Timmy elsewhere

At the ASI.

On Dominos wages.

46 thoughts on “Timmy elsewhere”

  1. Does neatly illustrate an argument I had with UK Lib recently.
    Jobs are created (or destroyed) by workers, not employers.
    Dominos wish to make pizza. To do so they need pizzapushers.
    If they can’t find pizzapushers who will push pizza at a wage creates a surplus value of pizza, above what they’re being paid, there are no Dominos pizzarias, there are no pizzas, there are no jobs.

  2. Well indeed Domino’s has to compete against the market-bucking things we as a society feel have to be done to stop the unemployed living in squalor. But good luck in persuading the Great British People that offering full benefits to immigrants is the way to reduce the way the market is bucked against the indigenous and in favour of the immigrants – it’s a perverse but correct conclusion.

  3. “offering full benefits to immigrants is the way to reduce the way the market is bucked against the indigenous and in favour of the immigrants – it’s a perverse but correct conclusion.”
    But why would you wish to do that? It simply ensures, no pizza is baked.
    The pizza pushing jobs are created because there are immigrants who are willing to push pizza at an affordable rate.

  4. The taxpayer subsidises British citizens not to work at Domino’s at the wages Domino’s is willing to offer.

    So Domino’s wants the taxpayer to subsidise immigrants to do these jobs instead. And, of course, we’ll be on the hook to pay for all the health care, education, and housing benefit their families consume as well.

    It’s a model that works very well for the agricultural industry in the US. They get cheap, flexible labour, the taxpayer gets to carry the externalities.

  5. Point is that you have two solutions – universal benefits to immigrants or reduce benefits to the locals. Neither of which are going to fly in Dailymailland.

  6. Says Law applied to labour; there can never be a labour shortage, or a “skills shortage”; just maldeployment[1] of labour.

    Ergo, you never need immigrants. Ever. Domino Man does, indeed, need to raise his pay and conditions until supply and demand come into equilibrium.

    Okay so, not quite true; you may need to shift labour around in the event of a resource bonanza, since the location of mines etc are fixed. Doesn’t apply though to pizzas or anything else produced in London. Even so, the “gold rush” only requires a single geographic redeployment of labour, rather than a continual one.

    [1] Is that a word? It is now!

  7. BIS-

    No, the purpose of Dominos is to produce pizzas at the market price, which is clearly higher than it is now (unless, being Marxoid, they’re taking an excess surplus value). In that sense, immigrants have become Marx’s “reserve army of capitalism”. The effect of pouring large quantites of labour into a market (effectively ex nihilo) is much the same as pouring in large quantities of cheap money; constant market destabilisation.

    As I said, Say’s Law applies. You can never (with already mentioned caveats) have a labour shortage; only misdirected labour, and the thing that will fix that is the price system. Too many shoes, not enough shirts is the canonical example; cobblers need to become shirtmakers. If you conjure up extra shirtmakers from outside, you’re still stuck with unemployed cobblers. The market hasn’t come back into equilibrium. You’ve prevented a rising shirtmaker wage attracting cobblers (whose cobbling wage was falling) into shirtmaking. So you’ve now got underpaid shirtmakers, and cobblers on the dole. Nice for the shirtmaker capitalist, not for the economy in general.

  8. And the newly arrived immigrants do not need shoes or shirts?

    Its a wonder America ever worked, what with all these immigrants…

  9. I can see how that might apply, Ian, if you had a closed system. But as we don’t seem to be able to stomach closing the system, the immigrants are your cobblers becoming shirtmakers.
    .

  10. The new shirtmakers will need some shoes, but not as many as the unemployed cobblers need to make to stay in business. The point is one of a constant differential; if you have one pulse of new labour, eventually the economy will shift to full-ish employment. The same as, one increase in the money supply will shift the price system but eventually reach equilibrium again. THe problem is with a continual policy of new labour or money, in large quantities.

    America is already addressed; it’s the resource bonanza case. Find a new continent, you can ship large numbers of people in to exploit its resources. The situation is much different in a mature economy, without previously undeveloped land, coal fields, etc.

    This is a major problem in fact; that the Western world’s policy on immigration flooding (and many other issues) is largely driven by American narratives; we even get people saying European countries are “nations of immigrants”, copying the American slogan. But the economic situation is quite differnt to the USA expanding across the continent and pushing the natives out of the way, in their great immigration phase.

