Austerity isn't really working is it?

Anynama141

[Deleted User] wrote: »

and a lot of unfilled jobs as the pay will be below what people need to earn to live, unless you want people to live like migrant workers!

If the jobs are real, they won't be unfilled as the employer will pay the amount it requires to fill them.

speedboatchase

Gambas wrote: »

You have 250k people - mostly men with limited or no qualifications who worked in an unsustainably bloated construction industry. Construction will come back, but not bring 250k jobs back. Maybe 50k. So what are the other 200k going to do?

Retrain. As you said, they have 'limited or no qualifications'. Up to them to fix that.

Deleted User

Deleted User wrote: »

and a lot of unfilled jobs as the pay will be below what people need to earn to live, unless you want people to live like migrant workers!

We didn't have min wage til 2000, I don't think the above was true either

Three Seasons

[Deleted User] wrote: »

and a lot of unfilled jobs as the pay will be below what people need to earn to live, unless you want people to live like migrant workers!

Employers will raise wages if no one is willing to fill the roles.

Removing the minimum wage makes it easier to start businesses and create more jobs, it also allows goods and services to be priced more cheaply.

mikemac1

Three Seasons wrote: »

Employers will raise wages if no one is willing to fill the roles.

No they won't.

Even during the boom experienced hotel staff got little over minimum wage as employers would use agencies to hire staff from Poland and other countries.

Good for them, jobs lined up before they arrived but they still undercut Irish staff who had years of experience.

dark crystal

Three Seasons wrote: »

Employers will raise wages if no one is willing to fill the roles.

Removing the minimum wage makes it easier to start businesses and create more jobs, it also allows goods and services to be priced more cheaply.

Do you have to live on minimum wage yourself at the moment?

Three Seasons

mikemac1 wrote: »

No they won't.

Even during the boom experienced hotel staff got little over minimum wage as employers would use agencies to hire staff from Poland and other countries.

Good for them, jobs lined up before they arrived but they still undercut Irish staff who had years of experience.

Then they simply weren't worth much more than the minimum wage. Their experience obviously wasn't worth much then.

Clarkes shoe shop pay entry level employes significantly over minimum wage.

Why is that if they don't have to?

Three Seasons

dark crystal wrote: »

Do you have to live on minimum wage yourself at the moment?

I don't have to live on minimum wage.

norrie rugger

Gbear wrote: »

It's always more difficult to cut spending than it is to never have set the spending level so high.

Whatever about the current goverment, they inherited a nonviable spending structure when they took over.

Unfortunately, it's never a case of making the most logical cuts but the cuts that you can get away with - hit front line staff because they can rather than tackling the hole hierarchy and general public service wastefulness that exists on a systematic level.

I'm sure if the government could act unilaterally they might fancy doing things a bit differently.

They could act unilaterally but, as FG votes come from the hierarchy, that's not gonna happen.

suicide_circus

Three Seasons wrote: »

Employers will raise wages if no one is willing to fill the roles.

Removing the minimum wage makes it easier to start businesses and create more jobs, it also allows goods and services to be priced more cheaply.

I agree with this theoretically and ideologically however Irish businesses have a history of pocketing everything and not passing savings on to the customer. Prices were rounded up when the € came in. Job-bridge appears to be little more than a free labour source. Retailers routinely use VAT increases to sneak in their own price hikes.
€8.65 per hour full time is what per week? €350? Hardly extravagant.

Three Seasons

suicide_circus wrote: »

I agree with this theoretically and ideologically however Irish businesses have a history of pocketing everything and not passing savings on to the customer. Prices were rounded up when the € came in. Job-bridge appears to be little more than a free labour source. Retailers routinely use VAT increases to sneak in their own price hikes.
€8.65 per hour full time is what per week? €350? Hardly extravagant.

Well if companies want to make more profits they'll lower prices.

Annasopra

Three Seasons wrote: »

I don't have to live on minimum wage.

Right ok. Says it all really.

mikemac1

Three Seasons wrote: »

I don't have to live on minimum wage.

