Well, yes Mr, Harris

Try these. The root cause of most worklessness, strangely enough, is an continuing shortage of work.

Hmm.

Oh, and one other thing: as the report concludes, in places where the private sector largely refuses to go, if you\’re going to convincingly deal with labour market failure you\’ll probably have to spend a reasonable amount of public money.

Mebbe.

Now as then, in too many places, there is hardly any work at all. Britain\’s economy is as segmented as ever, and to repeatedly kick people into local labour markets that barely exist is not just cruel but stupid.

Weeeel, sorta.

There is another way of looking at this which is to ask, well, why are there these areas that the private sector won\’t go into?

That private sector is absolutely delighted to go into areas of low labour productivity: China, India, Mauritius, all sorts of places private companies will happily employ people who don\’t produce all that much.

And as they are, places like Merthyr Tydfil have labour forces which are less produtive than others in other parts of the country. So why is it that companies will employ low value add labour in one place but not in another?

Because of course the simple output of labour is not what a company is interested in. Rather, the output of that labour compared with the price of it. That labour in China may be low output but it\’s also low price. Thus the productivity of it compared to the cost of it can be quite high.

So, if it were possible for companies to vary the pay they offered to reflect that output, then there wouldn\’t be these black spots of labour simply doing nothing. Companies would much rather employ low output labour in Merthyr than they would low output labour in China (although perhaps not than Mauritius which is actually a nice place to go).

So, abolish the national minimum wage. If £1 an hour is what some feckless Welsh youth\’s labour is worth, then allow companies to pay him that. Top it up with in work benefits if you like. It won\’t take long for that labour to be worth more than £1 an hour: Chinese manufaturing wages have risen fourfold (yes, after inflation) in only a decade. That\’s the sort of thing that can and will happen if wages are able to reflect value add.

You can also say that it\’s immoral to ask people to work for such a pittance. Perhaps it even is immoral. But if you set the price at which people can sell their labour above the amount that can be made by employing that labour then there will be unemployment.

Your call: unemployment or free wages?

 

35 thoughts on “Well, yes Mr, Harris”

  1. How about we stop importing more labour (immigrants) until we can employ our current unemployed.

    And why should the government have to top up wages because employers are too tight to pay a realistic wage.

    The bottom end of the labour market has been fcked by immigration. Let’s start on the cause and not the symptoms.

    Funny, when the boot is on the other foot, the business owners don’t like it or want to play fair. Such as after the Black Death when labourers were in short supply and could demand higher wages. So they brought in “The Statute of Labourers” to control and cap wages.

  2. “And why should the government have to top up wages because employers are too tight to pay a realistic wage.”

    And a realistic wage for a low-value activity is what? You think that a company should create a job and make a loss on the activity because why?

    The trick is to do high value activities, of course, but the feckless underclass aren’t equipped to develop web services or sell financial products or design microprocessors.

    Given the reality of mathematics what do you suggest is done with unskilled unemployed people who demand more money than their skills are worth?

    “So they brought in “The Statute of Labourers” to control and cap wages.”

    Companies will conspire to do this, and indeed have done so recently – until prosecuted for abusing the market. You won’t find Tim arguing for them.

  3. “Given the reality of mathematics what do you suggest is done with unskilled unemployed people who demand more money than their skills are worth?”

    Which bit of “stopping immigration” did you not understand? We didn’t have this problem back in the ’90s. We are compounding it by continuing the influx and just exacerbating the problem.

    Back in the late ’90s you could earn about £10 p/h doing labouring work, fair pay, for a fair day’s work, even if it was back breaking. I had a quick look at an employment agency window in Coventry last year, £6 p/h (minimum wage) for labouring.

    You cannot keep expecting people to work for less and less in real terms whilst commodity prices rocket by between 5% and 10% pa.

    Stopping immigration, will increase the demand on the current labour pool. If the current skill set is not there, then it needs to be taught and we can dump this target of 50% uni graduates and teach people the skills that are in demand.