    Anyway, Say’s Law.

  11. She died of liver cancer on my bathroom floor, a week last tuesday and now lies beneath the end flower bed with a small headstone. I miss her more than I could have imagined possible.

  12. You have my very deepest sympathies. Know what you’re going through. We don’t have them very long. Just all of their lives.

  13. My constant companion from when he was found, dumped, in Finsbury Park until his passing at an estimated 14. Best employee the firm ever had. Head of public relations & security.

  14. If they can’t find pizzapushers who will push pizza at a wage creates a surplus value of pizza, above what they’re being paid, there are no Dominos pizzarias, there are no pizzas, there are no jobs.

    I can understand that – I couldn’t understand your use of “create”.

  15. Ian B,

    Too many shoes, not enough shirts is the canonical example; cobblers need to become shirtmakers. If you conjure up extra shirtmakers from outside, you’re still stuck with unemployed cobblers.

    But this isn’t about a shift of skills from something else into pizza making. It’s about people choosing not to work because the incentives to work are screwed around with by the state.

    Maybe he should be competing with that rate, offering more per hour to get those people to come to work, but then, you have to raise the price of the pizza, at which point, customers start to make their own instead.

    The offshoring of work to places like China and India is almost entirely down to the disincentives to work. We have people who could work for less than people in Shenzen (as there are 2.7m people who aren’t working). Land in many industrial areas is almost worthless. OK, there’s the external costs like people paying for food, housing and the NHS, but if people are out of work, we’re still paying for those anyway. There’s no way that having a person on benefits is better than a person bringing in 1p of taxation to the exchequer.

  16. I don’t particularly disagree that benefits can skew incentives. But in this case Dominos cannot get *anyone* to do it – not even recently arrived EU immigrants who are *not* entitled to benefits. No one. That’s why they are trying to get non-EU people to do it.

    So they are essentially trying to pay sub-Bulgarian wages to people living in London. I’m not sure that’s a valid business model.

  17. ukliberty,

    Is there a claim that if benefits were stopped today then the 3m unemployed will be employed ‘tomorrow’?”

    Take a walk down a high street or newsagents windows, and tell me there aren’t jobs going out there that almost anyone can do.

    Even in places that we consider to be northern wastelands, I can show you jobs going: retail assistant in Newcastle at WH Smith, McDonalds in Barnsley, JD Wetherspoons in Liverpool, Worksop and Blyth. That’s just places off the top of my head and not local printing firms, refrigeration companies or landscape gardeners.

  18. @UK Lib
    ” If they can’t find pizzapushers who will push pizza at a wage creates a surplus value of pizza, above what they’re being paid, there are no Dominos pizzarias, there are no pizzas, there are no jobs.

    I can understand that – I couldn’t understand your use of “create”.”
    If you can accept that then you have to accept, a worker willing to push pizza for a wage produces a surplus value of pizza does indeed create a ‘job’ pushing pizza. It isn’t there otherwise.

    “Is there a claim that if benefits were stopped today then the 3m unemployed will be employed ‘tomorrow’?”

    I’d suspect this is true. But probably take a while longer than tomorrow.
    The cost of the 3m unemployed is not so much the benefits. It’s the absence of the 3m unemployed from productive endeavour. If they were all producing something of value in excess of what they took, you’d end up with a labour shortage, consumption being the other half of production. In the long run, paying people to do nothing results in more unemployment.
    Caveat. That’s in a closed system

  19. Tim Almond-

    Maybe he should be competing with that rate, offering more per hour to get those people to come to work, but then, you have to raise the price of the pizza, at which point, customers start to make their own instead.

    Which is how the market is supposed to work. Price of pizza rises a bit, demand falls a bit, the supply and demand curves intersect, problem solved. If that doesn’t happen- if you conjure more labour ex nihilo- then effectively you’ve got your explanation for the worsening gini index, because the immigrant labour is pushing the pizza-makers wage below its actual market level. And you’ve still got all those unemployed cobblers.

    BIS-

    Nice doggie 🙂

  20. @luke
    “So they are essentially trying to pay sub-Bulgarian wages to people living in London. I’m not sure that’s a valid business model.”

    Isn’t this Tim’s ‘value of imports- we all get to enjoy them’ argument. Except importing the pizza pushers rather than the pizzas. Would we object to sub-Bulgarian pizza? We don’t object to sub-Bulgarian Adidas

  21. Take a walk down a high street or newsagents windows, and tell me there aren’t jobs going out there that almost anyone can do.

