Mark Wadsworth: Edgar The Exploiter

Saturday, 28 April 2012

Edgar The Exploiter

26 comments:

James Higham said...: Just watched it all. It carefully skipped past the conundrum, characterized the boss as a scoundrel in a sort of C19th way and didn't offer any solution.

Without the NMW, the lower rung, by this argument, is back on $3 or nothing. With the NMW, existing workers would have to do the cleaning on top of their other job but that gets into labour demarcation disputes and crosses the Elfansafetee juggernaut's path.

My question is: "Just what is the solution for the employer?" Just say, for the moment, that he is not the scrooge who cares for nothing but profit. Imagine he wishes to do that which is "fair". Then what can he do?; 29 April 2012 at 07:40
Sackerson said...: It's so skilfully presented that I smell a rat. And that sweet feminine voice, so calm and reasonable.; 29 April 2012 at 10:44
Sean said...: Its tragic. As you go drive past construction sites ect you will notice the lack of under 25s.; 29 April 2012 at 11:30
Kj said...: and didn't offer any solution.

It quite clearly advocates abolishing the NMW... For the bottom earners, a CI or other wage subsidy is the answer.; 29 April 2012 at 12:58
Mark Wadsworth said...: Kj, this is Lola's thread, so I'll leave it to him to field the tricky answers. The solution, as ever, is the CI. On the one hand, it subsidises wages because employers can get away with paying a bit less and leaving the worker with enough to live on; on the other hand, it pushes up wages because people are ever so slightly less dependent on employment income. Ergo, it helps people at the bottom without any significant distorting effects, job done.; 29 April 2012 at 13:01
Sarton Bander said...: and if you fund it via LVT (and get rid of income taxes) then you create an economy much more likely to employ people.; 29 April 2012 at 13:55
Mark Wadsworth said...: SB, yes of course.; 29 April 2012 at 14:53
Lola said...: As MW says, I think to square the circle that minimum wages destroy jobs but that leads to a class of workers having to live on subsistemce income, you have to introduce LVT to capture the privatised tax component of rent. A lot of Edgars costs will be the rent for the 'land' from which he must operate his business. And as eny fule no, both Ricardo and H George set out quite clearly how this is a Bad Thing.; 29 April 2012 at 17:46
Mark Wadsworth said...: L, there are plenty of people who done research which purports to show that the NMW does not reduce the number of jobs or damage the economy, I find this questionable but maybe it is even true in countries where the NMW is not very high - in which case why have it?

I am personally whole-heartedly against the NMW, it is quite clear that in a sane world, your first job will be fairly low paid or an apprenticeship or an 'internship' and whose to say where the borderline is between "People who are happy to work for pennies because it will help their prospects later on" and "People who are desperate and being exploited"?

I for one started training as an accountant just over twenty years ago for DM 700 a month (= EUR 400 or so), which was bugger all then and would be bugger all in today's money, so what? I got the required training, day release to go to technical college, I got my certificate and once I finished I got paid proper money (three or four times what I got as a trainee).

A few years later, I went to Uni full time for three years to study more of the same to scramble up the career ladder and received not a penny for my efforts, but once back in the labour market, I got my money back within a few years.

So yes, having a Citizen's Income is the best way of squaring the circle, and if that is funded by LVT, then so much the better.; 29 April 2012 at 18:30
Lola said...: I done research into NMW - as it applies to me! And I can categorically state that it, combined with employees 'rights' legislation makes me very reluctant indeed to take on anyone as a young apprentice.; 29 April 2012 at 21:00
Derek said...: Yes, NMW is one of those concepts which was introduced with Good Intentions but has Bad Side-effects. I too favour its abolition and replacement by a CI. However there is an alternative which the MMTers advocate. It's called the Job Guarantee and is basically a minimum wage government job, picking up litter, washing windows for pensioners, cleaning graffiti or whatever. The idea being that it creates a floor on wages by offering jobs that anyone can do, so that no one has to work in a sweatshop through lack of choice. You can also look on it as Workfare of course.

