Comments on: The Dems’ Plan http://donklephant.com/2006/05/07/the-dems-plan/ Big Teeth. Huge Ass. Surprisingly Reasonable. Sun, 22 Nov 2009 17:39:23 -0800 http://wordpress.org/?v=2.8.4 hourly 1 By: probligo http://donklephant.com/2006/05/07/the-dems-plan/comment-page-1/#comment-20825 probligo Mon, 08 May 2006 00:38:47 +0000 http://donklephant.com/2006/05/07/the-dems-plan/#comment-20825 As a general observation, the wider and more detailed the publicised plans of a political party the greater the likelihood that I would vote for that party. Dave S, this is a path being followed by the present left-wing NZ government. It is not a new idea, but when it is applied to perhaps 60% of the workforce (as it now is in NZ) there are likely to be economic consequences down the track. Those consequences will not be a tax backlash or anything like that. It will show more as an increasing reliance by employers on the government to "top-up" wages. The true impact will come when (perhaps a change of government leads to...) the scheme is withdrawn, probably as the result of the fiscal imbalances being created within the economy. (It comes to mind that it would not be a right wing government that removes the scheme either. Especially as the true beneficiaries are their buddies, not the workers. Reason - pay workers less, more government top-up, gives greater gov't "indirect subsidy" on production equals higher returns and better dividends...) The pressure for increased wages in NZ is low at present, despite firm moves to increase the minimum wage here. NZ does not have the "multiplier clauses" in wage agreements. The relativities are usually set by more realistic processes than that. NZ (at the moment) is at far greater economic risk from excessive household borrowing, but I reserve the right to change that assessment later this year. As a general observation, the wider and more detailed the publicised plans of a political party the greater the likelihood that I would vote for that party.

Dave S, this is a path being followed by the present left-wing NZ government.

It is not a new idea, but when it is applied to perhaps 60% of the workforce (as it now is in NZ) there are likely to be economic consequences down the track. Those consequences will not be a tax backlash or anything like that. It will show more as an increasing reliance by employers on the government to “top-up” wages.

The true impact will come when (perhaps a change of government leads to…) the scheme is withdrawn, probably as the result of the fiscal imbalances being created within the economy. (It comes to mind that it would not be a right wing government that removes the scheme either. Especially as the true beneficiaries are their buddies, not the workers. Reason – pay workers less, more government top-up, gives greater gov’t “indirect subsidy” on production equals higher returns and better dividends…)

The pressure for increased wages in NZ is low at present, despite firm moves to increase the minimum wage here. NZ does not have the “multiplier clauses” in wage agreements. The relativities are usually set by more realistic processes than that.

NZ (at the moment) is at far greater economic risk from excessive household borrowing, but I reserve the right to change that assessment later this year.

]]> By: Dave Schuler http://donklephant.com/2006/05/07/the-dems-plan/comment-page-1/#comment-20793 Dave Schuler Sun, 07 May 2006 13:39:00 +0000 http://donklephant.com/2006/05/07/the-dems-plan/#comment-20793 The problem with raising the minimum wage isn't raising the minimum wage. It's the minimum wage multiple union contracts that make raising the minimum wage a stalking horse for raising the wages of hundreds of thousands of union workers who are making more than minimum wage. I'm in favor of giving a hand to the lowest income earners but I think the way to do it is by adjusting the Earned Income Tax Credit (basically, a reverse income tax). The problem with raising the minimum wage isn’t raising the minimum wage. It’s the minimum wage multiple union contracts that make raising the minimum wage a stalking horse for raising the wages of hundreds of thousands of union workers who are making more than minimum wage.

I’m in favor of giving a hand to the lowest income earners but I think the way to do it is by adjusting the Earned Income Tax Credit (basically, a reverse income tax).

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