    These people didn’t become useless overnight, they’ve been marginalised.

  4. I’m sorry, what?

    “Top it up with in work benefits if you like

    That “if you like” is doing a lot of work for you. You make it sound like “topping up” incomes of £40 per week would be an optional extra, like chocolate sprinkles on your ice cream.

    Imagine, for a moment, we don’t choose sprinkles. What would your policy prescription look like then? Income support and benefits would have to fall to something like £30 per week, otherwise nobody would bother to work. So your policy prescription would be to throw tens of millions of people in this country into extreme poverty (and let’s not piss about, £40 a week income in this country would be bloody awful, I think I live frugally and I (was) on around £300 per week, and I don’t have kids), and then wait for market mechanisms to drive up wages to some globally competitive level.

    And these are the only choices available to us are they? If we don’t like the millions-in-poverty route, we’d better just shut up our complaining about the millions unemployed.
    Because all other policies have been ruled out by you after extensive evidence based welfare analysis.

    Or, maybe we do choose sprinkles. Let’s say we allow wages to fall to £1 per hour, and top incomes up to what, how much would be a minimum weekly income to pay for housing, food, fuel, transport, clothing etc.? My guess is the tax payer would be having to “top up” incomes to the tune of £100+ per week. So that’s what your policy prescription looks like with sprinkles – we let wages fall to £40 per week then the tax payer gives £100+ per week to millions of workers on £1 per hour, in order to clear unemployment without causing mass poverty. How much would we have to put taxes up by for that, do you think? A nice big tax payer subsidy for capitalists, to reduce their wage bills.

    you know, quite often you accuse other people of being cretins and/or scum. On this occassion, let’s just say I don’t think you’ve thought things through quite as well as you might.

  5. God, I wish it were that simple. The minimum wage only affects those who are not entitled to benefits or want to work so badly they will do so at a loss. For everybody else it is the benefits system which sets the lower bound for wages. And no, you can’t just make it up with a wage supplement because that will decouple the work from the reward, pushing the wage even lower and giving the worker a high or even 100% marginal tax rate.

    And don’t forget the government also rigs wages with government non-jobs.

    What we’re really doing is paying them to stay where they are. If you cut their benefits and give them ten quid a day jobs, they will try move to London etc. pushing wages below cost-of-living and bringing back slums and that fun Victorian stuff. No easy answer, really.

  6. We had persistent unemployment of about a million throughout the boom years of 2000-2007, so his statement is bollocks. We imported staggering numbers of foreigners to fill this huge supply of jobs.

  7. Andrew Montgomery

    I can understand that a lack of local jobs could be the cause of high unemployment in Merthyr Tydfil. However I’m always mystified as to why London consistently has an unemployment rate higher than the national average.

  8. “The rent is too damn high”.

    Part of the problem is the cost of living. We often see in charidee advertising some statement like, “Charles lives on 1 dollar a day”, and we say ooh, how terrible. Which it is. But we overlook the fact that in Britain, you literally cannot do that. You would have no housing, and no food; virtually nothing in fact. You can’t even eat a subsistence diet on 66p per day. You w0uld literally die of starvation and exposure. Or, at least, be a tramp; and only small numbers of tramps can be tolerated because there is only so much food scraps in rubbish bins and bridges to sleep under. That is, you can’t have mass trampdom.

    So, the problem is that wages can’t fall to a “market” level because people can’t afford to work for that little money; there is a literal price floor on existence.

    Take away the taxes on everything that moves, take away the land use restrictions that stop people living in a shack in a shanty town, take away the expectation of a minimum standard of existence, then you can ask people to work for arbitrary low wages.

    Just as soon as you’ve also abolished the mediaeval guilds used by our Ruling Class to maintain themselves in the style to which they are accustomed. And all licensing of business by type and area, and all food and other products standards regulations, and the right to clean water, and so on and so on. In order to pay developing world wages you need to tolerate- and “allow” people to live- a developing world lifestyle.

