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May 13, 2008



The minimum wage is an example of rent seeking by left wing politicians and economists.

John Quiggin

On the second point, there's no crowding out problem in relation to refutation of wrong ideas. Kathy's posting on minimum wages doesn't preclude you or anyone else writing on other problems with standard theory.

On the first point, crowding out may or may not be a problem. Granting, for the sake of argument that an earned income tax credit is better than a minimum wage hike, are these policies complements or substitutes? In political terms, they are probably substitutes - effort to push one is at the expense of the other. But in operational terms, the discussion at CT suggests they are complements.


Yes there are better solutions, but it still doesn't hurt to put a floor under wages (provided that floor is not too low). Otherwise you could find genuine exploitation on the rise. Of course the best way to provide that floor is GMI.


I don't know where you are going with the srgument about higher top-rate taxes.

Didn't we see this in the Harold Wilson years when we hit 90% upper tax limit? I seem to remember that there was a scampering to get out of Britain by everyone from middle england upwards.

Yes, it might have helped to create a lot of jobs, but there were no entrepeneurs atound to capitalise on it, and noone to manage them, to take risks or who were prepared to invest money.

That needs a great deal of thinking about.

Michael Petek

Part of the justification for having a minimum wage is that the market for labour is not really a free market. It is, on the supply side, a forced market because, at least in theory, people without independen means must either work or starve, and can be driven in desperation to offer themselves for work at firesale wages.


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