Maximum confusion

Minimum wage
Pride is nothing to be proud of

2014-03-02 Maximum confusion youth-unemployment

The Australian ‘myth’

In my previous post I put up a few thinking points for your consideration. Here, I want to show you some fascinating pieces I found researching the subject. I came across several mentions of the Australian experience.
Interestingly, if you google “Australian minimum wage myth” you will get both sides of the argument.
Australia has a very high minimum wage. It is called upon as an example mostly by the proponents of the minimum wage saying: “See, they have high minimum wage and they are doing just fine. There is nothing to worry about“, but you will find  quite a few examples to the contrary as well. I will not enter into the argument trying to show you who are right or wrong and how the data is tortured to make either case, but I want to share with you three points I found particularly telling.

The policy wonk

You may want to listen to this 8 minutes interview posted on the Real News Network with an Australian university professor, Salvatore Babones, who is also an associate fellow of the Institute of Policy Studies in Washington DC. We learn from him that none of what the critics are saying is true, that the US should look around in the world to see how other countries are doing it; claiming that studies just don’t bear out the claim that raising the minimum wage has any impact on employment whatsoever,  and in the end he says:

“For my money, I’d rather buy a hamburger for $0.70 more, knowing that people behind the current counter have a living wage, than to pay $0.70 less for a hamburger and have slave labor conditions in fast food restaurants.”

Sounds noble and definitely very heartfelt. We should agree with the policy because it is the right thing to do. It will make us all feel good knowing that we are doing the noble thing. Inflation is good if we are doing it for the right reasons and the higher minimum wage creates a better, more humane, less divided, more egalitarian society.

But then, when you take a closer look, the picture is no longer that rosy.

The bureaucrat

The author of an article in ‘The Australian’ is wondering about the possible reasons for the high youth unemployment rate and plotting strategies “to halve  youth unemployment by 2020.”  He is the “chief executive of the Service to Youth Council.”

The article claims that:

The unemployment rate for 15 to 19-year-olds looking for full-time work in July [2013] was 25.5 per cent. Within the 10 areas listed by the federal Department of Human Services as the top areas of disadvantage in Australia, the youth unemployment rate rises to more than 40 per cent.

The author has several ideas to explain the causes and like a good communist he is calling for “business, government and young people to develop strategies to halve youth unemployment by 2020.”
The only thing that is missing from the article as a possible explanation of the problem is the minimum wage law. The causes must be unrelated changes and developments in the economy that can be identified, should be found and must be remedied by well-meaning professionals such as the author is.

The Ombudsman

The office of the “Fair Work Ombudsman” of the Australian government issued a report about the alarming rise of “unpaid work” in Australia.

We learn about the types (internships, trial periods, etc.); get lectured about their moral issues, there is a call to action (legal legislative, and administrative) but most importantly there is a call for further research of the problem because they “also determined that further research was necessary as the issue raised complex issues.” No kidding.

There is something sad and funny about these people and their efforts, about the denial, the willful blindness and the most earnest eagerness to offer their services to solve the problems with ever more application of the benevolent wisdom of the government. They all look at the problems with innocent puzzlement as if they were the results of nearly impossible to explain and hard to tame forces of nature.

They ignore or vehemently deny that the problems predicted by the critics of their policies exist; then treat those problems (which they declared non-existent) as unexpected, new developments of some not yet or not fully understood causes. The only thing that is more amazing than their puzzlement about the causes is their most sincere conviction that they are the right people to solve those problems that are yet to be properly understood.

The mind-set of the statists is fundamentally religious in nature. The essence of religious believes is a belief in causation, the conviction that things happen because someone wanted them to happen. If someone is poor, it is so because someone wanted him to be poor. Good things only happen if someone wills them to happen which is why they believe so strongly in positive action.

The blind faith in the correctness of their actions and the willful blindness about their own responsibility when looking at the consequences is reminiscent of communism. If any communist policy did not work as the planners expected then the hunt for the saboteurs began. If the plan that was created with the best of intentions did not work, it was because someone must have wanted it to fail. Critics of leftist policies are always suspect. We are not living in a communist dictatorship (yet) but the hostility toward any legitimate questioning of well-meaning but clearly harmful policies would fit right into any.

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  1. […] wage (my personal experience) Maximum confusion (the Australian myth) A perfect storm (when minimum wage meets maximum confusion in the head of […]

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