Economists Letter on Minimum Wages

This New York Times article discusses a recent letter signed by over 500 economists arguing against the proposed increases in minimum wages in the US.

The fact that the letter itself was initiated by a party with a vested interest has generated discussion online. I will leave people to make their own minds up on that.

More interesting is why so many economists have a firm belief that minimum wage increases are a bad thing. Aside from the toy models we present to students to introduce economic principles, where is the firm empirical evidence that would lead over 500 professionals to sign their name to something like this?

As this 1982 NBER survey shows, pretty much nothing was known empirically about the employment impact of minimum wages up to that stage despite a substantial body of theoretical work. A body of empirical work that followed generally has found no effects or even positive employment effects. The most famous paper directly estimating minimum wage effects on unemployment is this Card and Krueger AER paper that finds positive employment effects. It has been cited over 1400 times and debated over and again. Another highly cited UK study finds no adverse employment effects.

There is no credible empirical study documenting increases in unemployment following changes in minimum wage legislation. Nor are there credible empirical studies linking temporal and spatial variation in unemployment to minimum wage legislation. Simply type “minimum wages unemployment” into google scholar and sample the papers from peer-reviewed journals that come up. You will find some papers showing that minimum wage effects on unemployment result from highly stylised theoretical models but no papers in high-level peer reviewed journals showing a clear negative aggregate employment effect. Please feel free to link to some credible empirical evidence in the comments if you think I am overdoing the case. Here, for example, is a meta-analysis of UK studies finding no employment effect. With the empirical literature in mind, another group of economists have signed a letter in support of minimum wage increases.

Obviously people outside of economics will cite this as another case of economists not being able to agree. But the difference is the second group can point to empirical evidence. It is baffling as to where the first group derive their confidence from.

111 replies on “Economists Letter on Minimum Wages”

Yep – their estimates based on highly stylised toy models.

If you access the links to the papers they cite, there really is very little compelling evidence for employment effects. A number of the papers they cite find no employment effects at all or even argue for positive effects eg below.

http://press.princeton.edu/titles/5632.html

http://onlinelibrary.wiley.com/doi/10.1111/j.1467-9914.2010.00468.x/full

Some of the others have very marginal results.

Michael Baker, Dwayne Benjamin, and Shuchita Stanger,
“The Highs and Lows of the Minimum Wage Effect: A
Time-Series Cross-Section Study of the Canadian Law,”
Journal of Labor Economics, vol. 17, no. 2 (April 1999),
pp. 318–350, http://dx.doi.org/10.1086/209923.

David Neumark, “The Employment Effects of Minimum
Wages: Evidence From a Prespecified Research Design,”
Industrial Relations, vol. 40, no. 1 (January 2001), pp.
121–144, http://dx.doi.org/10.1111/0019-8676.00199;

That 500+ economists would use highly certain language to reference a number coming out of this type of analysis is embarrassing.

By Post Author

If you look at the list of people, including several Nobel economists, who sign the second letter it makes a mockery of this statement. “She added that “almost all economists” believe that a minimum wage boost would have some negative impact on the number of jobs, but the scale of that impact can be debated.”

By Post Author

Thanks for links:

“6. CBO’s estimates of the impact of raising the minimum wage on employment does not reflect the current consensus view of economists. The bulk of academic studies, have concluded that the effects on employment of minimum wage increases in the range now under consideration are likely to be small to nonexistent. CBO also agrees that the employment effect could be essentially zero, but their central estimates are not reflective of a consensus of the economics profession. Specifically:

Seven Nobel Prize Winners, eight former Presidents of the American Economic Association and over 600 other economists recently summarized the literature on the employment effects of the minimum wage in this way: “In recent years there have been important developments in the academic literature on the effect of increases in the minimum wage on employment, with the weight of evidence now showing that increases in the minimum wage have had little or no negative effect on the employment of minimum-wage workers, even during times of weakness in the labor market.”
The pioneering research in this area was conducted by John Bates Clark Medal winner David Card and Alan Krueger, who published a study in the American Economic Review in 1994 finding that fast food restaurants in New Jersey did not cut back employment relative to Pennsylvania after the former State raised its minimum wage. They concluded, “We find no indication that the rise in the minimum wage reduced employment.”
The Card-Krueger research was generalized by Arindrajit Dube, T. William Lester, and Michael Reich who compared 288 pairs of contiguous U.S. counties with minimum wage differentials from 1990 to 2006. Based on this, researchers found “no adverse employment effects” from a minimum wage increase.
A recent literature review of the extensive published work on the minimum wage concluded: “[W]ith 64 studies containing approximately 1,500 estimates, we have reason to believe that if there is some adverse employment effect from minimum-wage raises, it must be of a small and policy-irrelevant magnitude.”
Another recent review of the theory and evidence on the minimum wage by John Schmitt at the Center for Economic Policy Research concluded that “The employment effects of the minimum wage are one of the most studied topics in all of economics. This report examines the most recent wave of this research – roughly since 2000 – to determine the best estimates of the impact of increases in the minimum wage on the employment prospects of low-wage workers. The weight of that evidence points to little or no employment response to modest increases in the minimum wage.”

By Post Author

Best part of the article is this quote from Robert E. Lucas, Jr: “I was convinced that the minimum wage was not a good idea in Milton Friedman’s class in 1960.”

Personally, I was convinced that the sun moved around the Earth in Claudius Ptolemy’s class in 150 AD.

@Liam Delaney

“It is baffling as to where the first group derive their confidence from.”

Methinks indoctrination within the calvinistic streak in agency theory might have something ‘significant’ to do with it. After all, the ‘working maan’ is ‘baad, Baad, BAAD” and no amount of empirics is likely to change the misguided metaphysical illusions of such economists, or their possibilities of tenure. Tea anyone?

A minimum wage is often easy to game. When I worked in France, employers could easily pay below the minimum wage (SMIC) by, for instance, claiming that the work had a training aspect. Thus, jobs would be advertised as paying “60% of the SMIC”. We have something similar in Ireland now, where the minimum wage was raised by €1, however many workers in their 20s are working for nothing or next to nothing. Some do this through activation schemes like JobBridge and Gateway, but informally there is a new culture of working without pay for experience outside of state schemes.

So I wonder – if raising minimum wage does not increase unemployment, perhaps it also does not increase real earnings.

This debate should give economists pause before making claims for the findings of their ‘science’ in other, more complex areas, such as the size of the multiplier or the prospects for a monetary union.

Greg Mankiw was so happy to put this letter up on his blog – no surprise. To be fair – he also posted another economist letter supporting a higher minimum wage which was signed by 600 economists. These letters in my view are silly exercises. Actual empirical research is more convincing.

The debate on the impact of a minimum wage is also very topical in another major economy, that of Germany, where such a wage is being introduced for the first time as the result of an agreement by the centre-right/centre-left coalition now in power.

http://www.sueddeutsche.de/politik/arbeitsministerium-nahles-will-jugendliche-vom-mindestlohn-ausnehmen-1.1913360

What the debate in Germany suggests is that the arguments between economists, there and elsewhere, is largely rooted in ideological differences. The experience of Germany in the coming years as the minimum wage is phased in may provide a definite empirical basis to enable a definite conclusion to be arrived at. However, I doubt it.

“It is baffling as to where the first group derive their confidence from.”

I don’t think it’s baffling at all:

The Nobelists on the “anti” letter are Eugene Fama of the University of Chicago Booth School of Business; Edward Prescott of Arizona State University; and Vernon Smith of Chapman University’s Argyros School of Business and Economics and Fowler School of Law. Other luminaries among the 500-plus signatories are Gregory Mankiw of Harvard University and Glenn Hubbard, dean of Columbia Business School, both former economic advisers to President George W. Bush; and George Shultz, a former secretary of Treasury, State, and Labor.

Susan Swirski simply rounded up the usual suspects.

http://www.businessweek.com/articles/2014-03-12/its-on-nobel-economists-go-head-to-head-over-10-dot-10-minimum-wage

The fact that it’s even possible to get a platform to state baseless arguments in economics and not get laughed is either a poor indictment of economics or the media, or both.

