Dear Ministers, Leave Our Wages Alone
An email sent to Kate Wilkinson, Paula Bennett and John Key:
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Dear Ministers,
Thank you for your recent comments regarding the minimum wage for youth.
National had very sound reasons for opposing the changes made to youth minimum wage laws by the previous Labour Government, but in light of Minister Bennett's comments that she hasn't seen any evidence of a link between minimum wages and higher unemployment I wished to draw your attention to a few points.
Firstly, I recommend reading the following posts by Eric Crampton, and economics professor at Canterbury University, who has studied the government's own statistics and found increases in unemployment in youth since the law change (note, higher increases even than what would proportionally be expected due to the recession):
http://offsettingbehaviour.blogspot.com/2010/02/youth-rates.html
http://offsettingbehaviour.blogspot.com/2010/02/youth-rates-revisited.html
He has also applied similar techniques to data from previous minimum wage changes and come to the same conclusions:
http://offsettingbehaviour.blogspot.com/2010/02/youth-rates-re-revisited...
In addition, I'd suggest that both common sense and principle should be considered.
If the government were to impose a $5 minimum price on coffee, would you purchase a good $5 coffee that used to cost $5, or a bad $5 coffee that used to cost $2? Employers have no incentive to hire an inexperienced and more risky young worker, than an older, more experienced and more proven worker when they cost the same amount.
Furthermore, principally, why should the government have the right to tell a young person (or anyone really) that they may NOT work for a lower wage, even if they wouldn't mind doing so, and must instead go without a job at all?
I note that there are no shops that sell coffee for 10c or 50c (and in Wellington at least, it can cost a lot more). This is because the market creates its own minimum price (wage) based on consumer and employee demand - there is no need for the government to intervene and set prices (a wage is simply a price).
National claims to support the Free Market and smaller government and I don't see how having a National goverment fixing market prices fits with these principals.
Regards,
Peter McCaffrey
Vice President
ACT on Campus
Flat Tax
Yesterday it was revealed that Treasury are suggesting a Flat Tax.
Annette King and Bill English were both reported as opposed to the idea, but who said what?
One was opposed because: "We also need to make sure we put together a system that isn't regressive and that is fair."
The other was opposed because: "It raised questions about what other taxes would have to be raised to cover expenses."
Capital Gains Tax
Today, Bill English also refused to rule out National increasing taxes.
They won't be increasing income tax, but Capital Gains Taxes, and other options aren't off the table.
Putting aside the fact that the government should be cutting spending to fix the deficit, rather than increasing the tax take, let's take a look at why I don't like Capital Gains Taxes:
Investing in housing and property is attractive at the moment because there is a large difference between the high taxes paid on regular income and low taxes paid on housing and property investments.
To fix the distortion in the market that this difference creates, you have to get rid of this big difference between the two kinds of taxes.
The left's solution would be to increase taxes on these investments by introducing a Capital Gains Tax. This means we have high taxes on regular income and high taxes on housing, getting rid of the distortion.
National's solution should be to decrease taxes on regular income, so we have low taxes on regular income and low taxes on housing.
Simply really, isn't it!
Budget 2009
Has the Government done the right thing by postponing planned tax cuts in the Budget?
Ron Paul Update
We haven't posted much about Ron Paul recently, so here's a couple of good videos.
First, Paul on MSNBC discussing Austrian vs Keynesian economics and how he predicted the financial crisis (starting at 1:30):
"We haven't had free market economics - now they're blaming capitalism for all these problems, and not enough regulations - we've had crony capitalism, we've had inflationism, corporatism, big governemnt. We've not had true free market capitalism."
And now an older video from the campaign discussing drugs, marriage and prostitution:
"I think when you defend freedom, you defend freedom of choice and you can't be picking and choosing how people use those freedoms. So if they do things that you don't like, and you might find morally repugnant, I as an individual, I don't make that judgment. I don't believe government can legislate virtue."
Personal Outsourcing
I know this is meant to be satirical, but does anyone really have a problem with the concept?
National Cancel Tax Cuts
What do you call a National government that puts student loans before tax cuts?
A Labour government!
Seriously, National have just proven that they either don't understand economics, or would prefer to implement Labour policies than risk losing to Labour in 2011.
Which is it Bill?
Chicago Tea Party
"We have tried spending money. We are spending more than we have ever spent before and it does not work." - Henry Morganthau, US Secretary of the Treasurer during FDR's New Deal, 1939
National Forces Businesses To Discriminate
ACT on Campus - the ACT party's youth wing - has described the announcement that National will increase the minimum wage from 1 April as a discriminatory policy that must be a bad-taste April Fool's joke.
"Raising the minimum wage in the current economic climate will cost thousands of Kiwis - particularly young Kiwis - their jobs at precisely the time when they can least afford to lose them", said Peter McCaffrey, ACT on Campus Finance Spokesman.
"National suggests that the increase will bring 'negligible' job losses - but that loss will impact most heavily on young workers and Maori, those typically involved in low skilled, manual labour jobs. Perhaps National believes these vulnerable workers would be better off unemployed with a higher minimum wage, than employed at a lower rate.
"This is exactly the sort of policy Helen Clark and Labour specialised in, offloading a financial burden onto employers, and leaving businesses which are already struggling with no choice but to reduce the number of hours worked or lay off staff.
"The best policy for young workers would be to scrap the minimum wage altogether. Young people in particular should be free to negotiate any pay rate they wish with an employer in order to allow them to gain the experience, confidence and skills that will earn them higher wage rates in the future", Peter McCaffrey said.