Easy to talk about abolishing it so

Economic theories are not going to help the kitchen porter pay their bills when they are asked to work for less

The Dagda

NiallSparky wrote: »

Not necessarily the case, so it's a bit harsh to be claiming that the poster is "completely wrong". The majority of buying and selling on bond markets is of second-hand bonds. Hence private investors selling bonds to other private investors at some point past the issuance date.



You obviously have little comprehension of economics if you believe this to be the case.

Firstly I was speaking in relation to Ireland's activity in the bond market.

Secondly ask yourself where inflation comes from? Why does the current economic system require the value of money to be always increasing?

If you believe that the current system is sound then I'm afraid it's you that lacks comprehension...

Three Seasons

mikemac1 wrote: »

Easy to talk about abolishing it so

Economic theories are not going to help the kitchen porter pay their bills when they are asked to work for less

Yes they will actually, goods and services prices will fall and more business will start up and more jobs become available. No minimum wage benefits the poorer people in society.

Sandwlch

southsiderosie wrote: »

But they don't live in countries where a liter of petrol costs twice that amount, or where people pay 200 quid/week in rent.

Cost of petrol is irrelevant when you cant afford a car. You dont need 200 a week for rent when you live in a one room timber hut.

southsiderosie wrote: »

You can't compare a country like, say, Bangladesh to Ireland.

Why not ? Are they not people too ?

mikemac1

Charlie McCreevy cut the VAT rate and then put it back up in the next budget as consumers saw no difference, it was being pocketed by the businesses.

Rounding up prices when the euro was introduced has already been mentioned

Edit and there was a thread in wedding forum about posters having to insist on their VAT reduction
http://www.independent.ie/business/irish/hotels-must-pass-on-vat-reductions-to-consumers-warns-ihf-26745641.html

You have a lot of faith that prices will fall, I don't see it

dxhound2005

When did this austerity start? And how will we know when it is over?

Sandwlch

Augmerson wrote: »

I just think, from having listened to a few conversations with acquaintances or friends of friends and having read through a few Irish internet forums and beyond

Isnt that the flaw though ? The above, or the vaste majority of people in general have no understanding of the issues involved and so can make no judgement on whether 'austerity is working' or not. Leave it to the people who know best to make their best (which may be right or wrong, but still the best shot at it) effort at improving our situation.

Forest Demon

The real problem in Ireland is not Austerity. Its the lack of fairness for working family's and the waste of taxes gathered. We see evidence of this every day in the high salary's and cost of the senior public servants, consultants, RTE presenters, Union representatives, politicians, pensions, bankers, dentists, insurance, energy costs, solicitors and every other service that anyone might want to avail of. Why is everything always more expensive in Ireland? Its incompetence and waste. Its all passed down the line and onto the consumer.

We elect new politicians but the incompetent institutions and vested interests remain. As a matter of fact they are increasing, taking NAMA as an example.

The real scandal is the continued austerity while the waste continues. If the waste was properly tackled then we would not need austerity.

The Dagda

The Dagda wrote: »

Secondly ask yourself where inflation comes from? Why does the current economic system require the value of money to be always increasing?

Actually, inflation devalues the currency as you need more of it to buy the same stuff!

Inflation is the way the financial world robs savers without them knowing about it and is why the central banks (except the Germans) are so desperate to increase inflation again.
Inflation is needed to allow the loans to be repaid without draining the system of money.

Suryavarman

The Dagda wrote: »

Why are you bringing 1920-22 into the discussion? Everyone was talking about the great depression...?

Forgive me if i don't take your word for what someone living in America during that time would say in answer to your imaginary questions!

A simple look at the figures from this time, which show the huge growth the US economy experienced, and how much unemployment was reduced by, will contradict your assertions...

I agree that reduced spending caused the great depression but it most certainly was not further reduction of spending, which you're suggesting above, that caused it to end. That makes no sense.

You are bringing 1920-1922 into the discussion by saying that the Great Depression was caused by a fall in spending. The last fall in spending prior to the Great Depression was that time period. So either that caused the Great Depression or a fall in spending didn't cause it. Incidentally, that time period is one of the great examples of austerity working. After entering into a depression where GDP contracted more in one year than in any single year during the Great Depression, the US federal Government slashed spending and taxes. The economy then recovered almost immediately.