Though I can’t imagine ever reading a headline ‘500 head engineers argue the internet would work better with a network of paper cups and string’.
Or ‘ 500 head physicists claim gravity doesn’t apply every other Sunday’, except maybe in The Onion.

“This debate should give economists pause before making claims for the findings of their ’science’ in other, more complex areas, such as the size of the multiplier or the prospects for a monetary union.”

Economocs is NOT a science – “Its Political Economy, silly!” But it would be foolish economist who would assert this. And no, not a single one, will pause. Those critters KNOW they are correct (or should that be right?), so all negative critiques or commentary are axiomatically in-correct (or should that be left?).

As for those mythical ‘multipliers’. Another theoretical figment of economics. No one, except I missed it, has been able to identify a single, empirically observable, real, quantitativelly measurable ‘multiplier’. Perhaps fiat-credit comes closest, but then we have this little problem of – compounding debt! Now THAT’s a multiplier! Yes, indeed.

This, “Yes it does”, “No it doesn’t” – is Music Hall guff. Now, if the country in question was India, China, Vietnam, Cambodia, Indonesia, etc., etc. Yes, indeed.

And would someone like to get this economic’s Nobel nonsense straight. Its a bank prize, in HONOUR of Dr Gelignite. Real scientists (Frederick Soddy) get Nobels – as in Royal Swedish Academy of Sciences.

Even if we didn’t have studies to look at, logic would tell us that modest raises to minimum wage would have no effect on employment.

The sectors that pay minimum wage are also the sectors which pare costs, especially labour costs, to the bone. They are hiring as few people as they can, consistent with a functioning business. If they could get along with fewer people, they would have already done so.

Noni

The paper cited in the Seattle link can be found at surprise…Berkley.
http://www.irle.berkeley.edu/
For what it’s worth I’m strongly in favor off an increase not because of any paper which admittedly are a bit dry,but because of the cohort impacted.
Instilling a work ethic is something I have tried do with the kids,my daughters charge 20 bucks an hour cash babysitting,one neighbor the flash git pays 30 an hour.Naturally transportation to and from the job provided,snacks cable etc.
Most kids on their way too college work a mac job for a summer or two then intern which surprisingly are not paid at all.Anyway,one summer my daughter worked in a tennis store on min wage plus commissions,she just about quit the job after receiving her first pay check,wanted jack it in and babysit for the summer refused cash the check !
When I explained that people actually live on that type wages she was aghast..anyway I’m strongly in favor off an increase.

@ J. Gallagher

Is that quit the same?

The arguments as I understand them are: One side, there is EVIDENCE to suggest POT can increase risk of mental health issues and legalizing increases usage. While the other says, there is EVIDENCE to say it funds criminality, alcohol is far worse for your health and thre’s tax in it for us etc… 500 expert docters aren’t coming out saying POT casues diabetes or hair loss or increase strenght or other unsubstantiated claims.

The point being, each side has supporting evidence for the claims they use to support their idealogy eg. We should have freedom to choose POT or no it’s bad for you, the state should ban things bad for you.

Where as an economic ‘experts’ make un(or lightly)challenged (media issue) baseless claims to support their ideology all the time. In some cases facilitating implemation of policy supporting the idealogy. I mean, I know it’s difficult in economics, imperfect ‘actors’ ond all that… but at least try.

Imagine, we think the internet would work better with strings and cups, lets rip up all the fiber/routers/switches and give it a go shall we?

500 expert docters, we didn’t bother doing any esperiments but we think Heroin increases child intelligence, sure give it a lash and report back.

@Brian Woods Snr

Are you saying the “soft landing” economists are not economists. Then what are they—could they be liars?

ps://namawinelake.wordpress.com/2011/12/22/fine-gael-called-liars-in-metre-high-lettering-on-grafton-street-premises/

@ John Foody.

“Economics” (what used to be Political Economics before they rebranded, of course) isn’t so much science as philosophy.

And massive amounts of moolah are available on one side of that debate to function as shills for the mega-rich, making outrageous claims and getting away with it (the so-called ‘wingnut welfare’).

@Liam Delaney

Obviously people outside of economics will cite this as another case of economists not being able to agree. But the difference is the second group can point to empirical evidence. It is baffling as to where the first group derive their confidence from.

As Ernie Bell pointed part of the explanation is conviction economics. Many of these economists had a revelational experience when the truth of the free market and possibly reductive neoclassicism was revealed to them. The letter can be better understood as a declaration of faith and intent than as an attempt to justify a position. Proselytizing for Mammon.

You will find a striking correlation between economists convinced the minimum wage would be harmful (perhaps it would damage the purity of essence of capitalism?), those who did not believe that the fiscal multiplier was above one in our current situation, austerians and trickle downers. In all cases the theory is shaky and the evidence contradictory but the point is not about how the world is but about how it should be.

To completely explain the epistle just add in class interests to the mix and top it off with schilling for industries keen to exploit wage workers (quite possibly for some kind of financial return).

@john gallaher

For what it’s worth I’m strongly in favor off an increase not because of any paper which admittedly are a bit dry,but because of the cohort impacted.

It bothers me that this is not further up peoples list of priorities for expanding the minimum wage too. Imagine what you would think of someone who argued that abolishing slavery needed an economic justification?. A decent living wage is about human decency, having to justify every policy on the basis of its overall effect on the economy is a frighteningly narrow view of the world.

@Shay Begorrah
“A decent living wage is about human decency”

To be fair, very few economists will dispute this. The caricature of the profession being cold-hearted millionaires isn’t true. The debate is about whether increasing the minimum wage makes it harder for some people to earn a wage at all.

@John Foddy,perhaps not the best analogy but here is a decent summary on the pro’s and con’s.
http://www.cnn.com/2013/08/08/health/gupta-changed-mind-marijuana/
The CBO study first link above has ben widely cited as justification for opposing any increase in the min wage,but the suggestion that jobs may be impacted was only one finding.
@Shay its the old invisible hand off the market,surprised you did have a go at Fama.

“It’s often assumed that people are paid what they’re worth. According to this logic, minimum wage workers aren’t worth more than the $7.25 an hour they now receive. If they were worth more, they’d earn more. Any attempt to force employers to pay them more will only kill jobs.

According to this same logic, CEOs of big companies are worth their giant compensation packages, now averaging 300 times pay of the typical American worker. They must be worth it or they wouldn’t be paid this much. Any attempt to limit their pay is fruitless because their pay will only take some other form.

“Paid-what-you’re-worth” is a dangerous myth.

Fifty years ago, when General Motors was the largest employer in America, the typical GM worker got paid $35 an hour in today’s dollars. Today, America’s largest employer is Walmart, and the typical Walmart workers earns $8.80 an hour. ”

http://robertreich.org/

@Enda H and in the end we are all dead,but lets keep debating it shall we.Lovely stuff nice and fluffy about the low skills amongst the ‘poor’ so we should table any increase in min wages until the dysfunctional education system is fixed…

@ JC: “Are you saying the “soft landing” economists are not economists. Then what are they—could they be liars?”

Liars? Nope, that would imply a level of intellectual guile and engagement that appears to be absent.

Wrongheaded? Yep! But why? Now that IS the question! Poor data? That does not appear to be the difficulty. Problem lies elsewhere.

D McW ‘saw’ the property bubble in 1999 (it had begun in 1995/6, but paused in 2000/02). Quite simple, actually. You reference increase in res property prices against increase in wages and salaries.

It would have been a no-brainer for anyone who understood the critical relationship between take-home income and property prices, and who was curious, ie., ‘looking’. Plenty of empirical evidence in the daily rags of the day. Might have been a bit of an effort to trawl back through their archives. Simple really!

Those who did not see IT coming’? Should have gone to Specsavers!

@Enda H

To be fair, very few economists will dispute this…

Many do not dispute it but still think that it is less important than a distortion free market. Misery is sad but market intervention is bad so to speak.

http://www.psychologytoday.com/blog/give-and-take/201310/does-studying-economics-breed-greed

I am confident that the split on minimum wage policy is principally an ideological one and I think the econojeff posting unintentionally makes that clear with its loud Greg klaxon. In fact the posting seemed like a collection of top right wing memes coupled with a real indifference to the plight of those currently in low wage, low security jobs. It made me distinctly queasy.

