Category: carrots and sticks

Money matters


John Key on raising incomes for low-income families, 3 News, 9 Sept 2014:

Prime Minister John Key says there’s no evidence that giving people money makes any difference.

“What really makes a difference is employment and employment opportunities,” he told reporters.

John Key on tax cuts, 3 News, 10 Sept 2014:

“Whatever the number was for an individual or a household, whether it’s $500, $1000, $1500 – you can pick your poison – I don’t accept the argument that doesn’t matter to a low- to middle-income family. I think it does matter.”


Pathetic justifications for pathetic wages

slavery minimum wageWell, they’ve passed the youth rate bill… Certain workers aged under 20 can now be paid at 80% of the minimum wage; a pathetic $10.80 per hour before tax. This comes a month and a half after a living wage was calculated to be about $18.40 per hour.

One thing I’ve noticed from the Facebook arguments I get myself embroiled in… Every time a debate comes up about the minimum wage, somebody makes the same tired point: if you raise the minimum wage too high, employers won’t be able to afford to provide jobs any more, or people with no skills will be priced out of the market, or workers will be costing employers more than they’re earning them, etc.

That’s of course true, but all it shows is that that the minimum wage CAN be too high, it doesn’t show that (or when) it IS too high.

You can’t just point out that sometimes a minimum wage can be too high and conclude that NZ’s minimum wage in March 2013 is too high (or as high as possible).  That’s not an argument, that’s just pure ideology without anything linking the theory to the present real life situation, therefore it can have no bearing on the present real life situation.  An argument would need to demonstrate that this theoretical danger is likely to happen at current wage levels, here and now… using research and evidence from here and now.

In fact, the evidence shows quite the opposite.  In the terse words of Treasury: the fear about minimum wage increasing unemployment “has not been true in the past. The balance of probabilities is that a higher minimum wage does not cost jobs”.  Increases in the minimum wage have not increased unemployment in recent history (if anything the relationship is the opposite, though it’s not a causal one: minimum wage has been kept low and unemployment pushed up by poor economic conditions and neo-liberal economic policy).

If we accept that it is desirable to have a minimum wage, we accept that it should be high enough to provide a decent living, without being so high that it reduces jobs.  The only matter for debate is where the balance is.  The Living Wage research indicates that our minimum wage is currently failing to achieve that balance, but the problem is not that it’s too high for employers to pay, it’s that it’s too low for workers to live on (and, by the way, John Key agrees).

Brownlee’s latest emission


This blog is intended to be read whilst listening to the below song.  The above picture made sense in my head, if nowhere else.

Generally speaking, I think it’s a pretty good idea to internalise externalities, by taxing activities and products that impose a social or environmental cost on the rest of the world, and subsidising those that deliver a social or environmental benefit.  So I support petrol taxes, mostly as a way to off-set the environmental damages of burning oil (particularly if the tax income is used for that purpose), and as a way of bringing the price of petrol as close as possible to the real cost (personal, social, environmental; past, present, future).  This will hopefully reduce the use of petrol, as people who have to pay for the full consequences of their transport choices will be more likely to use public transport, cycle, carpool, etc.

So the latest petrol tax increase may have some accidental environmental benefits.  Emphasis on ‘accidental’, because Gerry Brownlee doesn’t mention it in his announcement.   He openly admits what Julie Anne Genter from the Greens exposed last month; that this tax rise is primarily about covering the $1.7 billion short-fall for the so-called “Roads of National Significance” plan.  This is why the Greens oppose this tax increase; it’s not about reducing petrol use, but encouraging petrol use by sinking $14 billion dollars into un-needed, uneconomical highways.

Brownlee probably knows better than to spin this as an environmental measure, because it would illustrate a stark double standard: it would be the opposite of their stance towards business and agriculture.  For these other major polluters (and National’s main backers), they’ve shown compassion in these tough economic times, and given them longer before they have to start paying for the social and environmental costs of their emissions.  The taxpayer can pick up the tab for a bit longer.

There’s another double-standard whereby this government, who “want to cut taxes, not raise taxes” according to the John Key quote in the above Home Brew song, are relatively trigger-happy when it comes to increasing GST and other sales taxes.  Some of these do off-set (or over-compensate for) external costs of harmful substances.  But if they’re just income-gathering measures like in this case, it’s worrying that they’d rather earn income this way than by putting income tax back up, or by introducing capital gains or financial transactions taxes.  Sales taxes tend to be regressive; disproportionately hitting the poor, while the latter are progressive; disproportionately hitting those with disproportionately high incomes and wealth.

IrishBill at The Standard points out another double standard, particularly pertinent to Brownlee; they’re happy to levy the ordinary motorist to pay for their idiotic motorway plans, but they’re not willing to implement a temporary, progressive levy for the Christchurch rebuild (because of the fragile economic climate, of course… not because of their priorities, choices and philosophies).

Actually, all of these double standards reveal a lot about the political philosophy underlying this government… Ordinary people are able to tighten their belts, while the rich need financial assistance.  We all have to make sacrifices, apparently, but on a religious level, these are sacrifices to the gods of the neo-liberal market capitalism, and on a material level, they’re sacrifices to the rich.  “Socialism for the rich, capitalism for the poor” indeed.