves when engaging with it, ignoring practices that would provoke outrage elsewhere. As a result, global aid spending soared from £50bn a year to £83bn over the first decade of this century; today 595,000 people work in a fiercely-competitive industry.

A study last year found even among these aid workers only about one-third thought their projects worked. In private, many will admit to grave doubts. You could fill this entire newspaper with examples of how the flood of money washes down the drain: a report by two health economists, for example, found nearly two-thirds of health aid in Africa is diverted. The waste, the ineptitude, the tolerance of corruption, the support for repression, the furthering of inequality, the boosting of arms spending is utterly scandalous…all those new colonialists riding around in their big white jeeps telling the locals what is good for them.

“They don’t consult with us,” complained a minister in Somalia, latest recipient of massive British aid. “It’s like a doctor trying to prescribe medicine for a patient you haven’t seen yet.”

This distorts priorities of recipient nations. It leads to the creation of pointless bureaucracy – one study found a typical African country must churn out 10,000 aid reports each year. Additionally, while our government attacks welfare dependency at home, it encourages it abroad with unquestioning support for politicians who have no need to bother responding to the needs of their own citizens.

Imagine how we would feel if armies of Africans came and told us how to run our schools and hospitals (while living in some of the smartest homes)? Or funded politicians who steal and murder? But this is our approach abroad: we know best, our voices count. This is how Britain ended up funding a regime that sent a hit squad to this country to kill people. And how it spent £1bn supporting education in just three east African countries but failed to check whether the teachers turned up or the children were learning; sadly, they were not.

The truth is often counter intuitive. Having our governments take more of our money by force and spend it on aid programs should help so many in Africa and elsewhere. But the reality is that simply stepping back and letting freedom reign does the job far better.


Cut the Waste!

A great reworking of a video from the Taxpayers Alliance.

The public sector union UNISON just launched a web video trying to persuade people that if a government makes significant public sector cuts, then all the doctors, nurses, lollypop ladies, et al. will be lost and we’ll be living a nightmare.

Of course we won’t. It’s all the pointless make-work jobs that make up such a huger percentage of government in the UK that should be axed. And we’ll all be healthier and wealthier for that. The public sector would operate better too.

Anyway, enough of the warbling, here’s the vid:

Welfare and Friendly Societies

One of my favourite (and delightfully brash) libertarian bloggers, The Devil’s Kitchen makes a very good case for the concept of the “friendly society” here.

I can’t say I totally agree with everything he says here (you’ll never get a bunch of libertarians to totally agree on anything), but I thought he made some great points. I don’t agree with all of them, but am very glad to see them be made.

I’ve always felt it was simple: when we see a beggar on the street these days, we say “gee, the council/government/society should really do something about that.” That line reminds me of the Ghost of Christmas Present, when he sarcastically paraphrases Scroodge’s sentiment in the Dickens classic A Christmas Carol: “Are there no prisons, are there no workhouses?”

If we dislike things happening in our society, then we should do something to change it. Don’t fob off your obligations to the state. What are YOU going to do about it?

There is no doubt in my mind that our first (and only true) priority is to the rigorous pursuit of our rational self-interest. If we all did that, then the need for any charity or state-welfare would be minimal. But of course, there would always be people who really need help. My point still stands though: The state shouldn’t play any role in this.

In Britain, 40% of the money they collect from us is in income tax. The welfare state accounts for 40% of yearly government spending. If we abolished income tax, 85% of the people who used to get welfare would be either just as well off or better off. As for the remaining 15%, how many do you think would stay poorer off in a society that had NO income tax?

The answer is a very small number. And that small number would be MORE than taken care of by the voluntary actions of individuals who had more money to spend on such charity. And raising money to say, buy equipment that lets a disabled person live a better and more dignified life, is in my rational self-interest because they become a more successful and productive person and thus, as either an employee or employer, another wealth-creator. If I (and a load like me) put 50p towards that purpose, it’s not too much to bare, considering in this scenario I don’t pay income tax any more.

Similarly, if we had a total free-market of education, then we’d have better choice, higher quality and lower prices. That’s what happens in every other private sector free of corporatism and government controls. And the remaining few who couldn’t afford despite their best efforts, well, what are YOU going to do to help them? And surely you’ll benefit from these educated kids when they end up contributing to the marketplace…

The more I think about it, the more I realise just how terrifyingly spot-on the Objectivist and female comb-over pioneer Ayn Rand was. We need a moral revolution for freedom and self interest. Once we’ve had that, the political and economic revolution will be easy.