I have not read your friend’s paper and I am not qualified to comment on its contents but I am suspicious when people offer theoretical models of the long term which seem to disagree with the numbers we already have for the short term.

It sounds like a typical policy ineffectiveness theory plea for inaction.

Most of the studies cited just look at what business reactions are to a
wage hike not to what actually happens to the general business
environment under the new conditions.

The NYT had a story that covered how small businesses were affected
when Washington State increased the min wage. They looked specifically at
businesses on the border with Idaho whose min wage was 50% lower.
What was expected was a run of businesses across the border to Idaho.
The actual result was the economic climate picked up so dramatically that
the state’s major business lobby, the Association of Washington
Business, changed their position and no longer fought the minimum-wage
law.

The story can be found at,

http://www.nytimes.com/2007/01/11/us/11minimum.html?_r=1&amp

@me omits crucial words.

I am confident that the split on minimum wage policy is principally an ideological one and I think the econojeff posting unintentionally makes that clear with its loud Greg Mankiw klaxon.

“Highest Minimum-Wage State Washington Beats U.S. Job Growth ” March 5, 2014

When Washington residents voted in 1998 to raise the state’s minimum wage and link it to the cost of living, opponents warned the measure would be a job-killer. The prediction hasn’t been borne out.

In the 15 years that followed, the state’s minimum wage climbed to $9.32 — the highest in the country. Meanwhile job growth continued at an average 0.8 percent annual pace, 0.3 percentage point above the national rate. Payrolls at Washington’s restaurants and bars, portrayed as particularly vulnerable to higher wage costs, expanded by 21 percent. Poverty has trailed the U.S. level for at least seven years.

http://www.bloomberg.com/news/2014-03-05/washington-shows-highest-minimum-wage-state-beats-u-s-with-jobs.html

Minimum wage increases are basically political footballs, otherwise meaningless objects, given symbolic importance by interparty rivalry, rather like assault-weapons bans or abstinence-only sex education. Most of the rest of us, including the nonpartisan CBO, look on, partly bemused and partly puzzled by the intensity of the struggle.

The CBO takes the position that a minimum wage is like a tax on low-wage work: people who purchase low-wage work, either directly as employers (through reduced profits) or indirectly as consumers (by paying higher prices for the stuff made using low-wage labor), pay the ‘tax;’ the proceeds of the ‘tax’ are transferred directly to low-wage workers. Consequently, the CBO concludes that minimum-wage hikes should be analyzed like other tax and spending proposals.

The problem is that we don’t know exactly how much of the ‘tax’ is shifted back to owners and how much is shifted forward to consumers. The CBO estimates that employers would pay about a fourth of the cost of increasing federal minimums to $10.10 and consumers about three-fourths, and that the increase would cost about 500 thousand jobs, about three percent of all low-wage jobs. Consequently, the CBO concluded that families earning less than $150 thousand would see a net gain of about $20 billion in 2016 (gains = $105 billion, losses = $85 billion), with more than $18 billion of that going to families earning less than $75 thousand, while families with incomes greater than $150 thousand would see net losses of no more than $28 billion.

My own estimate, based on the past responses on the part of big employers of minimum wage workers is that there will be almost no job losses, that almost all of the wage increase will be shifted forward to consumers, and the gains to families earning less than $150 thousand per year will be entirely offset by increased prices.

DOCM said:
„The experience of Germany in the coming years as the minimum wage is phased in may provide a definite empirical basis to enable a definite conclusion to be arrived at. However, I doubt it.”
And I agree with him. But we should really try to milk the developing data as hard as we can.

The studies mentioned, especially the AER do not prove to be a general judgement, but are just the assessment of short term, special situations. Sorry.

I have lived for many years in the US, and many more, before and after, in Germany, and I have in the last year come around, reluctantly, to support now a minimum wage here in Germany, being well aware that this will now also start ugly discussions (the public unions already breaking ranks with the rest (latest german example of people always trying to up the ante
http://www.faz.net/aktuell/wirtschaft/wirtschaftspolitik/nach-forderung-von-bsirske-gewerkschaften-streiten-ueber-mindestlohnhoehe-12840542.html)

And, just as for John Gallaher, it was also personal experiences which contributed significantly to my change of mind.

Plus more theoretical considerations, I will go into more details in a next post.

Just some useful links:

gov.uk/national-minimum-wage-rates

First a few comments, why the reasoning, and therefore proper decisions might be different between the US, Ireland, Germany:

The US has no social minimum payments, like we have here (Hartz IV, amounting to 35k$ for a standard family of 4).

Ireland is much further away of poor countries like Bulgaria and Romania, is not part of the open border Shengen area. As long as we do not yield to the UK Cameron demands, to renege on core European treaties about free movement, this means that folks have a massive incentive to immigrate into a social system providing higher minimum payouts than the average wage at home.
Low wages are taxed very differently in each country (20% retirement contributions, 15% health care, 5% other = 40% social contributions, divvied up roughly equally means effective taxation of
1 – (100 – 40/2) / 100 + 40/2) = 33% right from the beginning
And this changes the whole landscape

is4profit.com/business-advice/employment/national-minimum-wage-historical-rates.html

useful wikis:
wiki/List_of_sovereign_states_in_Europe_by_minimum_wage
wiki/List_of_sovereign_states_in_Europe_by_net_average_wage

Is the debate on minimum wage another example of the propensity of much of the “economics profession” to start with a conclusion and keep beating a confession out of the data until it supports their hypothesis?

@Liam: I will take your word on the conclusions of the literature.

Here is a more macro question. Most of these studies relate to economies with a small tradeable sector, with positive inflation, and mainly outside a currency unions.

What would be your recommendation for an economy with a large tradeable sector which is part of a low-inflationary currency union?

To take 1% more tax from the upper 30 – 40% in order to raise the living standard of the lower 5 – 10 % by relative 10 – 15% is not impossible.

When the fatherland needed it, in the 1990ties, after reunification, we janked up the marginal tax rate to 65%, kicking in at like 3x average, and not just for millionaires. US tax rates were up to 70%, until Reagan.

And btw, the US had price controls on bread, under Nixon, for those who scoff a little too fast on other folks still trying that. And, of course, it didn’t work : – )

How about, that those of you, who are capable to operate some spreadsheet without any fancy math, hopefully the majority, open it up, fill one column with numbers from 0 to 1, reflecting percentiles of earning abilities, and put in a second column = exp (2 x (C1 – 0.5) ) ?

And now play a little bit with what kind of social minimum payments or minimum wages would do to the incentive to work and to employ people with certain abilities

That gives you a pretty good approximation how historically income was distributed at least for the core 80%, and for the upper and lower part of the distribution the eternal accounting difficulties.

I would in general subscribe to Fred Thompsons comment that this works out to a large degree like a kind of relative tax change, one could do always in some other ways, like with EITC in the US, and then there in a more targeted way.

The interesting parts are the special cases, and that is where the US, Ireland, and Germany differ.

@ francis: “…social minimum payments or minimum wages would do to the incentive to work …..”

francis, I have considerable difficulty with this ‘incentive’ thingy. Maybe it would work if there were a surplus of employment opportunities – with a range of skills and talents and corresponding wages/salaries, on offer.

When folk are comparing social welfare payment levels versus waged-labour payment levels, it seems that there are some very dodgy assumptions not being assumed. There may in fact be some folk who just do not wish to engage in waged-labour – irrespective of the payments being offered.

What you would need to do is to stop ALL welfare payments – then see what happens. But that supposes that the employment opportunities will neatly match those who wish to be employed.

It would be nice if we were not such a consumer orientated society. Then perhaps incomes would not be such a big deal. Anyhows, most folk in an urbanized society absolutely need some level of income to avoid destitution. That’s your minimum income – whether it comes by way of a welfare payment or a waged-labour payment, makes little economic difference. One just really needs some income in order to survive, and considerably more in order to participate, in any meaningful manner, in a consumer society.

In 1789 the poor were urged to substitute cake for bread – and look how that turned out! Now? Well, just substitute credit for income and …. Hey, hold on! That has not turned out so well either.

@ BWS

most jobs at the low end are not that exciting or socially rewarding, but somebody got to do it. Trying to avoid it, in the presence of some social minimum, is, cough, not really that surprising.

