The flipside of minimum wage increases

February 25th, 2014 at 2:00 pm by David Farrar

minwage

 

Sent in by a reader. It makes a very valid point, the higher you force up wages for certain jobs, the more likely it is that they will be replaced by technology. That may actually be good for the economy eventually, but very rough on those who find themselves without a job.

Talking of the , some useful analysis on Stats Chat:

From April 2008 to April 2013, the minimum wage increased 14.6%. Inflation (2008Q1 to 2013Q1) was 11%. So, the minimum wage increased faster than inflation, and the proposed change will keep it increasing faster than inflation.

From whole-year 2008 to whole-year 2013, per-capita GDP increased 9.7%.  Mean weekly income increased 21%. Median weekly income increased 18.8%. Average household consumption expenditure increased 7.8%.

Increasing the 2008 minimum wage by 18.8%, following median incomes, would give $14.26, so the proposed minimum wage is at least close to keeping up with median income, as well as keeping ahead of economic growth.

As I said yesterday, I think it would be sensible to link it to the median wage.

As a final footnote: the story also mentions the Prime Minister’s salary. There really isn’t an objective way to compare changes in this to changes in the minimum wage. The PM’s salary has increased by a smaller percentage than the minimum wage since 2008, but the absolute increase is more than ten times that of a full-time minimum wage job.

Of course a higher wage will always have an absolute higher increase. That is why percentage comparisons are done. I didn’t realise however that the relative movement in the PM’s salary has been less than the movement in the minimum wage.

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69 Responses to “The flipside of minimum wage increases”

  1. Huevon (222 comments) says:

    But, but, but…the poor!!!!

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  2. Pete George (23,567 comments) says:

    Radio NZ:

    The Council of Trade Unions says the increase is not enough, given there has been several years of stagnating wages, an economy that’s starting to grow and widespread concerns about how that growth will be shared.

    http://www.radionz.co.nz/news/national/237130/minimum-wage-to-increase

    Helen Kelly said wages haven’t kept up – that may be true of wages generally but according to the post the minimum wage has more than kept up.

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  3. Sector 7g (242 comments) says:

    Who cares what the minimum wage is when the majority of New Zealand voters don’t believe in personal responsibility?
    We could redistribute all of the money in the country evenly today, yet within a year, 50% of people would have spent it all, 25% would have saved it and 25% would have increased their “share”. The answer to all of this of course is to continue to divide it up “fairly” each time things get out of whack.

    This is obviously the only thing we can do while “fairness” and “equality” is only ever being measured by “wealth”.

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  4. burt (8,271 comments) says:

    DPF

    I think you missed the memo that the incoming Green government will ban McDonald’s, Burger King & KFC – well actually they will ban any American corporation because America is evil.

    But – don’t mention the loss of jobs OK ….

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  5. David Garrett (7,288 comments) says:

    “flipside”…geddit? Burger flippers will get a raise…until McDonalds et al invent a machine to replace them too…

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  6. burt (8,271 comments) says:

    Helen Kelly said wages haven’t kept up

    That’s union code speak for – We can’t crank the union fees sufficiently to keep up with union spending……

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  7. Psycho Milt (2,412 comments) says:

    It makes a very valid point…

    If you’re a luddite, I guess. You know what increases productivity? Automation. You know what minimises automation? Low wages.

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  8. dime (9,972 comments) says:

    The saving grace is that we are a tiny country. Try this 15 an hour shit in the US and they will start developing tech to take over low paying jobs.

    Give business a dirty great tax cut and they can pay the new minimum easier. Just means less money for lazy shit heads on the bludge

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  9. igm (1,413 comments) says:

    Who cares what Kelly says, she is only representative of unionised drones that are not worth the minimum wage. Anyone who has taken personal responsibility, along with work ethics, will be over the minimum wage, by direct bargaining, performance, and productivity; not collective bargaining and bludging.

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  10. ShawnLH (5,124 comments) says:

    Who cares what the Stalinist Hobbit hater says?

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  11. PaulL (5,981 comments) says:

    On the upside, if NZ goes first, replaces order takers with automation, then sells that automation to the world, we’d have a great new industry. I already see lots of coffee apps, how hard to have a burger king app? Make your order before you even get to the shop, hot and waiting for you when you get there.

    I reckon you could also replace a goodly proportion of the fry cookers, burger flippers etc with a machine that wouldn’t be overly complex. I wonder what McDonalds would pay for the IP to an “automated McDs”? I reckon the technology exists to build most of it, and you could probably put most of what you need in a shipping container and send it anywhere (i.e. you could mass produce them).

