Notley’s South African Welfare Firefighters

 

 

The Alberta government, through the CIFFC, contracted 300 of the cheapest firefighters they could possibly get.

Everyone made a big deal out of these cheerful South African firefighters, who sang and danced upon their arrival at the airport. Hooray! How cool is that?

No one has said much about the fact that these firefighters were hired as part of a South African government job creation program called “Working on Fire.” They may have only been hired shortly before their departure for Canada (they arrived on May 29).

Are they real firefighters? We can’t be sure.

Once here, the workers go on strike because of their wages, which are pathetic by the standards of a comfortable Albertan (about $4 an hour, or $50 per day). Now they might all be going home.

Premier Rachel Notley says they contracted to pay the firefighters $170 per day + food and lodgings.

So the South African government is exporting its welfare firefighters and taking $120 per day off the top for each one. They must think the Alberta government is a bunch of suckers.

 

Notley, who apparently thinks everyone should pay $15 minimum wage except when her government wants cheap African thralls to fight fires, says she is going to fix everything. She claims she will somehow ensure the South African firefighters get paid the appropriate Alberta wage (which is small fortune to them — each day will equal almost a month of the average firefighter wage back in their home country).

Since the firefighters are paid by the South African government, this means the Alberta government will have to give money to the South African government. It’s probably fair to think the South African government is still going to skim “a little” off the top.

The South African government tells us not to worry, because that $4 per hour wage is just an “allowance”, and their firefighters still get regular pay at home (average 2,400 rand, or about $205 per month). The welfare firefighters are double dipping!

We’ve heard of people applying the broken window fallacy to natural disasters: “This wildfire is pretty bad, but fixing things will boost our economy!” Even those people wouldn’t be so daft as to suggest it would boost another country’s economy.

Who would have thought that a wildfire in Fort McMurray would lead to foreign aid for South Africa, letting corrupt bureaucrats enrich themselves at the expense of the Alberta taxpayer?

— Read more at CBC.ca —

 

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Local McDonald’s Is Ready for Minimum Wage Hikes

The Alberta NDP wants to increase the minimum wage to $15, nearly a 50% increase over the old rate.

We know they want to do this not to help unskilled, low-wage workers, but rather to enrich their union friends.

Obviously such laws outlaw certain kinds of employment and create more unemployment than otherwise. They reduce jobs available for the poorest, least skilled workers.

The McDonald’s location by this writer’s office has prepared for the foolishness of the NDP’s economic fiat.

mcdonks kiosk

It’s important to note that McDonald’s currently pays its new regular workers more than the old minimum wage already… but they don’t pay more than forthcoming minimum wage. So they have to get ready.

At a certain price, it makes sense to replace people with machines. Why not? No payroll taxes, fewer regulations, no training, and a lot less hassle overall for the employer.

Now when you need a Big Mac combo, you get to interact with a screen instead of being greeted and served by a smiling teenager.

And since you spend all day working on your computer or fiddling with your smartphone, I’m sure you’re desperate to stare at more screens.

I guess the happy fast food worker is just another wonderful occupation being destroyed by the knavery of politicians.

Do you remember the glorious era when you would roll up to a gas station and a helpful fellow would come out, pump your gas, check your oil, and clean your windshield all while you sat comfortably in your car? The minimum wage destroyed the gas station attendant job.

Fewer jobs for unskilled workers, and less service for consumers.

Minimum wage is compulsory unemployment. But here’s the amazing thing:

Even minimum wage proponents know this.

Otherwise, why would they stop at $15 an hour? Why not $100 per hour? There should be no argument against this if we follow the logic that government can make workers wealthier with a stroke of the pen.

Governments only raise the minimum wage to the point where it hurts the marginal workers.

They would never raise it to the point that it hurts, say, white adult male workers with union seniority. Because the entire point of the NDP raising minimum wages is to help unions.

Let’s not forget Premier Notley is a lifelong union lawyer and her husband is an official with the Canadian Union of Public Employees (Notley’s government office even returns calls made to Arab’s cellphone). We know whose side they’re on.

Hint: It’s not the side of the nice, polite young teenager who wants to work at McDonalds to make a little bit of money but isn’t yet worth $15 an hour.