EITC is a classical IBM acronym, none of the words in it do mean what is seems : – ),

lust like Bavarian Leberkäse, there is neither liver nor cheese in it.

Or the C S U, as some folks say, it is neither christian, nor social, nor a union : – )

@ francis

You have, of course, put your finger on the nub of the matter i.e. the overall “social contract” pertaining in a particular society is what is decisive in deciding whether a minimum wage is desirable or not.

As the Wikipedia link reveals, none of the four Scandinavian countries has a minimum wage as none is needed because of the commitment to equality of treatment of their citizens.

http://en.wikipedia.org/wiki/List_of_minimum_wages_by_country

Ireland has a long way to go as far as equality of treatment is concerned. There is much fuss about being “equal before the law”, for example, but none about being “equal before disease” (other than to invent reasons to circumvent the latter when the minister for health endeavours to introduce universal health insurance).

The exercise of the introduction of a minimum wage in the case of Germany raises the question of the extent to which large economies can hope to emulate smaller, and in societal terms, more cohesive ones.

Economists in general IMHO need to lift their focus and return to the study of “political economy” as only this can encompass all that needs to be studied.

I am reminded of the remark, attributed, I think, to Churchill, that “if you put two economist in a room, you would get two opinions except if Lord Keynes was one of them in which case you would get at least three”.

While difficult for individual workers, lower wages can make
U.S. industries and companies overall more competitiv­­­­­­­­­e and
allow employers to hire more workers than they would otherwise.
In the long run, that may make the nation more
prosperous­­­­­­­­­.”
=====
Pathetic !!! A nation of slave-wage workers
will never be prosperous­­­­­­­­­, but the unethical business owners
who exploit such workers will be very rich. Such countries are
known as Third World Nations.

@ francis: Yeah, I guess that’s the way things are. But …

What happens when some Silicon Valley genius learns to program robots to do many of those ‘menial’ waged-labour jobs. What will we do about the ‘surplus’ humans then?

Does Europe and US go the Chindia route then? That should create a nice level playing-field of competition – except that there might be a shortage of consumers … they all having minimum incomes, and all.

Interesting times.

DOCM

you made the good point of the 4 scandinavians. And for a long time Germany was able to be in many ways a kind of a large 5th Scandinavian.

But that doesnt work anymore. The social differences but abilities to move have become much larger in the EU, and the latter is in general a good thing, not to forget.

And that means, that in many cases of wage dumping, I can not stand in front of my people, and say, lets just way a few years, markets will turn it alright,

If I do not believe it.

Our problem is not to “hope to emulate smaller”, but to accept the reality that we have become, in economic terms, much larger than our nominal 82 millions

and when I look at the current clown brigade of european leaders, Merkel is actually more than just the one eyed under the blind.

@ BWS
This “robots will replace humans at menial jobs” story is around since the 1950ties. I believe it, when I see it.

What was actually surprising, that for a long time you couldn’t see the PC, a clearly revolutionary thing, making a dent in US or other countries productivity, just not to be seen.

francis: We already have too many humans – and not enough waged-labour employments for those who want them. I don’t believe the robot thing either. Just fooling!

So, all this malarkey about min wages, is just that, malarky! We simply do not have enough employment opportunities – nor will we. That’s the interesting bit. What to do with all the folk?

You’re correct about the PC. Gives the impression of productivity, but look more closely and all you see is more and more ‘busy work’ – gerbils on treadmills. Pay sunflower seeds and you get gerbils 😉

Night!

The Irish minimum pay at current fx rates is almost $12 compared with $7.25..

It’s a good time to raise the level when the economy is growing and companies like McDonalds with Frederick Winslow Taylor precision are likely to have no surplus labour in their stores. So why would they cut staff to reduce service? Ditto for Wal Mart, Starbucks etc.

A special minimum wage of $4.25 per hour applies to employees under the age of 20 during their first 90 consecutive calendar days of employment with an employer. After 90 days, the Fair Labor Standards Act (FLSA) requires employers to pay the full federal minimum wage.

Full-time students are paid 85% of the min wage.

Home care workers is the fastest rising occupation.

Last Sept, the US secretary of labor ordered that minimum-wage and overtime protections be extended to most in-home care workers.

According to BLS data home-health aides earn $10.49 an hour, nursing assistants earn $12.32 and personal-care aides are paid about $10.

While these rates are above the min wage, two Republican House members issued a statement saying: “Today’s regulatory action by the Department of Labor will raise costs and limit access to in-home care for vulnerable Americans…The department’s previous estimates suggest this regulation could increase the cost of care by $2bn over the next decade. Faced with higher costs, some individuals will have no choice but to leave their homes and enter institutional living. This misguided regulation will make matters worse for countless families struggling in the Obama economy.”

Bloomberg News says semi-private nursing home care costs $75,000 annually.

Carers generally have to use a car to get to work on this breadline pay.

http://www.bloomberg.com/news/2013-11-21/home-care-aides-making-10-an-hour-seen-growing-in-u-s-.html

@MH one item that should probably be included in the discussion is EITC,also people in jobs that include tips i think have a different scale.
“For tax year 2013, the maximum EITC benefit for a single person or couple filing without qualifying children is $487. The maximum EITC with one qualifying child is $3,250, with two children it is $5,372, and with three or more qualifying children it is $6,044.[2][3][4] These amounts are indexed annually for inflation.
The earned income tax credit has been part of political debates in the United States regarding whether raising the minimum wage or increasing EITC is a better idea.[5][6][7]”
http://en.wikipedia.org/wiki/Earned_income_tax_credit
http://www.washingtonpost.com/blogs/wonkblog/wp/2014/03/03/breaking-obama-to-propose-expanding-eitc-and-child-tax-credit-in-budget/

@all

Blind Biddy took a flight last night from Kharkov to lead the parade in Tehran.

(the Ho Chi Coup in Hibernia was cancelled due to supine lack of interest)

All quiet in Kharkov – prob due to Biddy’s presence and the reputation of her great aunt Katharina. Limerick launches a claim to Crimea.

@all
Neat nail-biting, mind-blowing win for Ireland in the last ball of the Twenty20 World Cup Cricket match vs Ziimbabwe.

p.s. Mad Oul Jozie down_the_road in is the Big Apple for the parade seeking out Chippe_JohnG with the twin Fig Leafs; she has gone off Tull – prob due to those flaming yellow bell-bottoms and the royal blue hoodie!

@(nearly) ALL

Have a great day!

From the NYT
http://www.nytimes.com/2014/03/17/business/economy/low-wage-workers-finding-its-easier-to-fall-into-poverty-and-harder-to-get-out.html?hp

“Today’s low-wage workers are also more educated, with 41 percent having at least some college, up from 29 percent in 2000. “Minimum-wage and low-wage workers are older and more educated than 10 or 20 years ago, yet they’re making wages below where they were 10 or 20 years ago after inflation,” said Mr. Schmitt, senior economist at the research center. “If you look back several decades, workers near the minimum wage were more likely to be teenagers — that’s the stereotype people had. It’s definitely not accurate anymore.””

People in no minimum wage camp, are in effect arguing for a low cost of living, kept low through impoverishing workers, so that their own standard of living can be enhanced.
They don’t much mind if the impoverished workers are workers in Chattanooga or children in Bangladesh.
Some would find the attitude of such people, to use the words of the Garda Commissioner, disgusting.

@Joseph Ryan,Chattanooga is a fascinating place,Look Out Mountain is home to many Coca Cola founders families,also has world class super fast internet access.
But its probably more infamous lately over the UAW and the VW plant.Francis has mentioned this and some are suggesting a german style workers council.
http://www.theatlantic.com/politics/archive/2014/03/how-to-give-workers-a-voice-without-making-them-join-a-union/284328/

on a much lighter note,poor Enda first off its freezing here,unseasonably cold,front page of the widely read New York Post,what a PR disaster.
“DRAUGHT DODGE”
guinness quits st pats parade over gay flap.”
http://nypost.com/2014/03/16/guinness-pulls-sponsorship-from-st-pattys-parade-over-lgbt-ban/

Can one of the American commenters here describe what net pay a single in th US would not get after Obamacare, SS deductions, for working 40 hours per week, 50 weeks a year, and how much the employer would have to put up.