    Is that a reason to worry about employment? Not to me – we’ve automated before without it causing mass unemployment. Is it a reason to worry about _some_ of the people who will be dislocated, and may not have the aptitude to be retrained for one of the new jobs that will open up? Yes.

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  12. thor42 (971 comments) says:

    @Psycho Milt – “You know what increases productivity? Automation. You know what minimises automation? Low wages.”

    Ahhh. Ergo, the logic goes – “raise wages and increase automation and productivity”.

    There is one thing you may have forgotten. Wages get raised, some jobs get automated and the **people who were doing them become unemployed.**

    For any business (well, most businesses) looking to automate a job, there will be an economic “crossing point” – the point at which higher wage costs then make it economic for them to automate the job.

    The thing is – **how FAST** do you raise the “minimum wage” or “living wage”? How fast do you push businesses towards that point where they lay off staff and automate? Yes, the staff can train themselves up in something else but that takes *time*.

    Raise the M.W. as fast as Labour and co would like and the economic “crossing point” gets reached sooner and people get *put out of work sooner*. The left wing *cannot* deny that – it is *pure economics*.

    The *best* solution all round is to encourage young people to *study and train* so that *as few people as possible are taking the “minimum wage” in the first place.*

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  13. edhunter (547 comments) says:

    According to the Big Mac index we’re paying the same price for a BM as the yanks, and as you don’t see many MacD’s closing around the country I can only assume that the franchisees are more than keeping their head above the water, and that the yanks must be making money hand over fist.
    Now before we start I think there should be a youth wage probably set at something like 2/3 of the minimum wage.
    In saying that with the declining influence of unions (yes it’s true) a minimum wage set by the govt is a necessary evil.
    I was in manufacturing for a number of years & it’s a mugs game especially when trying to compete with inferior but cheaper imported products. The people I’ve had working for me earning min or just above as a rule were hard workers & of course any rise in the min wage resulted in a basically across the board rise for everyone earning with $2.00 of the min. None of my workers belonged to a union, most were extremely loyal and they hated the bludgers as much as anyone on this site.
    So play the ball don’t play man.
    PS automation yeah that’ll teach’em only benefits the top 1.5% if these low paid, so called low skilled workers lose their jobs to robots who do you think picks up the tab when they all end up on a benefit.

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  14. Fletch (6,390 comments) says:

    That’s exactly what Bill Gates said when he was asked about higher minimum wage –

    Well, jobs are a great thing. You have to be a bit careful: If you raise the minimum wage, you’re encouraging labor substitution and you’re going to go buy machines and automate things — or cause jobs to appear outside of that jurisdiction. And so within certain limits, you know, it does cause job destruction. If you really start pushing it, then you’re just making a huge trade-off.

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  15. SPC (5,619 comments) says:

    thor, while the MW remains low the MW jobs will remain and require labour. And some MW jobs will remain even if the MW was lifted to proposed LW levels.

    Automation often comes in when there is lack of labour available or the competition is advantaged by moving to it and this is required to compete. Many employers prefer to continue with a low MW if they can as automation requires capital investment. Larger employers are more likely to adopt it than smaller ones.

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  16. edhunter (547 comments) says:

    PPS I hate serving myself at check outs.

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  17. Sir Cullen's Sidekick (890 comments) says:

    Our leader David the Messiah Cunliffe says that he will make the minimum wage to $15 within the first 100 days of assuming office and again increase it within a year. So the workers need to wait only for few more hard months under John Key. When the Messiah takes over honey and milk will start to flow on the streets and you could plug money off the trees.

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  18. SPC (5,619 comments) says:

    Sir CC, he means $15 late 2014/early 2015 and $15.50 from c 1 October 2015.

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  19. Kimble (4,440 comments) says:

    Higher wages doesnt make the good aspects of automation better, it makes the drawbacks of automation less significant.

    An improvement in productivity means doing more with the same resources, or doing the same with fewer resources.

    Shifting to automation because the relative cost of labour has increased doesnt lead to more being done with the same resources, and the resources aren’t getting cheaper. It is doing the same with more resources.

    Milts argument is a popular one on the Left. Another variant is, “we should take advantage of the profit motive! And by that we mean tax companies more so they work harder to keep their current level of after-tax profits!”

