The evil of social engineering

Yesterday Andrew Leigh* had a fascinating letter ($) in the Australian Financial Review. Fascinating because it gives an insight into social democratic thinking.

Almost a decade ago, I published a study which concluded that increases in West Australian minimum wages led to some job losses. This result should not have been a surprise to anyone: I doubt there’s a person in the country who believes that we could double the minimum wage tomorrow without some job shedding.

That’s a good start – Andrew Leigh admitting that increased minimum wages results in job losses. But then see what he does – he introduces a cricket analogy.

Shop assistants and hairdressers, early childhood workers and cleaners are among the workers who rely on minimum wages.

To pretend their pay packets are irrelevant is like complaining that Australia lost nine wickets in the first innings of the Adelaide test.

If you can’t also acknowledge that we made 570 runs and won the test, you’ve kinda (sic) missed the point.

Okay – so Australia lost 9 wickets in the first innings of a test match. He is quite correct to say that we also need to look at the runs made in the first innings of that test match. So far, so good. BUT … the same people who made those 570 runs also ended up losing their wickets. It isn’t the case that some people lost their wickets and other people got the runs.

What Leigh seems to be saying is that it doesn’t matter that some people lose their jobs as a result of increased minimum wages as long as those who don’t lose their jobs are better off for the pay increase.

While the evidence is somewhat mixed, it seems likely, on balance, that raising the minimum wage delivers a considerable pay increase to the working poor.

While tossing a bunch of other people into unemployment.

* As always launching into Andrew isn’t necessary and will result in grumpiness on my part.

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37 Responses to The evil of social engineering

  1. Because it’s Christmas, I will NOT call Andrew Leigh a censorious, over-educated toss-pot.

    That’s love for you, Professor. Real love.

  2. PS I suppose Andrew Leigh was very busy on all those ALP-patronage placements as a young man, and never had time to learn the actual rules of cricket. He did spend a lot of time working at overseas think-tanks, too, which would have removed him from the cultural milieu he would have needed to learn about cricket properly.

    So I will forgive him this slur on the national game as well.

    But only because it’s Christmas.

    [hums 'Silent Night'; assumes serene and pious expression]

  3. DrBeauGan

    The big problems are three, and the first is that as a society we are rich. Even someone unemployed is wealthier in terms of consumables than a mediaeval baron, far wealthier. The second is that technological unemployment is extremely high and governments have concealed this by creating an administrative class who do nothing except meddle in things they don’t understand. We can sustain an awful lot of parasites these days.
    The third part is that for most human beings a large part of the point and meaning of their lives comes from their work. If it is creative and productive they can be happy. If it is manifestly makework they need some sort of religion, in Andrew Leigh’s case, something that validates the meddling and pontificating which he so enjoys.
    That he can be paid money for his thoughts on these matters is amazing and a greater sign of degeneracy than the ACT’s gay marriage folly.

  4. Andrew

    Simple solution to Andrew Leigh’s problem. Introduce a ‘No Disadvantage Test’ if he is really concerned about workers being worse off.

  5. stackja

    While tossing a bunch of other people into unemployment.

    Abolish the seat of Fraser. Only need one seat in ACT. So then Brodtmann or Leigh gets tossed.

  6. stackja

    Just this:

    Liberty Quotes
    “In general, the art of government consists in taking as much money as possible from one party of the citizens to give to the other.” — Voltaire

  7. See Sinc? almost no Leigh bashing at all.

  8. Rabz

    As always launching into Andrew isn’t necessary and will result in grumpiness on my part.

    No comment.

    :x

  9. Bruce

    What Leigh seems to be saying is that it doesn’t matter that some people lose their jobs as a result of increased minimum wages as long as those who don’t lose their jobs unionists are better off for the pay increase.

    Fixed. All is understandable when one knows the psychology of homo vampirii.

  10. Oh, I get it, we’re all part of the same team. So it doesn’t matter if I’m unemployed as some others have jobs.

    I guess that’s alright then.