Link would be nice,

John Gallaher had some time ago some nice description of the whole thing, especially EITC and health care.

Same thing for Ireland would be nice too.

I would translate 1.25 Dollar to one Euro as “fair value”

Otherwise the Crimea Anschluss seems to work to everybodies satisfaction, stocks are up more than 1 % : – )

I’ve seen models that say pay for days lost due to sickness destroys jobs. Milwaukee can’t afford sickness pay according to one model ( prolly sponsored by Koch Industries).

This recent article by John Kay on the general topic that “the map is not the territory” is of relevance.

http://www.ft.com/intl/cms/s/0/b0786746-a84b-11e3-8ce1-00144feab7de.html?siteedition=intl#axzz2vT32QZBY

In the case of Germany, the recent move towards the introduction of a minimum wage is probably the right way to go given the size – in economic terms – of the country and the multifarious directions it faces and the policy options that it has to consider. Such a move in the case of the Scandinavian countries would not be justified.

As the main underlying idea is, in any case, to ensure that workers are not exploited, this in itself suggests that there may be something awry with regard to other elements in the management of the economy that could allow such exploitation. It may be better to concentrate on identifying and correcting these elements than seeing salvation in a minimum wage or a certain level of same. This is certainly true in the case of Ireland.

It all hinges on the issue of productivity in the sense of producing goods and services that can be traded in an internationally competitive environment; a somewhat trite observation but this is what makes countries successful and enables them to offer employment at home. Selling houses to one another does not fit the bill.

@francis best i can find,oh the mickey d’s website called practical skills is down!

“As Jim Cook at Irregular Times notes, the $1,105 figure up top is roughly what the average McDonald’s cashier earning $7.72 an hour would take home each month after payroll taxes, if they worked 40 hours a week. ”

http://www.theatlantic.com/business/archive/2013/07/mcdonalds-cant-figure-out-how-its-workers-survive-on-minimum-wage/277845/

http://www.practicalmoneyskills.com/mcdonalds/budgetJournal/budgetJournal.php

in a certain way, the German Hartz IV approach was kind a like the Marxian dream:

wiki/From_each_according_to_his_ability,_to_each_according_to_his_need

Everybody has to take every job, and benefits are distributed according to needs, and not as a minimum wage, for those who have a job.

Deeply rooted in Christian beliefs as well (Acts 4:32–35: 32), like Shakers, Mormons, Hutterites, Amish, Bruderhof and Jewish kibbuzim

In small, isolated communities this can work well, longer than this upstart USA exists : – ).

But in large, global societies, and in contact to some outside more capitalistic competition and in relations spanning far beyond local, personal community, problems arise

People do not feel bad about gaming the system, cheating people they don’t know.

trite, like DOCM says, but the true limit.

@ DOCM

From the Ciaran Cannon Indo link

‘The State pays an extra €50 to participants on top of their Jobseeker’s Allowance and our young people participate because they are eager to get into the jobs market at any price.
It is those first few months of meaningful work experience that will empower them to set a higher price for their labour in years to come.
Right now, our focus has to be on creating jobs, on giving real opportunities to the thousands of our young people who have yet to make that tentative first step to a career.
Yes, we need to guard against exploitation, but setting a sustainable minimum wage is all about balancing the rights of the employed against the equally important rights of the unemployed’

The jobs market is not homogenous. It is a set of markets. Some are protected and some are less protected. Some offer career development opportunities and most don’t. Getting a foot on the lowest rung of the least protected sectors can be a step to a ‘career’ only for a small minority of successful applicants. For most entrants it represents no more than a step onto the long term low wage treadmill, sacrificing a great deal of time, money and energy in the process of commuting and working.

The balance of rights in this case would seem to be the balance of those in dead end, training-less jobs against the rights of those who want to get one. Eroding the social welfare system intensifies competition for economic survival, but doesn’t really change the partitioned nature of the broader jobs/careers market or the gross inequity in society.

@ DOCM: Jaysus, DOCM, that Cannon piece is a piece of political cannon fodder. Woeful and useless. Did he compose it himself. Has the neat fingerprints of a ‘minder’.

We have ‘social welfare’ stuff because many folk cannot obtain waged-labour opportunities that will empower them to be paid-in members of a Consumer Society club. This claptrap about a ‘min wage’ looks like a distraction, smells like a distraction – and is a distraction. But from what? What’s amiss?

@ PQ/BWS

I linked to the Cannon piece because it seemed to me to underline the ideological divide, even within the current government. Neither side in the argument is correct. And the pursuit by academics of a clear answer i.e. as to whether a minimum wage hinders or promotes employment, or has no impact, is IMHO a waste of time unless the focus of the discussion is widened considerably. Insofar as an answer exists, the Scandinavian countries (to include even Iceland) have found it and largely for the reasons advanced by PQ.

As to what is amiss, I would have thought that it is fairly evident; the various parties are jockeying for position vis-a-vis what they imagine to be their core constituencies. Dividing up a cake which they have not yet baked is common to the strategies of all parties.

It is difficult for large multifaceted and disparate economies to manage without a minimum wage but there is no reason why a country such as Ireland should not seek to follow the example of the Scandinavian countries. Having failed to do so, we are still in a position parallel to that which we were in the 19th and 20th centuries as far as emigration to the US is concerned. The experience for them is a historical one. They do not have to plead the case for their “undocumented” as far as I know.

@ DOCM: Thanks for that. So, its virtual cake then? Madam Antoinette would be impressed. Should we contact Rachel Allen- she might have a suitable recipe. 😉

Perhaps its a Minimum Income that we should be considering. There are several ‘developing economies’ which have large numbers of persons existing on subsistence-style incomes and with little or no welfare – apart from charitable donations and volunteers providing some essential services.

If we persist with our current economic policies, it looks like we might be headed backwards to the 1930s-1950s, for a considerable proportion of the population. That would not be funny!

There is a possible possibility that the ECB might be ‘forced’ into some form of QE for ordinary folk, as opposed to the financial sector, in order to sustain ‘demand’. God knows what is going on in the background. If I had to place a bet with Paddy Power, I’d put my money on Energy Deficit. We’ll see.

The OECD on the topic of inequality in a report just released.

http://www.oecd.org/social/urgent-action-needed-to-tackle-rising-inequality-and-social-divisions-says-oecd.htm

The bottom line is that nation states, even within the EU and the EA, retain the primary responsibility for the management of their economic and social policies. Comparative studies are, of course, useful but they are often used as sticks to beat opponents in political discussion rather than as a guide to future action. This OECD report will prove to be no exception.

Those 500 economists remind me of Antonin Scalia, the fruitcake on the US Supreme Court who reckons the US Constitution is the last word on everything .

@ DOCM

If nation states retain primary responsibility then we need to reintroduce capital controls.
See what your handlers think of that. Goes against the raison d’etre of the EU free market .

Well, what minimum wages have to do with Scalia, is s mystery to me. And that a guy sitting on a constitutional court cares about his constitution, and not about whether this is popular in an Irish Pub, err, that is pretty much what I expect, isn’t it?

I was very short on why I don’t believe the US AER nor the UK min wage intro paper provide real evidence, soo ……

The German Hartz IV requires, well, at least in Theory, that everybody takes every job, no matter how it is paid.

And the government puts the rest on top, to bring everybody up to our social minimum standard.

Like I said yesterday, actually pretty Marxian. The problem is, this removes the incentive for the worker to demand a higher wage. Both employer and employee are actually pretty content with a low hourly wage… And maybe some non-monetary compensation on the side.

The social damage of this goes far beyond that I subsidize this with my taxes; it creates a downward draft to wages around that as well

But it took something like 8 years that this seems to be happening now in more substantial numbers

And when you look at the AER case, the half year checking is clearly not enough to an organization like McDonalds to react to changes in one US state, and a 5% change over 2 years (after accounting for inflation) in the UK does not induce visible changes to be separated from other developments.

It is like with the Laffer curve, nobody can really draw it based on undisputed evidence, but it is there.