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  20. gazzmaniac (2,307 comments) says:

    KFC at Moranbah in Queensland installed a self service kiosk. Now up until recently Moranbah was one of those mining towns where you (or the company you work for) were paying $2k+ per week in rent so there was no option available for KFC to get staff except kids from the local school, and even then they wouldn’t work fast since mummy and daddy just gave them a shitload of pocket money. In other words, labour was too expensive.

    Before the kiosk you’d easily wait 30 minutes or more in a queue to order your meal, so it was quicker and cheaper to go to the pub and order a counter meal. After the Kiosk was installed you’d be able to order almost immediately and have your meal in a couple of minutes. The *one* server at the counter was there and still had to be paid, but I can imagine that their turnover increased markedly because of the automation.

    As that technology gets more refined and becomes cheaper to install this will become the norm. Too bad for the kids who would have had entry level jobs on the counter at Maccas.

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  21. shoreboy57 (140 comments) says:

    At least they won’t have to join Unite

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  22. PaulL (5,981 comments) says:

    One of the sure ways to increase productivity (per head) is to reduce employment. The wasters go first, thereby increasing average productivity. It’s pretty well documented that as employment increases (as a % of working age population) that productivity drops and vice versa. This is usually a short term result, and doesn’t impact the underlying rate of productivity change, but is something to watch out for when people start spouting statistics about productivity.

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  23. Psycho Milt (2,412 comments) says:

    Ahhh. Ergo, the logic goes – “raise wages and increase automation and productivity”.

    Not quite. The logic goes – “stop keeping real wages so artificially low the the government has to top them up from social welfare benefits and businesses will find it attractive to increase automation and productivity.”

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  24. Psycho Milt (2,412 comments) says:

    Shifting to automation because the relative cost of labour has increased doesnt lead to more being done with the same resources, and the resources aren’t getting cheaper. It is doing the same with more resources.

    Yes, this is why the development of building roads using earthmoving machinery rather than hundreds of guys with shovels was such a disaster for productivity in the developed world.

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  25. adze (2,126 comments) says:

    Is that a reason to worry about employment? Not to me – we’ve automated before without it causing mass unemployment. Is it a reason to worry about _some_ of the people who will be dislocated, and may not have the aptitude to be retrained for one of the new jobs that will open up? Yes.

    This is a common objection to the threat of technological unemployment, where it is usually claimed (and which has been true in the past) that new, higher skilled jobs are created for every lower skilled job that is automated. These fears are usually referred to as the Luddite Fallacy.

    However, there is an increasing body of evidence that indicates that the Luddite Fallacy no longer applies. While it is true that lower skilled, formulaic type jobs such as those in retail/warehousing and manufacturing are continuing to be replaced with higher skilled work, there are now fewer numbers of these new jobs, and they are becoming so highly skilled that the majority of people are simply not able to do them.

    The bottom line here is that machines used to replace physical labour, now they are beginning to replace intellectual labour. And it’s happening more rapidly than in the first industrial age.

    The other issue is that it used to be that productivity within an economy naturally led to more jobs. There are signs, however, that productivity is becoming decoupled from job growth. Manufacturing jobs are coming back to the US, for example, but they’re being done by robots because it’s cheaper even than outsourcing to low wage workers in India or China.
    This is great for companies; but unless you are one of the lucky few able to do the limited amount of highly skilled work, this doesn’t necessarily translate into more jobs.

    Here is a talk by two of the leading thinkers on this subject for any who are interested: https://www.youtube.com/watch?v=kum_7D9EORs
    These two happen to be optimistic, but it remains to be seen whether that is well-founded.

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  26. thedavincimode (6,759 comments) says:

    It’s great that we encourage people to aspire to the most underpaid/menial/boring/unpleasant jobs by legislating higher pay rates for them.

    It’s even more rewarding to contemplate the prospect that people with piss poor work records who can’t even be relied upon to get out of bed in the morning and tie their shoelaces have no opportunity to demonstrate that they have sorted themselves out by holding down a job – any job -for a continuous period of time all because they are now legislated as worth an hourly rate in excess of their economic value.

    There is a part of me that wants to see the burger machines now – before the election – and another part of me that wants to see people have an opportunity to turn themselves around and/or at least get an employment record that will make them more attractive to future employers in higher-paying jobs. Especially now that Viscount Cunners of Herne Bay, property developer, wants to torpedo the 90 day trial.