    Even in places that we consider to be northern wastelands, I can show you jobs going: retail assistant in Newcastle at WH Smith, McDonalds in Barnsley, JD Wetherspoons in Liverpool, Worksop and Blyth. That’s just places off the top of my head and not local printing firms, refrigeration companies or landscape gardeners.

    Yes, there are advertisements for jobs. But are there 3m jobs? There was a story about 1700 applicants for eight coffee shop jobs at a Nottingham Costa Coffee. Maybe an extreme example – the average is supposed to be 80-160 applicants per job depending on the industry. But you take the point.

    Look, I don’t deny there are problems with the tax and benefits system. There is a consensus on left and right that it’s stupid. There’s no incentive for a single person to do 0-14 hours minimum wage work, because of the effective marginal rate alone; then there is the disincentive from the costs associated with working. There are diminishing returns for hours over that. Universal Credit is supposed to help but who knows when that’s going to come in. What is it now, 2017?

    I don’t know, I just think anyone sitting at home in the UK on £70 a week (inc. bills) can’t be having a whale of a time, I think there’s more to it than some people seem to be saying.

  22. @UK Lib
    “There was a story about 1700 applicants for eight coffee shop jobs at a Nottingham Costa Coffee. ”

    Let’s say Gino’s offering £70pw. Same as benefits. They go work for Gino, that’s £560 the taxpayer’s still got in his pocket. That’s £560 available to spend on coffee. Gino needs to hire more coffee makers. Allowing for the small detail we’d all be vibrating with caffeine overdose, you could build an economy on that. Especially if you accept the disincentives attached to not sitting at home on £70 are balanced by the disincentives of being stung for the tax to pay for it.

  23. Ian B,

    Which is how the market is supposed to work. Price of pizza rises a bit, demand falls a bit, the supply and demand curves intersect, problem solved.

    You haven’t solved the problem. You’ve destroyed trade. The man buying the pizza and the man selling pizza no longer get together because the state has overriden the terms that they would find favourable.

  24. Tim A-

    I haven’t destroyed any trade. Mr Domino is trying to generate trade that wouldn’t exist without the State supplying him with extra labour at below market rates. Hence, why he’s whining to the press about it.

  25. JamesV said “you have two solutions – universal benefits to immigrants or reduce benefits to the locals.”

    No, what matters for work incentives is not the cash value of the benefits but their net value.

    Yes, you can reduce that by reducing the cash amount of benefits, but alternatively you can increase the unpleasantness of what the recipients have to do in return.

  26. BIS

    “Isn’t this Tim’s ‘value of imports- we all get to enjoy them’ argument. Except importing the pizza pushers rather than the pizzas. Would we object to sub-Bulgarian pizza? We don’t object to sub-Bulgarian Adidas”

    So you are suggesting New York imports Bangladeshi garment workers to manufacture garments in Manhattan? I think that’s what you’re saying. Not sure that Mr Worstall recommends that.

  27. So Much for Subtlety

    bloke in spain – “Jobs are created (or destroyed) by workers, not employers.”

    That is an appalling thing to say. We have millions of idle workers sitting around. If jobs were created by workers, then they would be creating jobs. They are not.

    Jobs are created by entrepreneurs. People who see a need in the market and make a difference. Not by idle feckless lay abouts who are content to collect benefits. Although the two categories may over-lap.

    “Dominos wish to make pizza. To do so they need pizzapushers.”

    So first an employer has to have a vision, see a need, and invent a business. That is what creates the possibility of a job. Not government. Not workers.

    “If they can’t find pizzapushers who will push pizza at a wage creates a surplus value of pizza, above what they’re being paid, there are no Dominos pizzarias, there are no pizzas, there are no jobs.”

    Sure, this is where workers come in. It is a two-way hand shake. The employer has to make a proposal. Some number of workers need to accept. If they both do not do their part, the job is not filled. But first you need the employer. Then he has to see if he can fill the job at the market rate and still make money.

    The solution is not to pay the idle feckless morons of Britain to sit around smoking weed and watching TV, but to subsidise their labour – push them into work like this and top up their wages. Cheaper in the long run.