If you introduce a minimum wage at 10% median, it has no consequence; even prisons pay more than that.
If you would put a minimum wage at median, that would have drastic consequences.
So, the sensitive level seems to be around 50% median, both for having a meaningful impact, and not costing jobs in numbers, you could show.

DOCM,

within a 60 mio Germany we lived quite happy for many decades without a minimum wage.

It is the extension to a 500 Mio EU, with countries like Bulgaria with a minimum wage a little over 1/hr, which finally brakes the limits of cohesion. And that will hit the Scandinavians just like us, their own size is not the controlling factor, just a few years later than us, as with refugees / political asylum seekers.

A point worth clarifying here. Sweden and Denmark are often presented as countries which demonstrate that minimum wages are not needed to protect workers from being exploited. This is a typically disingenuous neoliberal talking point and, of course, utter nonsense. It is close to an outright lie.

The Scandinavian countries comparatively good wages and low unemployment have almost nothing to do with labour market flexibility and the imagined boost to the economy trickling down to the low paid. (Labour market flexibility is of course short hand for “Reduced job security and exploitation of low waged workers”).

The reason that Sweden and Denmark have no national minimum wage is that they have the second and third highest union participation rates in Europe. and almost every sector of the economy’s minimum wages are set through collective bargaining.

These sector by sector collective bargaining agreements mean that regardless of whether you are a member of a union or not employers can not offer you a contract with a lower wage than the one nationally agreed with the union covering your sector. Minimum wages are hence significantly higher in Sweden and Denmark than in other countries.

Unfortunately union participation rates in the rest of Europe are much lower and once union membership slips below 50% of the work force it is more difficult for them to protect their members interests. Germany for instance, land of Hartz IV and mini jobs, has now only an 18% union participation rate. So most of the low paid workers in Europe need minimum wages to protect them from exploitation by unscrupulous employer.

Lastly I suspect that the unions in Denmark and Sweden would not welcome a national minimum wage as it might reduce membership in lower paid sectors (which would be covered by any minimum wage) and so reduce the bargaining power of the labour movement as a whole.

shay,

some interesting points,

but could you please provide some evidence for your

“Minimum wages are hence significantly higher in Sweden and Denmark than in other countries.”

@ francis

You have a point! As Schroeder himself has admitted, unscrupulous employers took unfair advantage of the Hartz IV reforms, probably using the availability of alternative external sources of labour as the lever. However, as in the case of the Scandinavian countries, the key to Germany’s success IMHO lies in the recognition by both organised labour and employers that the capacity of their firms to compete is the key consideration in the matter of setting wage rates. They would not succeed in finding agreement on this basis were it not for the fact, again as in the case of Scandinavia, that there exists a wide social safety net (health insurance, unemployment benefits, standardised pension rights etc.) funded collectively by their citizens either through taxation or insurance contributions.

The Scandinavian countries have widely differing approaches to creating that safety net but an identical commitment to achieving it based on an understanding of what it means to live in an egalitarian society. This understanding is shared elsewhere in Europe to varying degrees but some major slippages have occurred, as the OECD report confirms, even in Scandinavia; and Germany!

Meanwhile, the battle on the minimum wage within the grand coalition continues!

http://newsticker.sueddeutsche.de/list/id/1559494

And among academics!

http://www.ft.com/intl/cms/s/0/18be4de0-303b-11e3-80a4-00144feab7de.html?siteedition=intl#axzz2jNk5wqPP

DOCM,

the “unscrupulous employers” are actually often those, many of us would associate with “the good guys”. social institutions.

A first glance at this we got when we abandoned (erm, I have to insist: “temporarily suspended” : – ) the military draft in 2012. Before that, those unwilling to serve, had to do a Zivildienst “civil service”, which was by law supposed to not replace regularly paid jobs. And then their howling started, whether ending the draft could be suspended, delayed, transformed …. eeeek.

BTW,

tomorrow night, 19:00 bavarian time is Nockherberg, testing the strong beer during fasting times : – )

A lot of fun, and tradtionally true seer qualities, last year covered the demise of the FDP, Putin, G-7

Economic artificiality has only served economic capital thus far. Items such as increased minimum wages are sideshows of little overall /macro economic importance (although not academic if you are among the unemployed or working hungry).

In Europe, the talk is of deflation (hard to see that….I am seeing a bottoming in NL, strengthening in Germang, etc….but the periphery is still very much a bag of sh**e). In the US, we see an increase in argument about the threat of inflation. Who knows….In the NE (where I live), the local experience in various /mixed but “unconvincing” but, say re property in particular, doesn’t strongly underpin that. There appears to be little current deflation in Ireland (it is still a relatively expensive place to visit). In the longer term, if interest rates rise, God help anyone in Ireland with leverage…..current cottonwool padding will not protect. Paying very low interest only for the last years does not count as “performing” in a more real (“normalised”) world. The lullaby of current credit infusions has many thinking in wrong directions….all is not ok (put simply, what is fixed?)

All we are continuing to see is the credit cycle in action, with almost everyone missing the timescale /timeline. There is still a reckoning ahead. I think MK catches that well (enough).

As alluded to above, economic growth is absent. While the status quo in Ireland has been generally maintained via the generosity of strangers, by definition with rising public debt and unresolved private debt, Ireland is closer to “the edge” than before and closer than most currently accept. One “correction” internationally away from a bad place (again). Then, only two buffer sources of wealth – funded private pensions and deposits….watch the raiding when (ok, if) the s**t eventually hits the fan.

Those who are fortunate to be “doing well” currently can very easily lose much again if things break badly (again)….break badly internationally in the first instance. What happens locally in Ireland is economically less relevant right now (although important in social justice, democracy, etc terms). Just as we are seeing once again in the Ukraine situation, the world is an immorall place when the proverbial hits the fan.

The lack of apparent preparedness in Ireland (again) for any international downside is hard to fathom. I’m currently seeing 30-35% increases in good farmland in Munster. Artificially and severely restricted resi RE in Dublin is pushing up prices for the benefit of the few, etc (no one is commenting about the huge contraction of supply driven by bank /credit forbearance). Foreign PE that bought at 10-20 cents a few years go is now trying to exit at multiples of that (one well known hotel is now on the market at 150% of original PE purchase price. A well known Irish hotel firm is thinking of buying…I hope not at that price!!!!!!!!!!)….but guess what….

It isn’t over, by any means.

@Paul W

I would tend to agree. For all of the money pumped in the growth resulting has been underwhelming. It all hinges on what people in the market believe. The herd is ok for the moment. Bears are silenced, momentum rules.
Bulls think the money will be taken away slowly , bears think it’ll be kept flowing because the economies are still too weak. I can’t see how the S&P 500 is at record levels given the state of the US economy after 30 years of debt growth. Smithers in the FT yesterday said based on q that markets are 40% overvalued. A lot of valuations are way off the scale. This time is not different either.

There’s a long way to go yet.

@Ernie Ball he was actually very good came across well,the hack is simply grabbing a quote.The question was on the strength off the Dublin market against rest Irl. and similarities to London/UK.Someone also asked him about the mortgage mess:)

yesterdays meeting in NY was on this topic.
“18th March 2014: The economic ties between Ireland and the US will be strengthened if negotiations on a new EU/US trade deal can be successfully concluded, according to business advisory firm Grant Thornton. Grant Thornton today hosted a seminar on what the EU-US Transatlantic Trade and Investment Partnership (TTIP) means for Ireland at its offices in New York.

The event was attended by Taoiseach Enda Kenny and Former US Undersecretary for Commerce and International Trade Grant D. Aldonas. TTIP is a free trade agreement currently being negotiated between the EU and US which is targeted for completion by the end of 2014.”
http://www.grantthornton.ie/MediaandEvents/Press-release-New-EU/US-Trade-Agreement-Will-Boost-US-FDI-Into-Ireland

You guys should be proud of him,dont have to agree with his politics to admire him,one chap described him as a jumped up county councillor from the back of beyond but that was in a plumy D4 accent-Tull?-anyway i enjoyed his talk and think hes doing a great job at promoting Ireland.He was funny,on top his brief,handled the crowd well,as i said represented the oul sod in a very positive manner,came across as a nice guy who you’d enjoy having a pint with or maybe even voting for!

two quite good questions were asked…

-how long before or can ireland prevent other countries taxing flag of convenience multinationals with nameplates in irl.
-pres. Clinton and yourself in 2011 at Dublin castle identified the mtg crisis as the biggest economic challenge facing Ir.
At that time there were about 60,000 PPR’s more than 90 days in arrears thats over 95,000 now,whats the plan?

answers in NWL Weekly Magazine or namawinelake this weekend:)
NWLsubscriptions@Gmail.com

shameless shameless plug.