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  27. Ryan Sproull (7,153 comments) says:

    Sent in by a reader. It makes a very valid point, the higher you force up wages for certain jobs, the more likely it is that they will be replaced by technology. That may actually be good for the economy eventually, but very rough on those who find themselves without a job.

    As I said in the other thread – keep going. Eventually people are going to realise that an economy where people are forced to work to live when technology is managing a growing proportion of society’s requirements… is a fucked, outmoded economic model that serves the interests only of the naked emperors.

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  28. thor42 (971 comments) says:

    @Ryan Sproull – “…an economy where people are forced to work to live … is a fucked, outmoded economic model.”

    Ok then – no problem…… how about this then?

    Fine, let people choose not to work. If they do, though, then they *don’t* get to *vote*. Their choice.

    “He who pays the piper calls the tune.”

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  29. Ryan Sproull (7,153 comments) says:

    Fine, let people choose not to work. If they do, though, then they *don’t* get to *vote*. Their choice.

    Hmm. I don’t like that either, Thor. I like the direction of thinking, though, in that we’re asking questions like – what does “work” mean outside of the context of working for pay to live or working for pay to accumulate capital? If some activity is productive in a way that benefits all in a society, how can people be rewarded/acknowledged/incentivised for doing those things? How are scarce luxuries distributed after necessities are moved into post-scarcity?

    I like a free exchange market economy for luxuries, personally.

    (Note that by “luxuries” I mean any goods or services not covered under “necessities”.)

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  30. Miritu (30 comments) says:

    Minimum wage laws – one of many undesirable distortions to the market economy and ultimately hurts the poorest. It removes a large number of entry level job opportunities (look at youth unemployment) and keeps thousand of people on benefits (which I suspect is the real intention of governments wanting to buy votes). I do wonder how differently people would vote if payroll taxes were done away with, and all workers had to pay their own tax.

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  31. Kimble (4,440 comments) says:

    Eventually people are going to realise that an economy where people are forced to do things for other people so that other people will do the things for them that they need to live when technology is managing a growing proportion of society’s requirements… is a fucked, outmoded economic model that serves the interests only of the naked emperors.

    Fixed your post Ryan.

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  32. Ben Dover (526 comments) says:

    Check O desk

    if it can be done there cheaper it will be

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  33. Ben Dover (526 comments) says:

    The only time when Microsoft makes something that does not suck completely

    it will be a Vacuum Cleaner

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  34. seanmaitland (500 comments) says:

    @edhunter – the Big Mac Index is about currency values nothing to do with wage levels.

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  35. seanmaitland (500 comments) says:

    @adze – “The bottom line here is that machines used to replace physical labour, now they are beginning to replace intellectual labour. And it’s happening more rapidly than in the first industrial age.”

    Truly intellectual jobs aren’t being replaced by machines. Simple jobs involving repetition, collating data, using formulas and simple decision making are being replaced, but they are no more intellectual than someone working in a factory line.

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  36. Crusader (314 comments) says:

    Viscount Cunners of Herne Bay, property developer

    Gold Jerry, gold.

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  37. edhunter (547 comments) says:

    The BM index is about purchasing power. A Mac D employee on minimum wage in Maine $7.50 p/h can buy 1.62 Big Macs for an hours labour. On mimimum wage in NZ you can buy 2.5 BM’s. Hence my contention that if despite higher wages in NZ the franchisees are making money, the US franchisees must be making money hand over fist.

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  38. Jim (398 comments) says:

    Psycho Milt has a very good point. There most definitely is a cost-of-labour : technology automation equilibrium. I deal with that every day. Low labour cost is an impediment to technology improvement (it’s cheaper for us to throw people at the problem).

    But artificially raising the cost of labour is not the solution. That just puts people out of work.

    The problem is the excess supply of unskilled labour, so the solution to low wages is to:

    * incentivise skilled professionals to breed
    * deter ferals from breeding

    A generation later you’ll find toilet-cleaning robots.

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  39. Psycho Milt (2,412 comments) says:

    But artificially raising the cost of labour is not the solution.

    It’s not the solution unless you’ve just spent several decades artificially lowering the cost of labour. We have done that, which has left us with minmum wage increases as pretty much the only realistic means of putting upwards pressure on wages.

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  40. Nigel Kearney (1,013 comments) says:

    Replacing people with machines is not a problem in itself.

    The problem is that the minimum wage has regulated out of existence the many jobs we need done that cannot yet be done by machines. That is why our clothes, electronic goods, cars and other items are now made in Asia. Without the minimum wage we could have full employment and be making those things ourselves or even exporting them.