Lower unemployment figures are not an indication of a healthy economy. Especially in this scenario. To use your logic, if we wanted to get Ireland's economy back on track we would only have to enslave all the unemployed, for that is exactly what happened during WWII in America.

Using wartime GDP figures to measure an economy is very problematic. Wartime price controls were causing large shortages of goods and also masking the true level of inflation. This means that real GDP will be overstated as it won't account for inflation properly. The basic GDP figure doesn't show what the GDP is made up of. Closer examination of the GDP during WWII reveals a reduction in the amount of consumer goods available for people to buy during WWII i.e. worse standards of living.

Reducing spending to end the depression makes plenty of sense. With the government borrowing less money there is more money available to invest in the private sector. This allows companies to hire people and produce goods that people want.

hatrickpatrick

Augmerson wrote: »

If we could inject billions into our financial institutions, why can't we do the same for the economy with jobs programs or public works?

Because no college friends, golfing buddies or political sponsors of the politicians would directly benefit from such a move, unlike saving failed banks along with their executives and their bonuses...

tayto lover

true wrote: »

+1. Our public servants, politicians, social welfare recipients and pensioners are still paid far too much. Double in Navan compared to Newry. Its not them that are suffering from real austerity.

Many people say that they can buy their groceries for half the price in Newry too.
Like with like please.

G Power

Augmerson wrote: »

Is there some kind of belief going about these days that the imposed austerity we are experiencing in Ireland and across Europe is not only required but also good for us?

I just think, from having listened to a few conversations with acquaintances or friends of friends and having read through a few Irish internet forums and beyond, that some people (at home at least) think higher taxes and more budget cuts are the only way to go.

I can see some kind of rational in the idea. Government expenditure is higher than Government income. Something has to change. What I don't agree with, is how this is approached. We are in are sixth year of austerity and recession. There is still serious unemployment and emigration. I don't believe austerity is working, in fact I feel it's just prolonging the recession. It's keeping us back.

I don't have any foolproof response to what should be done to tackle our current situation, other than say we should have done exactly what Iceland has done (but the chance to do that has passed) but cutting more and more money out of the economy like we are now doesn't work. If we could inject billions into our financial institutions, why can't we do the same for the economy with jobs programs or public works? I just think this is all madness, and I am sick of some people, political institutions and elements of the media promoting the idea that this is all getting us somewhere.

Perfectly willing to listen to the other side of the fence about this.

Also, in before anybody calls me crusty, hippy or lefty for feeling this way.

if you bury your head deep enough in the sand it's ok, it works for the majority

Augmerson

southsiderosie wrote: »

I don't think you can compare Ireland to the US - or Iceland for that matter - the primary reason being that Ireland doesn't control its own currency. So the government can't print more money to fund stimulus packages.

That said, aversion to inflation is more of an issue in Europe (due to the German experience in the inter-war period) than in the United States, where the Fed has always been more mindful of employment levels than inflation (due to the experience of the Depression).

With that in mind, I think every country's response to economic crisis is going to be shaped by its own history. In Ireland, emigration has always been the safety valve. But that valve is partially clogged because many of the potential labor emigrants are migrant workers in the now-defunct construction industry who make more on the dole in Ireland than they would in their home countries. And Ireland can't devalue its way out of the crisis. So it is stuck with a 'sticky' unemployed workforce and no control over monetary (and increasingly, fiscal) policy - not a nice place to be.

Interesting post, thanks, bit of an eye opener. As have all of the posts been so far in this thread. Makes for some startling reading tbh.

St.Spodo

Austerity is working very well. It's succeeding in its attempt to transfer money from the ordinary many to the wealthy few. The fact that it is working is exactly why it shouldn't be accepted.

Three Seasons

St.Spodo wrote: »

Austerity is working very well. It's succeeding in its attempt to transfer money from the ordinary many to the wealthy few. The fact that it is working is exactly why it shouldn't be accepted.

