I see that left-wing liberal bleeding-heart, Tapu Misa, doesn’t believe the PM when he says that raising the minimum wage from $12.50 an hour to $15 an hour will put thousands more Kiwis out of work. After quoting a whole lot of economists (whom none of us have heard of) to support her argument, Ms Misa conveniently ends her column in this morning’s Herald by admitting that, ‘There isn’t the space here for an exhaustive discussion of the research’. Very convenient! This doesn’t stop her claiming that, ‘recent evidence is forcing a rethink about what was once accepted economic wisdom.’ Well, I’ve been having a bit of a rethink about this myself and it’s blindingly obvious to me, as it must be to any other reasonable person, that what the PM is saying just has to be right.
It’s just common sense that if an employer has a choice of employing someone on $12.50 an hour and someone else to do the same job for $15 an hour, he’s going to employ the first bloke. And if he can’t afford $12.50 an hour, he’s not going to employ either of them. That’s simple economics. We could call it ‘John’s Law’: The higher the hourly rate, the higher the number of unemployed. The corollary of John’s Law – let’s call it ‘Bill’s Law’ – must then logically be: The lower the hourly rate, the lower the number of unemployed.
Now, unlike Ms Misa, I can quote several million ‘experts’ to support Bill’s Law. They’re all in highly productive work, none of them are on the bread line, they rarely complain about their lives or working conditions, their economy is knocking the rest of the world for six and almost every New Zealander benefits financially from their labour. They’re the Chinese of course and we could learn a lot from them.
Here are some of the things we could learn:
- If the minimum wage were set at $2 an hour instead of $12.50 an hour, a manufacturer could take on six (and a quarter) workers instead of just one.
- In one fell swoop unemployment would be erased.
- With his now significantly increased output the manufacturer could greatly decrease the cost of his product, thus hugely increasing both his domestic and, more importantly, his export sales.
- At the same time, the $2 minimum wage would put pressure on all wages, increasing the manufacturer’s margins and therefore his taxable income.
- By way of example, the clothing and shoe-making industries, both driven out of New Zealand because of high wages and an inability to compete in the international market, would be revived.
- Instead of buying clothes and shoes from China, we would be selling our clothes and shoes to the rest of the world, including China.
- And so it would be with everything, from plastic toys to Kiwi-built personal flying machines.
In summary, if the minimum wage were reduced rather than increased, we would become a mini China. Our $17 billion deficit would be gone by lunchtime. The Government’s coffers would be full. While it is certainly true that wages and salaries will fall dramatically under Bill’s Law, several compensatory factors must be borne in mind:
- Everyone in New Zealand who wants a job will have a job;
- Huge government surpluses will make it possible for governments to offer substantial across-the-board, flat-rate tax cuts every three years as a sort of Christmas bonus;.
- Blue jeans, most clothing and flat screen 3-D TVs will be cheap as chips;
- Charities, including public hospitals and schools, can expect to receive much larger donations from the new super-rich;
- The job-market for gardeners, chauffeurs, nannies, maids, butlers, cooks, kitchen hands, cleaners, chimney sweeps and other ‘downstairs’ staff will hugely increase;
- New Zealand’s 100% pure, clean/green environment, cheap labour and inexpensive retail goods will make it a tourist paradise and a Mecca for foreign investment;
- The trickle-down theory will become the trickle down law.
Ms Misa will of course reject Bill’s (and John’s) Law. She will say that it will create even greater divisions between the haves and have-nots in society. Of Labour’s policy of increasing rather than reducing the minimum wage, she writes: ‘There’s no doubt about the good it will do: it will put more money in the hands of the struggling low-paid, and lighten the load on Working for Families.’ To that, in the immortal words of Milton Friedman, I reply, ‘Yeah right!’