    Very few of us have a problem people working for much lower wages and our lifestyle being dependent on their efforts. The left just want to ensure that work happens in other countries while people are unemployed here.

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  41. jcuk (687 comments) says:

    The long term solution is to have fewer children … have fun but take precautions against the consequences …. sad thing is that the inteligent are already doing this it is just the morons who don’t have brains to do more than exist that have large families.

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  42. deadrightkev (469 comments) says:

    Interesting how the spin takes on a world of its own.

    If you focus simply on young people hoping to get a start in the workforce (i.e. to earn money or gain experience) in whatever way in whatever industry, the minimum wage is going to cap their employment opportunities.

    When I was an apprentice I earned something like $3hr. My kids went on the checkout at Pak n Starve for about $7hr, that was years ago. It is very damaging to the free market economy to believe think you are doing people a favour. Those in work are getting a top up, those that aren’t are on the dole.

    The minimum wage is a crock and as usual National is sitting on the fence playing compromise politics as if it is smart. It might be to get elected but it is yet another distortion to the pricing signals.

    If a person is of $14.50 value then its an employers market, if not you need to find a job to match your value.

    Contrary to popular opinion 99% of Kiwi employers will pay what a person is worth and often more than the minimum wage to keep them on the payroll.

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  43. Kimble (4,440 comments) says:

    It’s not the solution unless you’ve just spent several decades artificially lowering the cost of labour.

    The Lefty definition of ‘artificial’ is “its the opposite of what I think it should be”. It’s actually the definition of a lot of words they use.

    Most people would think that artificial meant something made or produced rather than occurring naturally.

    But not Milt. If he signed up to the real meaning of the word he would be forced to try and explain how wages would be higher unless the government intervened in the labour market.

    No doubt his first attempt would be explaining how the government reduced the power of the Unions. But that just kicks the can down the road a little bit, and leaves him having to explain how Unions cant themselves be considered “artificial” which makes the reduction in their power a return to a more natural state. The can would get another kick and he would have to explain how a group of businesses getting together to lower the wages of employees wouldn’t also be considered “natural”.

    …which has left us with minmum wage increases as pretty much the only realistic means of putting downwards pressure on demand for low skilled labour…

    There, I’ve fixed another post.

    How does the Left show they care about the poor? Making some of them unemployable so the income of the others can increase a little bit and then taxing that other group to pay for benefits for the first group.

    Essentially they tell poor people that businesses are bad, then they legislate the poor out of jobs, then they tax the evil private sector, then they give the money to the poor and take credit for helping them.

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  44. Ryan Sproull (7,153 comments) says:

    Fixed your post Ryan.

    Kimble, you changed it to this:

    “Eventually people are going to realise that an economy where people are forced to do things for other people so that other people will do the things for them that they need to live when technology is managing a growing proportion of society’s requirements…”

    You’re describing a situation where technology provides the necessities of life and yet also, for some reason, people need other people to “do the things for them that they need to live”.

    You do understand that the whole point of my comment was describing a scenario that trends towards people not needing other people to do the things for them that they need to live? I’m talking about a technologically post-scarcity economy. Your “fix” only makes sense in a scarcity economy.

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  45. KiwiGreg (3,255 comments) says:

    Ryan your ideas are pure fantasy. Who is providing the capital for all this”technology”? Does it work itself? Sitting around and not working and expecting stuff as your right is not a survival strategy.

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  46. Ryan Sproull (7,153 comments) says:

    Ryan your ideas are pure fantasy.

    Centuries ago they were pure fantasy. Now they’re less and less fantasy every day. In fact, it’s simple mathematics. Technology is increasing the productive potential of labour at an exponential rate. The necessities of life for human beings remain static, or their definition is expanded at an arithmetic rate. We have either already passed or will soon past the point where the necessities of life could be provided to everyone in the world, with everyone who can work working 40 hours a week. As time goes on past that point, the time requirements to achieve the same result will continue to drop. 20 hours, 10 hours, etc.

    Who is providing the capital for all this”technology”?

    Technology is a capital good, Greg.

    Does it work itself?

    Some of it is pretty highly automated, with a small amount of labour for maintenance. How many hours a week does an ATM maintenance tech have to work to maintain a single ATM? On average over a year, maybe a few minutes a week. And 30 years ago, the job performed by an ATM had to be performed by several full-time employees – the equivalent of 80 or 120 hours a week of time.