Who are the wealthy few who are receiving are increased taxes?

dark crystal

Three Seasons wrote: »

I don't have to live on minimum wage.

I thought as much.

I generally find people who suggest abolishing the minimum wage are not the people who have to exist on it.

monkeysnapper

Augmerson wrote: »

Interesting post, thanks, bit of an eye opener. As have all of the posts been so far in this thread. Makes for some startling reading tbh.

After hours can be full of stupid unhelpful comments alright but I don't understand completly . I'm one of thoughs people that just pay up what they ask for. I,ve always got paid low wages so make ends meet and keep things tight.

I've found this thread very helpfull . Thanks

Suryavarman

dark crystal wrote: »

I thought as much.

I generally find people who suggest abolishing the minimum wage are not the people who have to exist on it.

What difference does it make? Does a person's income level change the laws of economics?

Three Seasons

dark crystal wrote: »

I thought as much.

I generally find people who suggest abolishing the minimum wage are not the people who have to exist on it.

If I were on minimum wage my beliefs would remain the same. It's better for society not to have a minimum wage. It's a handicap on our economy, standards of living fall with a minimum wage.

dark crystal

Suryavarman wrote: »

What difference does it make? Does a person's income level change the laws of economics?

I don't know - does it?

Do you believe abolishing the minimum wage would incentivise people into working instead of claiming social welfare?

Do you think hitting the lowest earners in society would drive down the cost of rent, electricity, home heating oil, gas, petrol, childcare and house prices for everyone else?

Three Seasons

dark crystal wrote: »

I don't know - does it?

Do you believe abolishing the minimum wage would incentivise people into working instead of claiming social welfare?

Do you think hitting the lowest earners in society would drive down the cost of rent, electricity, home heating oil, gas, petrol, childcare and house prices for everyone else?

Some costs would decrease as the cost of labour falls in some areas.

The quality of the goods and services we would get per euro would increase.

Suryavarman

dark crystal wrote: »

I don't know - does it?

Do you believe abolishing the minimum wage would incentivise people into working instead of claiming social welfare?

Do you think hitting the lowest earners in society would drive down the cost of rent, electricity, home heating oil, gas, petrol, childcare and house prices for everyone else?

Obviously it doesn't change the laws of economics. The laws of economics are just like the laws of physics. They apply to everyone and everything.

Abolishing the minimum wage will result in a greater number of jobs available, benefiting the worst off in society. Those currently unable to find work because their productivity doesn't justify €8.65 per hour will find it easier to get a job.

dsmythy

Worked in Latvia. Back to growth already.

Bullseye1

bluewolf wrote: »

What austerity

Glad you've had no austerity. Are you suggesting that there has been none for the rest of us?

Bullseye1

Three Seasons wrote: »

Employers will raise wages if no one is willing to fill the roles.

Removing the minimum wage makes it easier to start businesses and create more jobs, it also allows goods and services to be priced more cheaply.

I'd suggest you try and live on minimum wage in this country with the extremely high cost of living this country enjoys. Besides if you had a relatively high social welfare how will that help matters? The cost of living needs to be reduced substantially before talking about abolishing minimum wages.

Three Seasons

Bullseye1 wrote: »

I'd suggest you try and live on minimum wage in this country with the extremely high cost of living this country enjoys. Besides if you had a relatively high social welfare how will that help matters? The cost of living needs to be reduced substantially before talking about abolishing minimum wages.

The cost of living will come down following the abolition of the minimum wage. People will be better off, especially the poorer people in society.

Bullseye1

The handicap for our country has been repeatably bad governance and the belief in big government for a country of our size.

Three Seasons wrote: »

If I were on minimum wage my beliefs would remain the same. It's better for society not to have a minimum wage. It's a handicap on our economy, standards of living fall with a minimum wage.

KyussBishop

The point that people seem to miss the most, is that as a country on our own we have absolutely no control, all of the control is at an EU level.

We don't have control over our own currency, the ECB does (and is itself limited by EU mandates), we don't have control over our own deficits, because EU treaties restrict us in this manner, and mishandling of the crisis EU-wide thus far, means it costs us more to work with deficits.