  28. I’m suggesting there’s no difference between importing garments made in Bangladesh & Bangladeshis making garments in Manhattan. They’re both garments made by Bangladeshis & indistinguishable in every way. If they’re cheaper than garments made by Americans in Manhattan, the consumer benefits exactly as if they’re imports.
    It’s the logical extension to Tim’s praising of imports & ignores externalities in the same way.

  29. @SMfS
    You’re failing to appreciate, something needing doing & a ‘job’ are two different things. One is what the (say) manufacturer wants & one is what the potential worker wants. There’s all sorts of ways of getting something done don’t involve employing someone. Mechanisation. Buying it in. Simply not doing it & finding another solution. It’s the worker offering to get it done at an acceptable price creates the job.
    Your last para proves the point. There are an infinite number of things need doing. For the right price someone can clean my apartment, for a start. That they don’t get done is because there’s no-one offering to do them for an acceptable price. If you reduce the price by subsidising their labour they have a job. But that’s exactly the number of jobs as there are unemployed. It’s not an infinite number of jobs. Hence it’s the workers (aided by the subsidy) create the jobs.

  30. So Much for Subtlety

    ukliberty – “Peculiar that 800,000 more people suddenly became lazy from April ’08 to April ’09, and 48,000 were no longer lazy from July to September 2013. Some kind of flu?”

    No it isn’t. There is a threshold of laziness. A lot of people are content to sit around on benefits until something is handed to them on a plate. Some people are determined to go out and get a job. People are on a spectrum. So if the economy picks up, it is not too much hard work to find a job so more people find a job.

    The thought experiment is to imagine welfare was abolished tomorrow. By this time next year unemployment would be zero. As everyone would have found a job.

    bloke in spain – “You’re failing to appreciate, something needing doing & a ‘job’ are two different things.”

    Are we talking about something needing doing? Aren’t we talking about someone discovering that something needs doing?

    “It’s the worker offering to get it done at an acceptable price creates the job.”

    As I said, it is a two-way handshake. But there are any number of Bangladeshis in Bangladesh who would work at a reasonable price. No one is offering them one. What they lack is not workers, and God knows a lot needs to be done. What they lack is entrepreneurs and to a lesser extent a slightly dishonest government that would allow them to thrive.

    “If you reduce the price by subsidising their labour they have a job.”

    In Britain. Where we have become complaisant because we have so many people running businesses and thinking in an entrepreneurial way. It is exceptional. There are any number of Jamaicans who would probably love a job. But it doesn’t have a lot to do with wages because there are not enough Jamaicans willing or able to take on the risk of starting a business. In most of the world, wages are low but often official unemployment is high too. Because they have workers, even mildly willing ones. They do not have small businessmen unless they are imported from another culture.

  31. So if the economy picks up, it is not too much hard work to find a job so more people find a job.

    But why did those 800k people go on JSA? Did they become lazy?

  32. @SMfS
    Oh, I’d wholeheartedly agree with you about the lack of entrepreneurs. But entrepreneurs & people wanting to find work are the same thing. They’re both looking to exchange endeavour for money.
    It’s that bloody “J” word that’s the problem. Too many people think a ‘job’ is somewhere you turn up at to be given money. That ‘jobs’ should be created for their benefit. It’s an attitude infests politicians so they talk about the creation of ‘jobs’ as if it was an end in itself. Like Tim says, they’re a cost to be avoided if possible.
    Jobs only get created when someone’s willing to produce more than they’re costing. The profit word gives CiF commentators the vapours. You can be as entrepreneurial as you like but if you can’t get stuff done at a rate makes it viable you haven’t got a business.
    A large part of the problem’s the education system. It doesn’t produce people who are capable of doing anything useful. It’s not just at the 3R’s end. There’s hundreds of thousands of otherwise capable kids wasted 3 years getting totally useless qualifications. Mislead into thinking if they have a bit of paper says they can do so’n’so someone will pay them to do it. The so’n’so usually chosen because they like it. How sweet! Learning to do something somebody wants might be a better strategy.
    But the trouble is, their 3 years of wasted time makes them unemployable. Who’d want them? You can take a kid straight from school & teach them something. After 3 years poncing about full of their own importance they’re almost unteachable. Can’t cope with having to go right back to the beginning & start from scratch.

  33. Surely all jobs are created by a human need or desire.

    I want something, I have to either expend myself or persuade someone else to expend their labour and give me their produce.