    But even with automation, you’re right that a little bit of human labour is required.

    Sitting around and not working and expecting stuff as your right is not a survival strategy.

    You sit around and expect oxygen in the air without working for it. Why? There’s an abundance of it. Does that make you lazy?

    Technology makes it increasingly possible for that same logic to apply to an increasing number of other necessities of life.

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  47. Kimble (4,440 comments) says:

    Your “fix” only makes sense in a scarcity economy.

    There is no such thing as a non-scarcity economy. The idea does even make semantic sense; without scarcity there is no need to be economical.

    I was merely substituting what “work” actually is in your comment to point out how ridiculous your statement was. Your clarification has helped much more in that respect.

    Technology has changed the work we do, and what we rely on others for. But it hasnt changed whats been true for the entirety of human civilisation; people need people. In fact, the more technology has advanced, the LESS we are capable of doing for ourselves and the MORE we rely on other people.

    I agree that Star Trek style replicators would turn everything on its head. So feel free to call the idea of people working to get the things they want an outmoded economic model but you would sound like less of an idiot if you actually waited until it actually was.

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  48. Psycho Milt (2,412 comments) says:

    Most people would think that artificial meant something made or produced rather than occurring naturally.

    Well, call me a conflater of correlation with causation if you like, but I recall that nearly 30 years ago, there were no end of members or representatives of the nation’s wage-earners who troubled themselves to point out that the path the government was embarking on would wreck wage-earners’ pay and conditions, and that after nearly 30 years on that path pay and conditions have indeed been wrecked. If it wasn’t deliberate government policy, it’s either a wildly unlikely coincidence or remarkably willful ignorance from successive governments.

    How does the Left show they care about the poor?

    I guess we could adopt the Right’s approach of caring about the poor by trying to make them become competitive with labourers in Cambodia or Bangladesh, but that doesn’t strike us as fulfilling the actual meaning of the word ‘care.’

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  49. Ryan Sproull (7,153 comments) says:

    There is no such thing as a non-scarcity economy. The idea does even make semantic sense; without scarcity there is no need to be economical.

    Very clever. I am using the word “economy” in its definition as “the state of a country or region in terms of the production and consumption of goods and services and the supply of money”, rather than the other definition, which is more synonymous with “thrift”.

    I was merely substituting what “work” actually is in your comment to point out how ridiculous your statement was. Your clarification has helped much more in that respect.

    Technology had changed what work we do, and what we rely on others for. But it hasnt changed whats been true for the entirety of human civilisation; people need people.

    I agree that people need people. I disagree that the guy working 70 hours a week making handbags needs Paris Hilton.

    I agree that Star Trek style replicators would turn everything on its head. So feel free to call the idea of people working to be get the things they want an outmoded economic model but you would sound like less of an idiot if you actually waited until it actually was.

    We exist on a spectrum, between pre-technological hunter-gathering and the other extreme, which you describe. I agree with you that we don’t have Star Trek-style replicators, which would reduce labour requirements to practically nil. That’s the extreme end of the spectrum you use to parody my point.

    Now, do you disagree that technological advances increase the productive potential of labour? Which is to say that, with better technology, the same output can be achieved in less time, or that the same amount of time can produce a greater output?

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  50. Kimble (4,440 comments) says:

    Well, call me a conflater of correlation with causation if you like, but I recall that nearly 30 years ago …

    And the can gets its first kick. But lets not play out the conversation as I had it in the above comment.

    Milt, how about you explain how the wages and conditions 30 years ago were natural and how any deviation from them (including what they would be now if history hadnt played out the same) is artificial?

    I guess we could adopt the Right’s approach of caring about the poor by trying to make them become competitive with labourers in Cambodia or Bangladesh, but that doesn’t strike us as fulfilling the actual meaning of the word ‘care.’

    Instead you are insisting that the low skilled in NZ either compete with more highly skilled labourers or accept a much lower income of zero, or some sort of social welfare if they can get it.

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  51. Kimble (4,440 comments) says:

    Now, do you disagree that technological advances increase the productive potential of labour?

    Does that mean that people get things for free?

    They get more for less, but less is a long way from zero.

    Scarcity isn’t disappearing. There is no such thing as a scarcity free society, economy, region, country, or anything else, and there never will be.

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  52. Ryan Sproull (7,153 comments) says:

    Does that mean that people get things for free?

    I did not say that it means that people get things for free. I just asked you a question.

    They get more for less, but less is a long way from zero.