JG,
I would have more sympathy with the people from outside the pale who still have their dinner in the middle of the day. Having met the man himself on one or two occasions, I would share your assessment of Chairman Mayo. That puts us in the minority on here.

@tull clearly i dont vote in Ireland so have no skin in the game,i dont mind admitting i liked him,it was the first encounter but still felt good afterwards that he was over here in NY and DC representing !
Oh anyone who has ever read NWL will know based on my horrid spelling and grammar that i am in no way connected to that excellent mag. was simply giving a shout out to NWL.The dunne BK case is covered in fantastic detail on there,i have forwarded the odd item off interest but have no involvement or association with NWL.
ok the answers..
question 1 on taxes was deftly batted away,i followed up with SC’s post on the OECD and Apple in Australia again and correctly it was pointed out that the US needs get its own house in order on taxes-by the first speaker.

mortgages-he handled this question quite well after asking security to remove me as i as getting quite annoying….eh no….he appeared genuinely concerned about the prospect off people losing their homes,discussed the various efforts to date and suggested that sustainable solutions would be found perhaps including debt forgiveness,good detailed answer.

Sorry, but Enda is an embarrassment. The idea of him being in negotiations with any other world leader about any matter of importance ought to strike fear into the heart of any Irishman.

@john gallaher
“he appeared genuinely concerned about the prospect off people losing their homes”

In what sense are the houses for which people are no longer paying the mortgages “their homes”? If I stop paying the rent on “my home,” do I also get to live in it for free, subsidized by the taxpayer.

Lesson learned: I think I’ll buy a home tomorrow far nicer than what I can afford, make a few token mortgage payments on it and then stop paying altogether, secure in the knowledge that there’s no way the government would countenance me being tossed out of “my” home.

There is reference above to 500 professionals. That is true if one uses the definition that anyone with a laptop and a briefcase, who is fifty miles from home, is a professional.

We are back to political economy ideas that lead to workable policy proposals. What we have are self interested individuals spouting whatever line their paymasters endorse.

Linda Nazareth in her book Economorphics attributes the demographic sweet spot to Ireland’s success in the 1990s’ rather than economic or tax policies.

http://www.theglobeandmail.com/report-on-business/careers/management/solving-the-problem-of-demographics/article17554904/#dashboard/follows/

@Ernie Ball i really find engaging with an obnoxious non de plum a total waste off my time,i understand your need to hide and have no problem with it,but attacking people non stop from behind a cloak is cowardly.I have a lot of respect for Brian Lucy because he has the courage to use his own name,Gregory Connor too.
Your ad hominem attack on Fiona Muldoon’s speech was a sad reflection on you as a teacher and UCD,i at one point entertained the idea of perhaps my kids going even for a year or two to trinity or ucd,i attended DIT but was fortunate to have amazing lectures such as Ursula Barry.The fact that you are actually in any way involved in teaching kids is enough for me to no longer consider it.
Fiona is retiring may 1 from the central bank and as is a loss she was an ‘outsider’ and yes a woman.
Ernie you are the embarrassment.

Oh for heaven’s sake.

1) I didn’t “attack” Fiona Muldoon, I criticized her.
2) My criticism was of her grammar, not her person and therefore was not ad hominem.
3) My most recent post was also not accurately described as an “attack.” I was criticizing Enda Kenny as (clearly) not being up to the job he’s been landed with and also making a substantive point about the pernicious rhetoric of people losing “their” homes.

You are free to send your kids wherever you like. But that you have such an narrow view of what my recent posts were about (attack!) doesn’t really speak well for your training in the art of reading. Your writing, however, babbles for itself.

@Ernie Ball i fully and freely admit my spelling and writing is awful,thankfully my math skills pay the bills!
“Decades ago, Mike Godwin—an American lawyer and author—coined what is known as Godwin’s law: as an online debate grows longer, the probability that someone will compare someone to Hitler or the Nazis nears 100 percent. The ridicule that gives power to this brilliant adage would probably shame those who hear it from using the Nazi analogies. But unfortunately, it seems that those who most need to learn from Godwin’s law are the ones who don’t know it.

And so, now I will create Kurt’s law—not as graceful or eloquent as Godwin’s, but true nonetheless: those who exploit the deaths of millions to buck up their own arguments are cowards deserving of every bit of scorn the civilized world can muster.”
http://www.vanityfair.com/online/eichenwald/2014/03/what-it-really-means-to-cry-nazi

Yeah, and when you have relatives, as I do, who were murdered by the nazis because they were Jewish then you’ll be in a position to give me lessons on the subject…

@ernie try reading the piece thats his point.
“And, damn it, how dare so many of you politicians and political commentators and entertainers spit on the ashes of the earth containing the bodies of millions of the slaughtered, by making such asinine comparisons. How dare you belittle unspeakable suffering, how dare you brush aside the emotional torment of survivors, how dare you feed into the Holocaust denialism by pretending that some difference in political opinions is just as bad as the literal torture and destruction of millions of families.”

Yes, but the difference here is this:

1) the people he is criticizing routinely compare this or that triviality (indirectly) to the Holocaust. I have never done any such thing.

2) the people he is criticizing are not comparing actual, contemporary fascists to nazis. I believe I am.

In other words, the question for you is this: when you are confronted by actual modern-day right-wing extremists, is it OK to call them “nazis”? Or do we have to dance around that for fear of violating some makey-uppey “law” (a law, by the way, that serves contemporary nazis quite well)?

Jesus lads, who cares. If you dont like eachother then just ignore.

jg – that’s the most ridiculous reason for ruling out a university for your children ive ever heard !

@Ernie Ball sorry i nodded of eh what ?
totally lost me,i don’t think there is any reason on the irsisheconomy to constantly accuse or call other commentators ‘nazis’ or when losing an argument as you frequently do,because you haven’t a clue,evoke the ‘war’.Sorry about your relatives but its no excuse,its like people who say oh im not racist i have a black friend..oh im not homophobic i have a gay friend.The fact that we are having too have this little chat means you are WRONG,ernie yep again but you have good company in your simply awful horrid frequent misuse of nazi/the war.

“America’s billionaires are tired of hearing your complaints from the cheap seats. Consider Home Depot co-founder Ken Langone (net worth: $2.3 billion, according to Forbes), who went ahead and compared criticisms of income inequality in America to “what Hitler was saying.”

Here’s the quote, as reported in a Politico piece called “The Rich Strike Back”: “Because if you go back to 1933, with different words, this is what Hitler was saying in Germany. You don’t survive as a society if you encourage and thrive on envy or jealousy.”

If that sounds familiar, it is. Tom Perkins, an $8 billion man who earlier this year emerged as the leader of the “pity the rich” crowd, compared “a rising tide of hatred of the successful 1 percent” to the moral tableau against which Hitler brutalized Europe. “This is a very dangerous drift in our American thinking,” Perkins wrote in his letter to the editor of The Wall Street Journal. “Kristallnacht was unthinkable in 1930; is its descendent ‘progressive’ radicalism unthinkable now?”
http://www.vanityfair.com/online/daily/2014/03/ken-langone-super-rich-americans-are-fed-up-with-your-criticism

@rf oh ok i tried get them interested but no luck,Ive been trying buy a repo BTL in D4 thought i may have new tenants lined up if needed,but the kids aren’t biting.Cant for the life off me understand why UCLA,Stanford and LA/Cali or Boston appeals so much instead off Dublin…..

Sigh. I don’t have a “Jewish friend.” Rather, I’m Jewish. You still want to level blind accusations about how I’m not sensitive enough?

