On Mon, September 8, 2008 09:56, Heasman, David wrote:

> Incidentally, what exactly are the problems that these prescriptions
> meant to deal with? You don't spell them out.

1. No person should have to work significantly longer at lower wages to
survive and to enjoy a comfortable standard of living commensurate with
their fellow citizens.

2. No group of people should be able to accrue for themselves a
disproportionate amount of the total wealth of a country.

3. The social organization, or state, should not be made to bear the
externalized costs of profit making enterprises.

4. Within a single social organization regional fluctuations in living
costs should be actively depreciated.

> Prescription of minimum wages and maximum working hours have produced,
> in continental Europe, a highly-automated society. You get
> fully-automated car-parks, car-washes, self-service - including weighing
> and paying - at supermarkets, anything to avoid employing minimum-wage
> personnel.

Are you implying that this is a "BAD THING"? Surely you do not subscribe
to the philosophy that automating tedious, mechanical, unthinking, work
denies people employment? Economies only grow when labour can move into
higher valued activities. A living minimum wage acts as an incentive for
profit making enterprises to use labour in the most efficient and highest
value manner possible. Further, it vastly increases the number of
families that have sufficient surpluses to spend and to invest thereby
generating even more economic activity. A living minimum wage does not
create a permanent class of unemployables who are only capable of
labouring long hours at low wages or living off social welfare. That
outcome is only archived by poor education and misinformed social

> And for a country as large and diverse as Canada (are you applying this
> to the US as well?) is it wise to set the minimum wage as a proportion
> of the national poverty level? Regional variations, I understand, are
> massive. And are these wage-levels set before or after other state
> interventions, e.g. payroll credits?

State interventions to income are, to a large degree, the result of wage
and employment standards that do not provide a living income for the
effort expended by the labourer. It is a way in which profit driven
enterprise gets the taxpayer to pick up the tab for their payroll, or at
least a significant part of it, often concealing this by putting forth the
argument that they are "providing jobs" rather than "increasing profits".
In a fashion similar to industrial pollution this is just a way of
unburdening themselves of the direct costs of doing business and making
someone else bear it.

Given a national living minimum wage, equal taxation treatments, and the
free movement of labour then regional variations in poverty levels would
rapidly converge to a fairly narrow range of values. Given that the
minimum wage would be set at 110% of the national average poverty level I
doubt that many minimum wage earners would excessively benefit or be
overly burdened by regional variations.

The second major incentive for state interventions, at least in Canada, is
to offset the natural tendency of labour to move to regions providing
better wages. It is this desire for social "stability" that is at odds
with the labour mobility required to maximize economic activity. If
capital is able to seek the most favourable climate for investment and
goods the most profitable for producers then so too should people be able
to maximize their income. These interventions need to go in any case for
they simply exacerbate regional variances.

Keeping labour where it is less productive depresses wages by creating an
artificial surplus. It also increases wages disproportionately in areas
enjoying strong economic activity by preventing an influx of labour whose
effect would be to moderate wage demands. Neither of these conditions
would be aggravated by a living minimum wage, since in the former there
would be a floor below which an employer could not go, while in the later
case minimum wages, no matter how high, are irrelevant. In the former
case, the living minimum wage, by eliminating any need for other state
interventions, would promote the movement of labour from markets where
there is a labour surplus, and thus relatively few jobs, to areas where
there is a labour scarcity, and thus relatively plentiful jobs, and where
wages will generally exceed any minimum set by law to a significant

However, as with capital and goods, unregulated markets just become the
hunting grounds of predators. The living minimum wage and the relative
salary caps applied to all employers within a market simply levels the
playing field so that the economically efficient can prosper while the
unscrupulously exploitive withers.

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James B. Byrne mailto:ByrneJB@Harte-Lyne.ca
Harte & Lyne Limited http://www.harte-lyne.ca
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Hamilton, Ontario fax: +1 905 561 0757
Canada L8E 3C3

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