    Okay, so you agree that technological advances mean we get more (output) for less (time).

    Do you think that the necessities of human life are more or less static over time? Or would you describe them as increasing over time?

    Scarcity isn’t disappearing. There is no such thing as a scarcity free society, economy, region, country, or anything else, and there never will be.

    Hmm. Perhaps if you repeat that just a few more times, I’ll take your word for it.

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  53. Kimble (4,440 comments) says:

    Do you think that the necessities of human life are more or less static over time?

    You want to live like a peasant from the middle ages?

    Perhaps if you repeat that just a few more times, I’ll take your word for it.

    No need to take anyone’s word for it. The counter position is self evidently absurd.

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  54. ross69 (3,652 comments) says:

    I’m not exactly sure what the problem is.

    Productivity has increased by more than 80% since 1982 yet, over the same period, real wages have fallen by 25%. It’s quite clear that businesses have done very nicely at the expense of workers.

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  55. ross69 (3,652 comments) says:

    I’m still waiting, patiently, for Mr Farrar to explain that workers deserve a large pay increase and they deserve it now.

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  56. Kimble (4,440 comments) says:

    It’s quite clear that businesses have done very nicely at the expense of workers.

    And another one who thinks that the “natural” and true state of labour relations was at a point when Union power was at its greatest, and that assumes that not only that state but also its trajectory was always going to be stable.

    Why do you guys always choose 1980-ish as your starting point? Why are you always comparing the current world to this one point in time? And why or fucking why will you never man-up and defend your presumption that the world today would be BETTER if nothing had changed?

    How about this? If nothing had changed, NZ wouldn’t have had the real growth it has had since 1982, and real wages would be lower than what they were then. The structure of our economy would be completely different to what it is now, and we would still have the millstones of dead industries weighing us down.

    You choose 1980-ish because that was the point at which NZer’s we MOST overpaid for their labour. We were massively unproductive and inefficient. What you call a reduction in real wages is really just a correction.

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  57. Psycho Milt (2,412 comments) says:

    Milt, how about you explain how the wages and conditions 30 years ago were natural and how any deviation from them (including what they would be now if history hadnt played out the same) is artificial?

    You’re not making any sense, unless your argument is that any organised intervention in employer/employee relationships is ‘artificial,’ in which case the whole thing is artifice from start to finish so why would we care that the minimum wage is artificial raising of wages?

    Instead you are insisting that the low skilled in NZ either compete with more highly skilled labourers or accept a much lower income of zero, or some sort of social welfare if they can get it.

    Yeah, we insisted on it for the unschooled agricultural labourers of the early 20th Century too, but somehow society survived this cruel leftist abuse of the poor.

    Why do you guys always choose 1980-ish as your starting point?

    You may recall something fairly significant happened to the way government, the public service, the economy and industrial relations were run in the period 1985 – 93.

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  58. Mark (1,488 comments) says:

    Debating whether the minimum wage should be increased on a right wing forum such as Kiwiblog is going to flush out the reasons why not fairly quickly

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  59. Kimble (4,440 comments) says:

    You’re not making any sense, unless your argument is that any organised intervention in employer/employee relationships is ‘artificial,’ in which case the whole thing is artifice from start to finish so why would we care that the minimum wage is artificial raising of wages?

    So Unions are natural.

    How then could a cabal of employers getting together to underpay workers not also be natural?

    Yeah, we insisted on it for the unschooled agricultural labourers of the early 20th Century too, but somehow society survived this cruel leftist abuse of the poor.

    And here we have the go to for Union apologists. I am surprised you didnt talk about 4 year old kids down the mines. Lets not get into how your example ignores a magnitude of difference.

    The fact remains that the unemployment benefit pays less than $200. Being employed at the minimum wage would get you around $550. There is no middle option. People with skills that price them between $200 and $550 are left with what?

    You may recall something fairly significant happened to the way government, the public service, the economy and industrial relations were run in the period 1985 – 93.

    So why not 1970? Or 1950? Or 1920? They all occurred before the changes. Why dont they represent the ‘natural’ state of employment relations?

    NZ has decreased military spending as a % of GDP since 1940, even though the number of armed conflicts we have been involved in have increased! <– what you are saying is as stupid as this.

    By using that specific time as your starting point, and whining about changes since that point as having introduced an 'artificial' suppressant to wages, you are claiming that that specific period in time is the NATURAL state of a labour market. It wasn't.

    You havent even started to explain why 1982 is natural, while the changes (which resulted in LESS regulation and freer markets) was somehow artificial.