  11. Fisky

    The ABC is right-wing and we need to increase the number of public servants. Just putting it out there.

  12. tomix

    The ABC is right-wing
    As in Franco style fascist right wing? You could be onto something.

  13. What Leigh seems to be saying is that it doesn’t matter that some people lose their jobs as a result of increased minimum wages as long as those who don’t lose their jobs are better off for the pay increase.

    So the unemployed are Shane Watson? I wish.

  14. Stateless, free and happy

    Leigh is correct to say that the evidence is mixed. Indeed, several reviews of the evidence base show that observed increases in the minimum wage have had no effect on employment, at least in the UK and the US. (Note the word observed – doubling the minimum wage is a different issue).

    The adjustment is probably felt in the form of changes to work, effort, hours etc. And actual job loses are probably too difficult to detect given all the other factors that affect employment. So, in that sense, Leigh might be correct.

  15. Rob MW

    Sinc – I hope this is not Andrew bashing but Andrew’s cricket analogy bullshit. Considering the traditional Pommy cricket team for example.

    The Poms live in the collective birthplace of tribal unionism and their cricketers (usually) subscribe to the union notion that when batting……. it’s one out…….all out…….. therefore, any Pommy batsman who refuses the notion of one out…..all out…. and scores some runs is in actual fact an overpaid scab and it is they who are more likely to get the sack.

  16. Danzig_Misfit

    Most Lefties I know are well off, some I even thought were smart.

  17. I’m quite happy to launch into Leigh.

    I think he reflects the dilemma of the social democrats world wide – is it better that more people work or that those who work have higher incomes?

    Is it better to take a sizeable proportion of the incomes of those who work and use it to sustain those who don’t work, or would it be better if more worked in the first place so it wasn’t necessary to take as much of those incomes?

    We know the social democratic answer and frankly I think it is profoundly immoral. Leigh’s view is unconscionable.

  18. I am the Walrus, koo koo k'choo

    We know the social democratic answer and frankly I think it is profoundly immoral. Leigh’s view is unconscionable.

    Agreed.

    Good luck convincing him of that, though. The narcissism of the social democrats is insuperable.

    I must say, I find it odd that commentators are allowed to call Julia Gillard a fat-arsed lying slapper, but they aren’t allowed to launch into Andrew Leigh. It looks as though the trade union of economics academics is looking out for its own, for no better reason than they are its own. And that’s not a good look.

  19. Gab

    As always launching into Andrew isn’t necessary and will result in grumpiness on my part.

    Why? Does he have compromising photos of you or something, Sinclair?

  20. Infidel Tiger

    * As always launching into Andrew isn’t necessary and will result in grumpiness on my part.

    Understood. Loud and clear.

    I have no doubt at all that Andrew is the ALP’s best and brightest.

  21. Infidel Tiger

    Better that one man earning $1000 be laid off than ten men earn $100 and keep their jobs. It’s the Australian way.

  22. …early childhood workers and cleaners are among the workers who rely on minimum wages.

    No, early childhood workers rely on the overtaxed, working-poor couples who can’t afford the wife taking a couple of years off to raise her kids and enjoy them.

    Easy fixed Leigh; cut Government spending, cut income tax and replace unemployment benefits with subsidies for low productivity workers.

    Then stand back and watch productivity rip, alongside happy Mums and kids…

  23. Infidel Tiger

    Shop assistants and hairdressers, early childhood workers and cleaners are among the workers who rely on minimum wages.

    Lefties love assuming that these low paid workers have progressed as far as they ever will in life. They all think the worst of the people they pretend to care about.

    “You have been assigned the janitorial duties at tractor factory 7. See you in 45 years comrade. Have a good life.”

  24. wreckage

    Question. Is there any evidence that abolishing the minimum wage will result in the lowest-paid workers being worse off than if they were on the dole or pension? IOW as long as there is a social security net, what real incentive is there to work for less than that? And if it is moral for the government to pay people such a low wage, why is it immoral for the private sector to pay the same or substantially more?