  34. bis,

    A large part of the problem’s the education system. It doesn’t produce people who are capable of doing anything useful. It’s not just at the 3R’s end. There’s hundreds of thousands of otherwise capable kids wasted 3 years getting totally useless qualifications. Mislead into thinking if they have a bit of paper says they can do so’n’so someone will pay them to do it. The so’n’so usually chosen because they like it. How sweet! Learning to do something somebody wants might be a better strategy.

    It’s a problem of every influence on young people. They have parents who went to university who don’t grasp that there’s a massive oversupply compared to their generation, and had grants etc. Or they have parents who have high aspirations for their kids sending them to do degrees in Photography when they’d be better off spending 3 years backpacking with a camera.

    Schools are pro-degree. Universities are pro-degree. The media are almost entirely pro-degree. Literature and fiction is pro-degree. Politicians are pro-degree. They also see it as an improved social life, despite the fact that most people who have a job have far more money for going out than people on degrees do.

    A large amount of the thing of people going to university is about social climbing or conformity, what marks you out as a higher class person. Decades ago, it would have been having a salaried office job. A century ago, rising to officer ranks rather than being an infantryman. It’s now a symbol of middle-class identity.

  35. “Surely all jobs are created by a human need or desire.”

    Yes. That in combination with finding somebody else who can provide it for less trouble than one could do it oneself, combined with the ability to provide for somebody else’s need/desire for less effort than they could do it themselves.

    Otherwise, you could solve the unemployment problem by simply proposing that all the unemployed go work for one another. All those people desperate for work to feed their families constitute a massive ‘demand’ which means there are jobs to be had supplying them. The reason that doesn’t work is that they can’t do the jobs for each other any more easily than they could do them for themselves. They have no excess value to trade.

    Say’s law essentially argues that since every trade is of one product for some other product (money only being a token medium of exchange) that demand is just supply seen from the other side of the trade. The two are the same thing, and you cannot have one without the other.

    That does not, except in a trivial sense, mean that free trade will result in full employment – as Keynes interpreted it. The trivial sense is that since everyone needs to buy stuff, and they can only buy stuff if they first sell stuff, therefore everybody must sell stuff – i.e. be employed.

    So far as I know, the generally accepted explanation for unemployment is changes in the level of borrowing/spending. For somebody to be forced to consume without producing, somebody somewhere else must be producing without consuming – i.e. working for money but then not spending the money on goods. This can happen when people save for the future, or pay off debts incurred in the past. Conversely, borrowing consists of consumption without requiring simultaneous production, and therefore increases employment (as does living off one’s savings without working). In the long run, people save with the intention of spending it later, so if the savings level is stable, there are as many people saving for their old age as there are pensioners spending their savings, and the two cancel out. But if overall saving is going up, or debts are being paid off, unemployment results. Economists say that unemployment is the result of the marginal propensity to save.

    There is of course another way that people can be ‘unemployed’, which is when they are self-sufficient. If you can do everything for yourself easier than anybody else could do it for you, there’s no point in trading for anything. You don’t need to produce, because you don’t need to consume. If everything was produced by robots, you would have a society like that. There would be no jobs, but it wouldn’t matter because everything would be free. Full employment is not required.

  36. Hmmp. Should have said “So far as I know, the generally accepted explanation for unemployment is changes in the level of borrowing/saving.” Hopefully you get the idea.

  37. It’s an interesting description but I’m not sure if it helps when describing ‘jobs’ in the early C21st. The ‘job’ has come to have a particular meaning. A contracted arrangement with an employer where labour is exchanged for money on an ongoing basis.. Hence the common declaimer “These aren’t proper jobs.” (One can for the sake of argument include self-emp under jobs with the proviso, some unpopular self-emp is included in that “not proper jobs”)
    It refers to a world where the vast majority were employed by someone else & the vast majority were actually capable of supplying labour to a demand.
    I’m not sure how well it deals with a world where goods & services can be produced with so little human involvement that the number of jobs involved is trivial. Or of a world where a large proportion are functionally incapable of providing a form of labour anyone would pay enough to meet.their minimum needs..
    The money does indeed go round but it doesn’t necessarily pass through the jobs market. It wouldn’t be hard to envisage a future where very little of it did..

  38. SMFS

    “The thought experiment is to imagine welfare was abolished tomorrow. By this time next year unemployment would be zero. As everyone would have found a job.”

    No. There was unemployment in the 19th century, when “benefits” meant the workhouse. Don’t wiffle around with thought experiments when there is actual evidence.

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