    You have also, again, belly crawled away from the opportunity to explain how wages would be higher NOW, had the changes to the economy not been made at that time.

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  60. Psycho Milt (2,412 comments) says:

    Kimble: I’m aware that the “natural” state for capitalism is the version described by Marx, that socialists have spent the intervening 150+ years rendering it unnatural by various artificial means, and that there are a number of people who’d prefer to return it to the natural state and (unwittingly) make Marx relevant again. For people who don’t suffer from that particular ideological illness, the “150+ years of artificial socialist interventions” version is capitalism, and we tend to talk about it on that basis. You’re not going to get your “natural” version of capitalism back again, because everyone knows it would suck. Bleating about “artificial” wage increases is pointless – the entire edifice as it now stands is artificial.

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  61. Ryan Sproull (7,153 comments) says:

    You want to live like a peasant from the middle ages?

    Okay, so you agree that technological advances mean we get more (output) for less (time).

    And you agree that how we define the necessities of a human life expands over time. (I’m inclined to consider internet access a necessity of living a human life, for example, myself.)

    Do you agree that technological advances are progressing at an exponential rate? Which is to say, in terms of its function as an amplification of the output of labour, has it advanced more in the last decade than in the previous decade, and more in that previous decade than in the one before it, etc.

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  62. Kimble (4,440 comments) says:

    I dont want the ‘natural’ version of capitalism. Thats a strawman argument and a pretty pathetic one at that.

    I reject your characterization of capitalism as effective anarchy. I have always maintained that there is a role for government and the capitalism has to be defended from capitalists (who will try to use the power of government in their favour, EXACTLY how the Unions do when you let them).

    You were the one claiming that the removal of government interventions in the labour market was ‘artificially’ suppressing wages.

    And the period you chose as your comparison was one where the Unions were at the peak of their power and the economy was hobbling off a cliff. Thats the position you have to defend. Why is that period the best comparison?

    Do you even know what wage awards were? How the hell can any honest person claim those were ‘natural’?

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  63. Kimble (4,440 comments) says:

    Ryan, even IF technological advances are happening faster than the expansion of “necessities” that doesnt mean that we are close to any cross-over point now, or in the next few centuries.

    There will never be a post scarcity world. Ever. Something will always have two uses and using it for one will mean it cant be used for the other.

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  64. Ryan Sproull (7,153 comments) says:

    Ryan, even IF technological advances are happening faster than the expansion of “necessities” that doesnt mean that we are close to any cross-over point now, or in the next few centuries.

    There will never be a post scarcity world. Ever. Something will always have two uses and using it for one will mean it cant be used for the other.

    Okay, so you agree that technological advances mean we get more (output) for less (time).

    And you agree that how we define the necessities of a human life expands over time.

    And you agree that the labour amplification of technology is increasing faster than our expanding definition of human necessity.

    Do you agree that the rate of technological advance is exponential? That not only is it always progressing, but it progresses more in each decade than it did in the previous decade?

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  65. Kimble (4,440 comments) says:

    I am not going to take the intervening steps when I have addressed and demolished the destination.

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  66. Ryan Sproull (7,153 comments) says:

    Well, you can lead a person to a line of logical argumentation, but you can’t make him think.

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  67. Kimble (4,440 comments) says:

    Your argument has been demolished.

    If you want to propose a new one or clarify the first, go ahead.

    But it looks like you are incapable of doing either, and are now trying to take my refusal to repeat the whole process from the start as some sort of victory.

    You arent fooling anyone.

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  68. Ryan Sproull (7,153 comments) says:

    Kimble, you have agreed with every premise so far. At some point, if you disagree with the conclusion, you will disagree with a premise or the manner in which I combine them, and then we can address that particular point.

    To refuse to continue after agreeing with so many premises so far just smacks of you putting your fingers in your ears and humming. You can’t have demolished an argument you haven’t seen yet. You’ve (repeatedly) disagreed with a conclusion I’ve stated, and now I am showing you the argument I used to reach that conclusion.

    When you’ve seen the argument, then you can demolish it. But in the meantime, your refusal to continue is like: “Waaait a minute. This isn’t the way to the park! NO NO NO, YOU’RE TAKING ME TO THE VET!’

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  69. RedJoe90 (1 comment) says:

    Any business that, in order to stay afloat, has to pay any employee below what it costs to live does not deserve to be in business. What, you thought people go to work to starve?

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