The policies that can resolve this crisis are all known, and these recovery policies have to be implemented at an EU level, and without that there will be no real recovery in Europe, the single currency is just likely to eventually dissolve.



Austerity doesn't work, because the root problems are unemployment and lack of demand, which both cause an 'output gap' (economy is below it's full productive potential), which reduces tax intake and pushes government into a deficit.

Solving the economic crisis means solving the problems of unemployment and lack of demand, and it is then that economic recovery starts to happen, and the private sector slowly gets back on its feet, and deficits go down.

Austerity comes at this from the opposite end, knocking the deficit down now, and in the process slowing the recovery of the private economy, and making sure unemployment and lack of demand stay an issue for longer.


Ireland cannot fund a deficit though, so it is impossible for us to recover on our own inside the EU; member states in the EU need to implement EU-wide recovery policies, and it looks like this will never happen due to countries like Germany not wanting this, so we are screwed.

So it looks like the only options we have are to eat-up austerity, or the "jump off a cliff" option of exiting the single currency.
Europe on its current course, without any recovery policies, will probably cause the single currency to collapse anyway in a few years, so we will likely have to deal with that anyway; the main question remaining, is what have we got to gain waiting for that to happen, versus getting it over with now so we can start the real recovery earlier?


Also, austerity = higher taxes and government spending cuts, which we undisputably do have; it seems some want to see a particularly sadistic level of cuts and social suffering, before they will call it 'real' austerity.

Bullseye1

Three Seasons wrote: »

The cost of living will come down following the abolition of the minimum wage. People will be better off, especially the poorer people in society.

Nonsense how can cost of living come down with VAT at 23% and fuel costs which have a direct impact on goods and services? General electrical and heating which government has some influence is also way too high and high commercial rates and upward only rents are a noose around our domestic economy coming out of its slump.

How exactly does reducing the poorer people's wages make them better off? Do you actually believe what your write or do you have some actual proof? Where has this precedent been set?

KyussBishop

Anynama141 wrote: »

European austerity is another matter - in theory, the ECB could start printing money and dole it out via European governments via soft loans or whatever, but this would not be painless either - you would effectively be robbing savers (usually the old) by inflating away their savings, and inflation is a terrifying phenomenon once you let the genie out of the bottle - to the extent that in most developed countries, the central bank's key role is to prevent inflation.

This is not true mind, because any policy utilizing money creation will have to limit it based on an inflation target; inflation is primarily caused by resource bottlenecks (hitting a supply limit, causing prices to rise for that resource), and the most important resource is labour, so you can spend up to the point of full-employment before you have to cut back due to inflation.

Since full employment is specifically what we want, this solves a huge part of the crisis.

Due to Germany and such though, there is never going to be an agreement to do this at an EU level; if/when the single currency breaks up though, this will become very important.

Augmerson wrote: »

We could initiate a Public Works program, a sort of New Deal type product, much smaller, which could maybe get 50 to 80k working for awhile - finishing estates, upgrading roads etc. Hopefully that many people in work would have a knock on effect on the economy. People spending. Tax intake increases and so on.

This is precisely what is needed (though not necessarily on that specific set of projects), with funding being the problem; and this combined with the above, would be the solution to the crisis.

68Murph68 wrote: »

This has been tried a lot and the historical evidence is that it just doesn't work. There are really no reasons to think why it would work in Ireland.

He's talking about the New Deal; that did work, it was an enormously spectacular success, with ample historic evidence to show it.

68Murph68 wrote: »

WWII was what got the US back on its feet.

WWII, i.e. a massive increase in government spending, bringing the economy close to full employment, got the US back on its feet.

It's unusual the way people recognize that military keynesianism helped resolve the last Great Depression, but don't recognize that you can put all that effort into infrastructure instead of war, and do the exact same thing, except without wasting the productive effort by killing people and destroying countries.

68Murph68 wrote: »

The consensus is that the New Deal extended the effects of the Depression.