    Is there any evidence that the people currently on the minimum wage will have their welfare eroded sufficiently to offset the MASSIVE gain in welfare to those no longer unemployed? Statistically the benefits include not only money but huge improvements in happiness, social and community connectedness, self-esteem, and sharp drop-off in substance abuse, violence, crime and suicide.

    How many despairing long-term unemployed suicides is the minimum wage worth? Can we put a price on it? Let’s just thumbnail it in at $100 a week, shall we?

    That then, is approximately how much our society doesn’t give a fuck about the most vulnerable. Because full-time minimum wage earners are not the most vulnerable in our society. The unskilled, isolated, unemployed and disabled are.

  25. Infidel Tiger

    Combined with the unfair dismissal laws why would any employer hire an untried battler? You’d have to be out of your mind to take the risk.

  26. I must say, I find it odd that commentators are allowed to call Julia Gillard a fat-arsed lying slapper, but they aren’t allowed to launch into Andrew Leigh. It looks as though the trade union of economics academics is looking out for its own, for no better reason than they are its own. And that’s not a good look.

    Starting to wonder about Sinc’s extended family …

  27. wreckage

    So sure, some poor unskilled bastard shot himself, but at least I don’t have an unjustifiable and frankly pretty irrational sense of anxiety about an imaginary future pay cut.

  28. squawkbox

    Andrew Leigh is a transcendent genius, equalled only by John Quiggin and Harry Clarke.

  29. squawkbox

    (Just trying to get a few brownie points with the doomlord)

  30. The only hope for Andrew Leigh’s arguments in general is if the premise is valid that “Shop assistants and hairdressers, early childhood workers and cleaners” are types of people rather than types of activity or circumstances. In other words the Marxist premise that the world is divided into fixed classes. That’s not true any more.
    And don’t forget that a bigger reason unions fear the removal of minimum wages is that people might actually start to get paid more! Can’t have that happening without the unions being able to claim it was the result of a struggle!

  31. manalive

    One group that don’t seem to figure in the cost/benefit calculations of left-wing economists are the children of the ‘working poor’ who wouldn’t even get the opportunity to become unemployed.
    What’s the social cost of a growing pool of unemployed youth who have never had a job and probably never will?

  32. manalive

    …….. who wouldn’t even get the opportunity to become unemployed lose a job.

  33. Poor Old Rafe

    A surprisingly appropriate collection of images turned up under social engineer. At first I tried thief in the night but social engineer captured the essence almost as well!

    This was a difficult assignment because I really don’t want to upset Sinc, I don’t want to lost my posting privileges again.

  34. JimD

    IT’s 10.30pm post reminded me that Ford used assemble tractors in the mid ’70s at Campbellfield pre Belarus. Same night watchman used patrol our depot with loose screws from the tractor floor constantly embedded in his boots.

  35. JimD

    Ah memories. Meant to say IMO Andrew Leigh knows less about economics than a 15yo commercial student leaving high school in 1962.

  36. Anita

    DavidLeyonhjelm said: “I think he reflects the dilemma of the social democrats world wide – is it better that more people work or that those who work have higher incomes?”
    I live in the electrorate of Fraser. A couple of months before the Federal election, I received a pamphlet with words of wisdom from Andrew Leigh. He said that there are many, many Belconnen residents who only hold part time jobs and therefore recieve low income and that the then Liberal Opposiiton was denying these poor workers the tax break (for those earning under $18,000) that the Labor Government proposed. If Andrew Leigh is first an economist and then only a politician, he would agree with the reason why many, many workers are offered only part time employment by retailers and restaurant owners in Belconnen: the cost of labour is too high. Instead of advocating jobs for all and therefore the reduced need for tax exemption, my MP was trying to win an election by Liberal bashing. Andrew Leigh, address the economic fundamentals first before sobbing about your constituents having only part time jobs.

    There Sinc, you don’t have to bash Andrew.

  37. wreckage

    Well, if we take everyone who isn’t employed or past retirement age, and put them into the average wage calculations as “$0″ wages, do minimum wages still raise the average wage?

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