    Otherwise, you’ll find that the rent is just too damn high.

  9. Er, sorry, those quote marks around “the rent” make it look like I’m quoting Tim or someone in the thread, and that’s not the intention, I was quoting that American geezer who used it as a catchphrase in a feeble attempt at very mild humour.

  10. You cannot confuse a free market with the corporate socialist shithole we now live in.

    Immigration has brought down labour costs.Without immigration the pop of the UK would be decreasing.

    Few people will work all week for v little while others are being paid more to do nothing.

    The number of jobs is kepot down by the tax/meddle/regulate/ borrow most of the available cash antics of the state.

    Several commentators are right that you can’t live on £1 per hour in this country–although I don’t see wages dropping that far. If you are going to starve to death doing 40 hours work a week will only speed the process.

    The minimum wage does need to go.

    Immigration needs to be halted.

    Taxes must start on a downward path (in 30 years say all taxes gone except a 2 % income tax, fixed for all time)

    Regulation must go down to the very minimum–genuine safety and that’s it.

    We must get out of the EU now.

    Govt expenditure must begin a long steady decline. Slowly at first but faster and faster over time.

  11. “Back in the late ’90s you could earn about £10 p/h doing labouring work, fair pay, for a fair day’s work, even if it was back breaking.”

    I expect there’s a whole bunch of reasons why £10/hr isn’t the going rate for unskilled manual labour now. Heaping the blame on hard working migrants who despite their language disadvantage are preferred by employers is not exactly fair.

    “You cannot keep expecting people to work for less and less in real terms whilst commodity prices rocket by between 5% and 10% pa.”

    I don’t “expect” anything: the cruel wind of economic reality driven by the harsh logic of the laws of arithmetic expects nothing from anyone. It merely is. The sooner that people lose their misplaced sense of entitlement the better.

    “Stopping immigration, will increase the demand on the current labour pool. ”

    And stopping issuing licenses to mobile phone operators will increase demand for the current ones. Stopping imports of cars will increase demand for local cars. So what? If there was any merit to anything done locally it should be done on its own merits, not by forcing the rest of us to pay too much for substandard services and goods.

    “These people didn’t become useless overnight, they’ve been marginalised.”

    Yes, by a toxic cultural combination of paternalism and inflating self-esteem that has lead to an almost religious belief in entitlement.

  12. Spot on TW, in particular the use of the word “immoral”, though I would use the term “unethical” to describe the activity of forcing people to be inactive and making them totally dependent on slave labour (i.e. income from forced taxation upon the working).

  13. Kay, you can’t expect people to acquiesce to the harsh disciplines of a free market when they don’t live in one.

    Neither, talking of “entitlement” is it entirely clear, at least to me, where a foreigner gets his entitlement to move to Britain from. Perhaps you could clarify that.

  14. I suspect the choice is:

    either
    1. some unemployment
    2. free wages and no benefits (i.e. the Somalia model)
    3. a command and control economy (i.e. the Soviet model).

    but the real point is that we are not faced with a binary choice, either some unemployment or if we want zero unemployment, some ridiculous extreme. I agree that unless we go to ridiculous extremes (and anybody who think removing benefits and the min wage and running a work or starve policy in this country, isn’t ridiculous, needs their head examining) then we will have some unemployment.

    but the question is how much unemployment. And it is perfectly sensible to complain that unemployment is too high, that the government isn’t doing enough about it etc., and the response “well, it’s either this or free wages” is just daft.

  15. “Kay, you can’t expect people to acquiesce to the harsh disciplines of a free market when they don’t live in one.”

    No, they don’t live in one. But the specific thing being complained about is exactly the thing that free markets bring: the opportunity to lose or win. The complainants wish for less free markets, spreading the misery of retarded economic development more widely.

    “where a foreigner gets his entitlement to move to Britain from. Perhaps you could clarify that.”