Eh? That is a highly revisionist view on history; the US government cutting spending half way through the Great Depression, is what plunged them back into trouble (exactly the same way the US cut in spending this year, will start to slow recovery):

Paul Krugman wrote:

It raises memories of 1937, when F.D.R.’s premature attempt to balance the budget helped plunge a recovering economy back into severe recession.

https://www.nytimes.com/2010/06/18/opinion/18krugman.html?_r=0

Here also:

We have known that austerity is an idiotic response to a severe crisis for 75 years. The U.S. was in the midst of a strong recovery from the Great Depression until FDR’s neo-liberal economists convinced him in 1937 that is was essential that the U.S. adopt an austerity program to reduce the federal deficit. Austerity forced our economy back into a Great Depression.

It was only the stimulus of federal spending in World War II that brought the U.S. out of the depression. During World War II and for the remainder of that decade the ratio of debt-to-GDP was at or near historically record levels. The result was the greatest industrial expansion in history, full employment (including a massive influx of women), strong economic growth, and sharply declining deficits and debt-to-GDP ratio because the growth led to large increases in revenue and the low unemployment greatly reduced spending on the unemployed.

http://neweconomicperspectives.org/2012/12/kill-the-fiscal-cliff-instead-of-the-economy.html


Also, others disputing the causes of the Great Depression: It was much the same as now; reduced consumer spending and thus aggregate demand, due to unemployment and high debt-loads, as well as rising costs.

There's loads of revisionist nonsense about the Great Depression thus far in the thread; the causes of and solutions to it are not in great dispute, they were largely known and worked out at the time by economists such as Keynes/Minsky/Fisher.

FTA69

Three Seasons wrote: »

The cost of living will come down following the abolition of the minimum wage. People will be better off, especially the poorer people in society.

When the government last cut VAT they said it would result in lower prices for goods. It didn't. And the reason the price of goods stayed the same was because businesses just saw it as another opportunity to profit and eventually the government restored the original rate. If you cut the minimum wage all that you will see is employers exploiting people even further and an even greater gap between the income of the poor and the profit garnered by those who employ them. Stating that business recovery should take place on the backs of the poorest in society is shameful.

Similarly it's a redundant point as the vast majority of workers don't even earn the minimum wage, only the lowest tier do. These also usually consist of the most vulnerable groups in our society working in industries such as hospitality and agriculture which already have a long-standing reputation of exploitation and abuse. Chopping the bar-worker's wage or the salary of a Lithuanian mushroom picker isn't going to result in recovery, it's just going to rob the poor even more in order to increase profiteering.

FTA69

Bullseye1 wrote: »

How exactly does reducing the poorer people's wages make them better off? Do you actually believe what your write or do you have some actual proof? Where has this precedent been set?

He has already said that he doesn't have to exist on a minimum wage so how would he know? Arguments for cutting the minimum wage are pseudo-intellectual cant usually; a load of nonsense theorising divorced from the actual reality that they will plunge poor people into further poverty.

Three Seasons

Bullseye1 wrote: »

Nonsense how can cost of living come down with VAT at 23% and fuel costs which have a direct impact on goods and services? General electrical and heating which government has some influence is also way too high and high commercial rates and upward only rents are a noose around our domestic economy coming out of its slump.

How exactly does reducing the poorer people's wages make them better off? Do you actually believe what your write or do you have some actual proof? Where has this precedent been set?

It provides jobs for those who wouldn't have one otherwise as te minimum wage sucks jobs out of the economy.

Also the purchasing power per euro would increase.

KyussBishop

It's worth noting, that as usual in these threads, a great number of the posters arguing in favour of austerity have an inherent conflict of interest, where many directly work in (or are moving towards working in) banking/finance, and often otherwise have significant personal/business conflicts of interest, where they have an interest in promoting policies that benefit them, to the detriment of the rest of society.

This is why the Austrian school of economics is so prevalent with financiers: It's a framework of views, which inherently allows them to justify a huge number of socially destructive policies, and thus their paychecks.