I'm not sure about it, since I remember the YOP and YTS schemes which were similar but with more of a training element and aimed at those aged 20(?) or less. Plus the JG wouldn't help disabled workers or those genuinely unable to work like the CI would. Also what do you do about people who don't take their government-provided job seriously? Fire them?

However whatever problems there might be with the JG I would think that the NMW could safely be abolished if there was a JG. So from that point of view it is an alternative to the NMW or a CI.; 30 April 2012 at 06:59
Kj said...: It's called the Job Guarantee and is basically a minimum wage government job, picking up litter, washing windows for pensioners, cleaning graffiti or whatever...Plus the JG wouldn't help disabled workers or those genuinely unable to work like the CI would. Also what do you do about people who don't take their government-provided job seriously? Fire them?

I've also mulled over this proposal for a while, and I'come to the conclusion that while it's probably possible to alleviate the problems with the JG, every single one is solved by having CI instead(even if it's lower than what the JG would have been), and count on the increasing attractiveness on employing labour (by abolishing taxes on income + abolishing the NMW) to fill in the gap in earnings for the lower rung. For the disabled, there might be a need for a higher CI (like for pensioners) and/or universal insurance paid for with earnings. That's not to say we don't need people to pick litter, clean grafitti etc., but it's probably done better if as regular, unpolitisized jobs, on terms and wages decided by the market.; 30 April 2012 at 08:07
Mark Wadsworth said...: D, hmm maybe, but I'm with Kj on this one. Government-run job creation schemes, as a matter of practice, are usually a waste of money and resources. It might be a nice idea in principle, but it just never really works.; 30 April 2012 at 08:11
Bayard said...: The video didn't address the problem of having an over-supply of labour, where there is effectively no competition and the employer can get away with paying effectively nothing. We have this now in the graduate labour market with internships.; 30 April 2012 at 10:13
Sarton Bander said...: Government Jobs are often done by people who don't want them, putting off those who might want them.

Not a good idea at all.

As for state "insurance" extorted out of wages, that's another bad idea too.; 30 April 2012 at 16:48
Derek said...: Sarton Bander wrote:
Government Jobs are often done by people who don't want them, putting off those who might want them.

Which is one more reason why I think that a Citizens Dividend is better than a Job Guarantee.

What I find difficult to understand is why the main MMT guys want it as a core part of their policy so badly. To the extent that they have attacked any of their erstwhile supporters who suggested that a Citizens Dividend would be better.

Very strange.; 30 April 2012 at 18:45
Mark Wadsworth said...: B, in the absence of taxes on income and output, the 'oversupply of labour' i.e. 'undersupply of employers' would melt away to a tolerable minimum.

D, yes, I think we can rule out govt make work schemes. Streets need sweeping so let's pay street sweepers a proper wage etc, The Citizen's Income covers a multitude of sins, it's a rudimentary welfare system, helps us dish out the surplus of LVT over cost of running basic government, subsidises low earners without discouraging work, tides over students and carers, acts as personal allowance against LVT bill and so on. It's more or less perfect (the other alternative is pay off the national debt).; 30 April 2012 at 21:17
Kj said...: I believe I've heard Japan had sort of a JG until the 90s, which was not formal, but they just employed anyone that wasn't working...

I discussed CI vs. X benefits with a co-worker the other day, and he commented this; a lot of current benefits are transportable and not depending on citizenship/residence; you work for some years, and receive a pension, loosely based on earnings. The favoured choice of more and more pensioners/DB-receipients is to move up to some low-cost country and take their benefits with them. How would a CI-policy approach this? Obviously a 30-year old has no reason to demand a CI if he moves to India, but what about a pensioner hypothetically receiving a higher CI? I suggested cutting the higher CI for pensioners down to regular CI levels for pensioners if living abroad.; 30 April 2012 at 21:30
Mark Wadsworth said...: Kj, the whole international thing is an impossible problem, and any solution is going to be a fudge.

Clearly, a CI for younger people and children is not exportable, you get it if you live in the country paying it. But old age pensions are by and large, as a matter of practice, portable.