Alberta’s NDP, Unions, and the Minimum Wage

When analyzing public policy, one must typically ignore stated goals and understand the economic incentives that make groups favor certain forms of economic intervention.

Unions, as a group, tend to favor market restrictions that prop up their higher wage rates.

Alberta’s NDP, led by Rachel Notley, favors unions.

evilnotley

This an important factor in the NDP arguing for a 50% increase to Alberta’s minimum wage, despite protests from the business community and anyone with an understanding of basic economic law. NDP goal to hike minimum wage has nothing to do with helping less productive workers make more income, regardless of what their stated objectives are.

Minimum wage laws are a classic form of monopolistic grants of privilege that benefit some groups at the expense of others. Despite the proclaimed objective of minimum wage laws, which is to increase incomes of the most marginal workers, the actual effect is the exact opposite — it makes them unemployable because they are not sufficiently productive to be employed at the legal wage rates. This means that minimum wages will always cause more unemployment than otherwise — any economist who denies this is either a liar or a fool who doesn’t even understand the basic principles of price controls.

Who benefits from such laws? Certainly not the marginal workers, for it becomes illegal to hire them at the wage justified by their productivity. On the other hand, anyone employed above the minimum wage benefits because their competition is reduced. In particular, unions benefit from minimum wage laws. Unions despise cheaper labor competition. Minimum wage laws remove competition of less productive workers by forcing them to be unemployed.

And there is another reason why unions love minimum wage hikes — it is a devious way to increase their own wages. This can work in many ways depending on the labor agreement. Some agreements trigger mandatory wage hikes when statutory minimum wages increase (because wages are based on a percentage above minimum wage). Others have provisions to open wage negotiations if minimum wages go up.

I am not making this up. Economic theory informs us that we should expect nothing less. But consider also a 2004 study in the Journal of Human Resources by economists William Wascher, Mark Schweitzer and David Neumark. They clearly showed that lower-wage union workers usually see a boost in employment and earned income following a mandated wage hike. And those non-union wage workers who are now unemployed or unemployable? Who cares! The union members already have higher wages and protected jobs. So what if this cruel policy leaves in its wake desperate workers who can no longer legally work?

As for the NDP, there should be no doubt that Premier Rachel Notley is a union hack. Most of her career has been in the service of unions. Consider a few facts from her personal history:

She is married to Lou Arab, a communications and public relations staffer for the Canadian Union of Public Employees[2] and a campaign strategist for the party. She lives with him and their two children in the historic district of Old Strathcona located in south-central Edmonton.[17]

After law school, Notley articled for Edmonton labour lawyer Bob Blakely, and went on to work for the Alberta Union of Provincial Employees representing members with Workers’ Compensation cases.

She worked for a short time for the National Union of Public and General Employees (NUPGE),[20] worked at Athabasca University,[21] acted as volunteer co-ordinator for the Friends of Medicare “Romanow Now” campaign, and finally as a labour relations officer for the United Nurses of Alberta.[1]

Can there be any doubt that Notley will seek to benefit her union friends at the expense of other groups in society? Of course not.

Rachel Notley and the NDP are looking to empower unions. They don’t care if they hurt society’s least productive workers, like teenagers, people with disabilities, workers with language barriers, anyone without much experience for any reason, and ethnic or racial groups that may face discrimination.

Some will argue that forcing minimum wages higher makes employers invest in more equipment and develop new technology and this will increase productivity of labor. Therefore, this improves the economy. But this is a silly argument. Capitalists are always seeking ways to increase productivity, so to think they are just sitting around waiting for the government to force price floors on labor to do so is a joke.

But even assuming the employer doesn’t just reduce his quantity of labor demanded, his investment in new capital is limited by savings in the economy. Increasing minimum wage does not increase the total supply of capital available. If anything, capital will merely be shifted from some industries to others in an attempt to offset an artificially higher cost. Capital is not being reallocated because of a market requirement, and so this is not an economic improvement.

Don’t be fooled by anyone who says they want to increase the minimum wage to help the poorest workers. The main concern motivating the NDP to increase the minimum wage is helping unions.

Anyone advocating a higher minimum wage should be ridiculed and shamed out of public office on account of sheer ignorance.

Is a minimum income “fairer” than a minimum wage?