For a lot of them, it's likely cognitive dissonance rather than something they are conscious of (though I would not be surprised if many were conscious of it; god knows there are a lot of firms/people in the financial industry, who don't give a toss where the money comes from); a good quote applicable to it:
"It is difficult to get a man to understand something, when his salary depends upon his not understanding it"

Amirani

The Dagda wrote: »

Secondly ask yourself where inflation comes from? Why does the current economic system require the value of money to be always increasing?

If you believe that the current system is sound then I'm afraid it's you that lacks comprehension...

I never said that the current system was "sound". You claimed that it was bound to collapse like a house of cards, but that's not bound to happen at all. Inflation is a fall in the value of money (unlike what you said), as a result monetary policy can always be used to alleviate deficits. Debt levels naturally decrease over time because of inflation. As a result, countries can print money that will alleviate their debts (causing inflation).

A country or monetary union that prints its own money can never really go bankrupt, hence no big collapse.

southsiderosie

Three Seasons wrote: »

I'd argue we should eliminate the minimum wage altogether.

That would create more jobs IMO.

Three Seasons wrote: »

Then they simply weren't worth much more than the minimum wage. Their experience obviously wasn't worth much then.

Clarkes shoe shop pay entry level employes significantly over minimum wage.

Why is that if they don't have to?

Three Seasons wrote: »

Yes they will actually, goods and services prices will fall and more business will start up and more jobs become available. No minimum wage benefits the poorer people in society.

Suryavarman wrote: »

Obviously it doesn't change the laws of economics. The laws of economics are just like the laws of physics. They apply to everyone and everything.

Abolishing the minimum wage will result in a greater number of jobs available, benefiting the worst off in society. Those currently unable to find work because their productivity doesn't justify €8.65 per hour will find it easier to get a job.

Three Seasons wrote: »

The cost of living will come down following the abolition of the minimum wage. People will be better off, especially the poorer people in society.

This is a prime example of how fervent belief in economic theory does not translate to political or social reality. Slashing the minimum wage and assuming that it will benefit the 'worst off' in society makes two key assumptions that are not acknowledged in any of these posts.

First, it assumes that there is a closed labor market, i.e. no immigration. In a closed market when the supply of labor is fixed, then we would expect wages to rise, as employers would have to somehow entice workers to take up positions with them. But that is not the case in Ireland: there a readily available pool of cheap foreign labor and therefore any pressure from rising wage demands get diluted by expanding the labor market.

Second, the assumption that the price of goods and wages will fall is so problematic as to be farcical. Prices of non-commodity goods are generally sticky upwards - what incentive do companies have to drop their prices? This is particularly true in sectors that are politically connected and protected. If barriers to entry were low, and there was no regulation and/or government involvement in the economy at all, then maybe prices could truly move freely, but this is an impossibility in a democratic society where citizens groups, unions, and business associations have the right to lobby for legislation that benefits them.

That aside, I don't think you can consider the minimum wage in a vacuum. The existence of the welfare state means that there essentially is a minimum wage: people will not take a job that pays them less that what they would get on welfare. Add in other state benefits, and you get an effective minimum wage that is going to be higher than the minimum state jobless benefit - regardless of what the official minimum wage is.

Ultimately the idea that no minimum wage will benefit everyone only makes sense if you live in a limited-to-non-democracy with minimal government and tight border controls. Hong Kong, long the prime example of this kind of setup, established a minimum wage in 2010, and is in the process of expanding the welfare state, in particular, access to government subsidized housing. But they are only able to do this because a huge percentage of their workforce are foreigners with absolutely no rights. So I don't think it is realistic in 2013 to talk about a 'no minimum wage' modern economy: 21st century social mores and political sentiments will not permit it, and historically, where this has been tried, it is not clear that a lack of minimum wage benefitted the worst off in society at all.

southsiderosie

Three Seasons wrote: »

If I were on minimum wage my beliefs would remain the same. It's better for society not to have a minimum wage. It's a handicap on our economy, standards of living fall with a minimum wage.

The Nordic countries have the highest standards of living in the world. They also have minimum wages and heavily regulated labor markets. Do you have any actual empirical examples to support these claims?