It seems fair to me that the basic CI (call it £70 a week) is paid to everybody in the UK who is legally resident, and the extra bit for pensioners, call it £70 a week on top, has to be earned by years residence, so if you come to UK aged 50 and CP age is 70, when you retire you get the basic £70 plus half of the extra £70 = £105 in total.

Anyway, send me an email.; 30 April 2012 at 21:37
Kj said...: Kj, the whole international thing is an impossible problem, and any solution is going to be a fudge.

One thing to remember is there are already functional SS-agreements between many if not most countries, so it wouldn't be too difficult entering CI into this, meaning you won't get CI in country A if you are claiming any benefits country B. Ofcourse this is assuming country B isn't quite happy to have you claiming country A while living in country B...

It seems fair to me that the basic CI (call it £70 a week) is paid to everybody in the UK who is legally resident, and the extra bit for pensioners, call it £70 a week on top, has to be earned by years residence, so if you come to UK aged 50 and CP age is 70, when you retire you get the basic £70 plus half of the extra £70 = £105 in total.

Sounds fair, I think this may be roughly how NZ Super functions.; 30 April 2012 at 22:05
Robin Smith said...: What nice piece of junk political economy. It fails to ask why wages are so low compared to living costs. WHAT IS THE PROBLEM? And makes no mention of the reason for that, high rents and mortgage interest. Jumps right into its political agenda. Finally it assumes a free market when it is fully monopolised. I amazed you put this up.

To suggest a CI is the answer is jumping ahead wildly. If rents were socialised and wages privatised, that is by a Single Tax, what do you think would happen to competition between labour? It would disappear right?

Labour would now be able to employ itself if it felt like it. Most would not need Edgar the only one able to afford the main barrier to entry. High rents. They and all those on welfare willing and able to work would just start working probably for themselves.

Edgar and his peers would be shitting themselves competing fiercely for the now scarce labour. Employed wages would rise to their natural level.

This is why a citizens income is nice when there is a surplus that we should avoid leaving to government. But there wont be. Wages (And Edgars capital returns) will already have it all. The rest will be used for keeping the free market free and running the natural monopolies.

Once again I have to suggest you think about how things will be in the context of the new order, not the current disfunction.; 1 May 2012 at 00:59
Mark Wadsworth said...: RS, it is bad to be so rude, it is good to have principles, but most important of all is a grasp of the facts - real life, maths, logic.

And the fact is, the costs of running the core functions of the state is so tiny (5% to 10% of GDP) that there would be a huge surplus if we collected all land rents instead of taxing incomes. And what is the most sensible thing to do with that surplus?; 1 May 2012 at 09:44
Bayard said...: Mark, I see your point about LVT solving the problem, but the video wasn't about LVT, it was about the evils of the minimum wage and it stated that there is competition amoungst employers for workers as if this was always the case, when it quite clearly isn't. It also didn't mention the way the problem is solved of the "unprofitable cleaner" in this country, which is to have dolies doing it for nothing.; 1 May 2012 at 10:18
Kj said...: Robin Smith: When you say that there won't be any rent left, are you then using the HG theorem that all public expenditure is reflected in rent? What are natural monopolies in your opninon, and what expenditure of government would increase rents and what will not? You don't think there would be a teeny tiny surplus? And if not, I assume you bank on charity to cover those who can't earn?; 1 May 2012 at 21:57
mombers said...: Yes all fine and well if you don't have tax credits and other transfers. Topping up someone on £2/hour to a civilised income comes at the expense of taxing other parts of the economy. Unless it's LVT, this will cause unemployment there, e.g. VAT or NI driving a business under.; 3 May 2012 at 12:54
Lola said...: Assuming a 'free market' there can be no such thing as 'underpaid labour'. The reward is the market price. Whether or not that wage is sufficient to live on, or rather is a poverty wage (and poverty is a subjective judgement) is a separate although connected argument. Any wage or employment subsidy is a massive distortion ot the price signals. And as MW says the only non-distorting subsidy is CI/LVT.

Apologies for late response - very busy.; 7 May 2012 at 12:00

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