@Ernie Ball look im sorry you have no friends Jewish or otherwise,cant say im surprised..ok ok oh i don’t think you that bad most the time.
I do find it difficult to reconcile some your beliefs you appear well read,yet rather gun ho on evictions for someone with your inconsistent views.
It would appear the author is well qualified to comment,I’m simply illustrating an ongoing debate in the states about the misuse online of nazi/ww2 analogies in arguments/debates.
“It is hard to fully comprehend the magnitude of the Nazi death camps and their impact on the lives of untold millions. But, even so, there are a few things I can say for certain: the Nazis, and the Holocaust they brought were nothing like Obamacare. Or the national debt. Or political correctness. Or criticism of economic inequality. Or the Tea Party. Or the Internal Revenue Service. Or the Obama administration. Or the Bush administration. Or any of the other masses of infinitesimal flotsam spewed up in self-pitying and hysterical analogies by vulgarians with more mouth than brain.”

If anyone’s getting bored of the Nazis there are some interesting pension industry announcements in the UK budget which might affect demand for government bonds.

@Grumpy

Any links on that?
Or links on why Irish pension funds don’t hold, or are not allowed to hold Irish govt bonds. They seem to have had no problem in owning Irish bank shares.

Don’t mention the war!!. I think this debate is gone slightly off thread.
@ Brian Lucey +1

Some folks always seem to have the need to control other people.

well, the discussion is roaring, I didnt miss much watching Nockherberg 2014.

The Singspiel in the beer hall is actually developing into a new art form. Fascinating.

TV quotes are on Superbowl level (> 40%), only beaten by “Fastnacht in Franken” with near 50%. Rare things nowadays.

To give Faust in a beer hall, this is bavarian culture : – )

Implemenenting or raising a a minimum wage is certainly not the cure to all ills, its not “living wages”, but both in the US and in Germany a useful step to correct things which are not right.

Reflecting on Paul W’s contribution, I do believe that interest rates after inflation and tax will for many years be lower than the last 30 years, close, if even above Zero, for creditor status all but Greece can achieve in the Euro Community.

The aging of societies globally results in a HUGE demand of near risk free assets. And all you need to do is to behave reasonable.

“Some Volk always seem to have the need to control other people.”

Corrected that for you, francis.

@ Francis
30 years…are you serious!

Note the rises in interest rates today after the Yellen timeline revision, albeit $. The feed through was almost immediate, market driven…..

http://blogs.telegraph.co.uk/finance/ambroseevans-pritchard/100026893/emerging-markets-face-ordeal-by-fire-as-feds-janet-yellen-turns-tough/

Obviously too that interest rates reflect in fx rates, in the cost of oil, saving rates, etc. etc. No so simple to wave a wand to keep rates low. It only takes sentiment /confidence to change things.

Ernie,

1. especially for you, I was counting my jewish friends on linkedin, 6 I know, 4 likelies like going by the name of Rachel and Reuben, 5 more I know since at least 2 dozen years, but not on linkedin, possibly more, because in general I don’t give a shit, and they either.

In all the years, being in Russia or in the USA, on Datchas next to Landaus, raucous parties in New York, NJ, upstate, Mass, Harvard, Somerville, St Patrick with IRA collection box, not to be missed, NOT ONCE did I get any kind of racial mistreatment, I actually got accustomed to here in this blog.

The “jewish” people I know, are aware of their (“market”) value. Excellent physicists, finance, enterprise. They certainly don’t need to play the race card. I meet them at a conference in Frankfurt, San Francisco, and sometimes we celebrate the good old times into a little too much hangover.

It is just folks like you, not exactly on the winner / market value side, who try to play the Jew or other racist card.

2. it is always the old, pseudo elite, who cling on to formal things, like the queens English, dresses, and proper spelling and grammar.

The real people, who produce value, speak the same language, little and broken English, and understand each other very well, whatever religion, hindu, muslim, jew, xian. Or

Ernie, the unproductive, unscientific social studies are just the garnish, and need to dress up their manners to that : – )

@ Paul W

Just look at German 10 year rates, after tax 1.13% last Friday, with german inflation probably running a t2.5% for the next few years, this is a storage fee of over 1%. I ll take that, no problem, but healthy is this not.

Real 30 year rates below Zero. Not a problem for my portfolio, but long term insane.

Demography plays now out over 80 years, Germany annihilated Varus 2000 years ago, 30 years are short time

Thanks for confirming my worst fears, francis. That’s some classic anti-semitism there. Obviously it’s such second nature to you that you wouldn’t even recognise it. Counting up your Jewish friends (or are they “friends”) as if that meant anything. “Some of my best friends are Jews!” I can just see you at a “raucous party” in New York constantly repeating to yourself “look at me! I’m partying with Jews!” Your protestations to the contrary, I’d say you were acutely aware of it.

And yeah, sure, the Germans are getting “racially mistreated” on here. Newsflash: “German” isn’t a race. And neither is “Jew.”

I also note your distinction between “good Jews” who are “real people” on the one hand and “bad Jews”/losers (who are not people?) on the other and your ham-fisted attempt to lump me in with the latter based on zero information (other than that I’m Jewish).

@ Francis
Current rates relect current biases, that’s all. Tomorrow, everything will be different and can be very different…..Your last post sees things from a German perspective right now…too narrow. As you say, “insane”…..so cannot and will not last. Historical analysis has its limitations in the modern context. The world moves faster now. 2014 years ago…….

Irish analysis seems to be ignoring what’s going on in the world again. Money is pouring out of China, via HK at present…..Seen in the BBC programme re London property shown here in the US about a week ago. Chinese money also finding its way into some Irish positions….e.g. Fota Island Resort, etc….not always logically. The potential for another upheaval is certainly a growing possibility if not probability. Predictable returns, interest rates, life…..nah…cannot be maintained.

@francis

but could you please provide some evidence for your

“Minimum wages are hence significantly higher in Sweden and Denmark than in other countries.”

For minimum wages across Europe you can have a look at:

http://unitedexplanations.org/english/2013/02/04/minimum-wages-in-europe-2013/#

As far as Sweden goes I could not find a comprehensive up to date list of minimum wage by sector but here are three examples from http://www.eurofound.europa.eu/eiro/country/sweden.pdf.

Figures are for monthly wages and for 2011 – it seems reasonable that they have increased in line with inflation.

Steel and Metal SEK15,387 ~1692 Euro
Retail SEK 16.630 ~1829 euro
Restaurant and hotel trade: SEK17481 ~1962 euro per month

Ireland’s current “high” minimum wage is 1,461.85 monthly across all sectors.

These numbers are not strictly comparable as Sweden has a higher level of taxation on the low waged but since it also a higher level of public service provision I suspect this is more than balanced out.

I would be interested to see equivalent figures for Germany, post HARTZ IV.

@ Shay

Thanks a lot for the Swedish data. I know very well, how difficult that is, and even more, to interpret such data properly.

I do appreciate therefore especially your “These numbers are not strictly comparable …”

The 1692 Euro / month for the metal sector, which probably is the easiest to compare, in terms of not too many additional difficulties like tips, translate into 10.3 Euro / hr, roughly. And I assume, that just as in Germany, about 20% – 23% of this go to de facto taxation, mostly in the form of social contributions (“Sozial Abgaben” here). So it is about 8 net, which would translate into the 10 US Dollar (with 1.25 to the Euro), the currentUS proposal, and they would have to pay at least 6.5% SSI and some other contribution on that too.

Comparable German Data
http://www.igmetall.de/internet/docs_EisenStahlindustrie_Loehne_Juli2013_8bbb3babaa81324e6894fc13d64529045962dcfc.pdf

net info: Germany seems a tiny little higher (11.19 Euro/hr) than Sweden, with you mentioning the 2011 data of Sweden needing a little inflation adjustment

Today I saw here a demonstration of the truck drivers, who are under even more pressure of wage dumping than the butcher sector, and who are apparently not entirely satisfied with our present plans for our minimum wage.

@ Paul W, All

I am presently pouring over the last update of the OECD data and forecasts.

For how high the burden of interest payments really is on who, the OECD Annex Table 31 might be of particular interest.

In general, most of things seems to go back to more sanity, neither deflation scares nor Euro state defaults.

@ Ernie Ball

Do you want to expand a little more on your “classic anti-semitism” allegations against me? And how this comes from me stating, that, between my friends, the Russian Jews threw the best parties?

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