    The Government decided to allow in unskilled labour to tackle shortages, rather than reforming welfare. Those who were consequently allowed in are, of course, fully entitled to be here.

  16. “2. free wages and no benefits (i.e. the Somalia model)”

    Somalia isn’t a “model”. It’s not a libertarian society as asserted by the mocking Guardianistas. It’s a warlord society that exhibits all the consequent ills. Including kleptocracy.

  17. Andrew Montgomery

    One more thing: the 40 hour work week. I’ve seen immigrants who happily clock up 60 or 80 hours a week, spending as little as possible so they can remit the rest to their home countries. £6/hr minimum wage over 40 hours is the same weekly salary as £4/hr over 60 hours. If you’re doing a low-strain low-productivity job like night watchman or security guard, working 60 hours is easy; particularly if the commute is very short.

  18. “The Government decided to allow in unskilled labour to tackle shortages, rather than reforming welfare. Those who were consequently allowed in are, of course, fully entitled to be here.”

    By the same argument, everyone on the dole/sick/etc got their entitlements the same way, so your argument makes no sense. You’ve swapped the meaning of entitlement you are using from “something a person feels they should have” to “something they get by an officially approved process”.

    Anyway, the general point is this; probably everyone here (except Arnald) wants “more free markets”. The problem is in by what path we get from the current state to that desired state, and just shoving free market things in willy nilly isn’t going to achieve that and just causes social and economic chaos.

    It’s like a free marketeer wanting rid of the NHS. Fine. Great. But you can’t just abolish it overnight. Likewise, free movement across borders is an ideal future outcome, but just opening the borders of intensely distorted command economies isn’t the answer. You have to do things in the right order, rather than just implementing things at random- like some twat of an MP opening the borders so that he can have a cheap brown nanny for Tarquin and Jemima.

  19. KayTie,

    alright, pick another country with no welfare state and no wage controls – Somalia was just the first that come to mind.

  20. “By the same argument, everyone on the dole/sick/etc got their entitlements the same way”

    Your’re equating freedom from coercion with the fruits of coercion.

  21. A couple of points:

    1) It seems perfectly acceptable to many that someone in Merthyr Tydfil can sit at home watching TV on benefits all day at the expense of the rest of society, but suggest that said person have to work for £1/hr in order to get society to top up their income to a similar (or slightly higher) level and you are accused of being some evil monster who wants to take advantage of the poor.

    2) The fact that over 1m Eastern Europeans came to the UK over the last 4-5 years and almost 100% of them found jobs immediately, is not an argument against immigration (well, not of hard workers anyway) but an argument in favour of not allowing the natives to sit on their @rses claiming benefits rather than doing menial low paid jobs (which are, or at least were a few years ago, freely available).

  22. @Ian B
    The geezer who came up with the slogan,”The rent’s too damn high” is Jimmy McMillan (see You Tube).He does n’t appear any too humorous:he seems furiously angry.

    The explanation of Progess always leading to Poverty because high wages get cancelled out by high property/ land prices goes back to Henry George in the US and to Adam Smith and beyond in the UK (as TW is only too aware but always fails to mention).
    The reason labour is expensive in the UK is that the average worker’s wages have to be padded by a £100 a week to pay for accommodation: basically land charges.Sooner or later workers who can work for next to nothing, because land is so cheap in their countries ,go through galloping land price inflation/property booms ,as in China right now ,and things equal out in the long run ( da di dah di dah as Keynes said).
    So if you want people to work for some fraction of the price of the services or goods produced ,in competition with other workers worldwide, you have to reduce UK accommodation costs in places where there’s work to as low as possible.Businesses also have to have too damn high rents lowered. But free market it ain’t. A land taxer said laissez-faire /laissez passer but he did n’t mean land prices.

  23. There is nothing magic about Immigrants. They are only keen because they are being paid several times what they could earn at home, where they are planning to spend it. If someone in the US were to pay me a hundred dollars an hour to sweep up, it’d be yes sir, no sir three bags full sir all the way to the bank. Saturday morning, sir? I’d love to.