The economic argument against the minimum wage is irrefutable. It hurts the most marginal workers by making it illegal to hire them at the market price. It helps larger, more established firms (who tend to pay more than minimum wage) at the expense of smaller, competing firms (who are more likely to pay lower wages).

Andrew Coyne, writing for the Financial Post, concedes the economic argument against the minimum wage. It hurts those it is professedly intended to help, and doesn’t help fight poverty. Yet he remains convinced that wealth must be reallocated with the government’s badges and guns — he just wants a more direct, efficient way of doing it.

He proposes a minimum income paid by the state, instead of a  minimum wage paid by employers.

This is a terrible idea.

First, we should note that nowhere in his article does Mr Coyne give a moral argument as to why the state should take property from some people and give it to those who cannot or will not take care of themselves. Anyone speaking of fairness should be expected to raise the moral issue. Economics is a technical discipline and its laws do not deal with fairness. Instead, fairness is an issue for ethics and moral philosophy.

Nor does Mr Coyne offer any economic reasons as to why charity should not handled by voluntary activities. The best case he can make is based on nothing more than a complete lack of imagination and a silly anti-capitalism cheap shot:

I think it is because people imagine the alternative is… nothing. Let people starve, that is, to sate some sadistic God of Laissez-Faire. But that is not the alternative. The alternative to the minimum wage is a minimum income: paid not by employers, but by the state.

So his only argument, if it can be called that, is that it’s fairer to have a minimum income, because minimum wages instead involve shunting off “our” responsibility for “distributional justice” onto others.

I am not sure how one tallies up the fair score for each side to see which one is fairer. Let us merely note that there is nothing positively fair about this proposal as such. For what is using the state to impose the “collective ideal” of distributional justice, other than completely unfair? Because a government taking money from one group to give to another group is a political issue — by definition, it is determined by who has the most power in a political system. That is always unfair.

A minimum income must be paid by the government, which acquires most revenue through taxation. But in democracy, the amount a person pays through taxation can only be decided with a ballot box and a gun. How is that ever fair? And “need” can never be objectively quantified, so there can never be a “correct” value for the minimum income.

Putting aside the issue of fairness, what would be the economic impact of a state-provided minimum income? It’s amazing that someone like Mr Coyne, clearly capable of following the steps in reasoning which show the failure of minimum wage laws, would yet propose something even worse.

Obviously, a state-provided minimum income is a subsidy to poverty and idleness. Therefore, this effort to combat poverty and idleness will increase poverty and idleness. As Thomas Mackay wrote more than 100 years ago, “the cause of pauperism is relief. . . . we can have exactly as many paupers as the country chooses to pay for.” Unemployment relief accomplishes the same thing by subsidizing unemployment. If you do not accept the law that subsidizing gives you more of it, then you might as well throw all of economics in the garbage.

Providing a minimum income for not working causes the labor market to be smaller than it would otherwise be — this causes the price of labor to rise. But because nothing has changed to increase the marginal productivity of labor, employers will simply hire fewer workers. One of the reasons unions support unemployment aid and minimum wage laws is to preserve their artificially high wage, below which they withhold their labor. So basically, a minimum income still has a distorting effect on wages. However, to benefit from a higher minimum wage you have or get a job at the new minimum wage. With a minimum income, you don’t have to go work — you can sit around with no pants on, playing Xbox instead.

Additionally, these social programs reduce the incentive to be a producer. All taxes imply a decrease in present and future goods, because not only are resources shifted away from the producer, but the producer’s incentive to add more value in the future is diminished . Therefore, as with all government transfer payments, such a minimum income program would systematically depress the utility of productivity and encourage the tendency to be nonproductive.  People will shift from productive, tax-paying efforts, to nonproductive, tax-consuming activities. With a minimum wage law, you still need to get a minimum wage paying job to see any benefit. With a minimum income, you can sit around with no pants playing Xbox all day. Nonproductive bureaucrats must also administer the minimum income. The entire economy would necessarily contract.

There is only one way to create “wealth” in society: to increase the marginal productivity of labor with capital investment. Shuffling existing wealth around with schemes like minimum wages and minimum incomes only aggravates the problem of poverty by encouraging people to be poor and unemployed. Men such as Mr Coyne need to consistently apply the principles that reject the minimum wage to all other forms of social welfare.

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