  24. No I’m not Kay, I’m pointing out that your argument that anything the government does is justifiable applies to all things; we all voted for a welfare state (by this argument) so stop complaining about it. Dole recipients are as “entitled” as immigrants.

    We need to be clear here that there is no natural right to move from one area to another. It is a matter of property rights; under the democratic nation state system, the population are joint owners of “Great Britain” and are free to exclude anyone they like, in the same way as you are free to exclude me from pitching a tent in your garden.

  25. “We need to be clear here that there is no natural right to move from one area to another.”

    LOL. I never had you down as an internal-passports Stalinist.

    “the population are joint owners of “Great Britain” and are free to exclude anyone they like”

    The joint owners of Great Britain, eh? Sounds desperately like “society” to me. When I see that word I am tempted to reach for my revolver. Alas I don’t have one because society prohibited them.

    I may be able to pitch a tent on your land, yet you feel able (via the mechanism of society) to tell me who shall and shall not live and work on my farm.

  26. Surreptitious Evil

    the population are joint owners of “Great Britain” and are free to exclude anyone they like,

    Whether we should be, or not, we quite clearly are not (not ar-nald).

    The EU determines, to a large degree, who we are allowed and who we are not allowed to exclude. As do, to lesser extents, the ECHR and 1951 Refugee Convention.

    On the other hand, I’m not aware of any legal regime (except possibly the imaginary ‘Common Law’ of the deluded) where ‘the population’ can have ever been described in any real sense as joint owners of Great Britain. Not even during the Commonwealth. Marxist states?

  27. Is this the same Kay Tie who ridiculed by objection to compulsory purchase? I think we should be told.

    I’m not arguing for how I want things to be, Kay. I am arguing for how they are. The reality is that right now we live in a collectivist community, and it may be physically impossible to avoid doing so (so far as I can tell, Right-Anarchism as described is actually a system of “micro-States” of various kinds).

    The question of who owns the public property of a nation/collective/whatever is interesting. In England, it’s techincally the Queen. In the USA, there is no queen. America is best described as a pool of private property owners, exercising joing ownership via the government, which is (supposedly) “by the people”. The USA is probably our best guide as it is the nearest thing to a liberal polity so far tried on Earth, and it seems to quite clearly state that “the people” appointed the government, and thus that “the people” own the USA.

    Here in Britain, we’re all tenants of the Royal Family, I think. But we’re hardly a model anyone would want to copy, are we?

    So anyway, from a propertarian position, taking the more clear case of the USA, the USA in toto is collectively owned and the private land is privately owned, and nobody has any right to invade another’s property; ergo there is no right of entry to outsiders (non owners of the USA); any owner may claim a right to travel within the USA, but has no right to enter another individual’s private land. That’s the ideal situation; in reality the government acts arbitrarily by force like everywhere else, but that’s not what we’re discussing.

    So, nothing to do with internal passports, then. Right?

  28. “Patriotism is your conviction that this country is superior to all other countries because you were born in it. ”

    George Bernard Shaw

  29. Ian B simply substitutes ownership for right to entry, and so doesn’t answer any questions at all. Who owns? Those who are present at the time of asking, including immigrants. Who can be an immigrant? – like katie says, whoever the government lets in. Citizenship is permanent – that’s part of its nature – you can’t – shouldn’t be able to – take it away, unlike dole payment “rights.” What an odd idea, that there is a fixed stock of “Britons” who can live here, and outsiders, who can’t. It’s all, happily, in flux.

  30. Louis,

    If not through wages how do we give [pick your depressed area] a comparative advantage so that they can attract employers?

    We’ve tried educashun, educashun, educashun, but that seems to have fallen on deaf ears. So what’s left?

  31. Work will seek out potential workers.

    Workers (if they are truly workers) will seek out work.

    Explain what the Govt can reliably do to improve matters with a net gain.

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