Minimum wage and social welfare

Last week the Government announced that New Zealand’s minimum wage would increase 50 cents to $15.25 per hour on 1 April (2016).

The starting-out and training hourly minimum wages rates will increase from $11.80 to $12.20 per hour. It is set at 80% of the minimum wage.

“An increase to $15.25 per hour will directly benefit approximately 152,700 workers and will increase wages throughout the economy by $75 million per year.

For a 40 hour week that works out at $610. Annually it is $31,720.

“With annual inflation currently at 0.1 per cent, an increase to the minimum wage by 3.4 per cent gives our lowest paid workers more money in their pocket, without imposing undue pressure on businesses or hindering job growth.

“The Government has increased the minimum wage every year since coming to office, from $12 to $15.25. This is an overall increase of 27% compared to inflation of around 11%.”

New Zealand was the first country to set a minimum wage, in 1894. Relatively we have one of the highest minimum wages in the world. The current Australian minimum wage is higher at A$17.29, but is as low as US$7.25 in the USA (it varies state to state).

Yesterday Radio NZ had a debate on at How high should the minimum wage be set? (link to audio there).

Eric Crampton, who is an economist and the director of the New Zealand Initiative…

…said among developed countries New Zealand already had the highest minimum wage in relation to the average wage.

Mr Crampton said it was unreasonable to set the minimum wage high enough for people to live off it without any subsidy.

“I don’t think that there is any problem that is solved by the minimum wage that is not better solved through things like wage subsidies and Working for Families,” he said.

The minimum wage was poorly targeted and welfare systems were better placed to support lower-income workers, he said.

“We should look at where the burden of supporting lower productivity or lower income workers should fall,” he said.

“Should it fall on the employers and customers of firms that supply goods and services that are produced by lower income workers? Or should it fall on the tax base more broadly?

“We’ve got a tax system that’s progressive – it tries to spread the burden to where it can be afforded. When we instead put that burden onto employers of lower productivity workers, we knock them out of work.”

Former MP Laila Harré, now the co-owner of a living-wage restaurant…

…said full-time workers should not need to rely on government handouts.

“If people go to work, one should expect to learn a living from that job,” Ms Harré said.

“We have many non-viable businesses keeping themselves viable by surviving on these incredibly low rates of pay, [and] often extraordinarily dangerous working conditions.”

University of Auckland economics professor Tim Hazledine…

…said businesses generally had a great degree of ingenuity to adjust to change.

New Zealanders had a social and cultural expectation that adults should go to work and receive a living wage, he said – and the economy could adjust to that.

The Living age Movement Aotearoa New Zealand increased their suggested minimum to $19.80.

The Movement calls on Government, employers and society as a whole to strive for a Living Wage as a necessary step in reducing inequality and poverty in our society.

Striving for a ‘living wage’ is fine. Whether a much higher minimum should be imposed is debatable.

A problem with a set ‘living wage’ is that one size doesn’t fit all workers.

And if it is set too high then some businesses (and jobs) may not be viable, so the risk is that it would result in higher unemployment and make it more difficult for low skilled and especially young people to get jobs.

New Zealand also has an extensive and increasingly complex social welfare system that supports the unemployed and the unemployable, and also substantially subsidises many low paid (and not so low paid) workers through Working for Families.

Working for Families on it’s own is complicated enough with four types of payments:

  • family tax credit
  • in-work tax credit
  • minimum family tax credit
  • parental tax credit.

As well as that Accommodation Supplements are available and their are subsidies available for pre-school and out-of-school care.

Few would argue over having a minimum wage, although the level will always be debatable.

A higher ‘living wage’ is much more questionable except as an aspiration.

Both broad and targeted social welfare to some extent is expected in a modern society but the levels and availability will always be up for debate.

One problem is that social welfare tack-ons make it increasingly complex, at risk of being in inefficient use of taxpayer resources.

Some call for a Universal Basic Income (UBI):

An unconditional basic income (also called basic income, basic income guarantee, universal basic income, universal demogrant, or citizen’s income) is a form of social security system in which all citizens or residents of a country regularly receive an unconditional sum of money, either from a government or some other public institution, in addition to any income received from elsewhere.

A UBI may simplify things but would be difficult to transition to if it meant (as it would probably have to) that some people would get less than they do now, unless it was encumbered with supplemental assistance.

It’s easy to tack on increases, but reducing benefits and subsidies when people have adjusted to and become reliant on current income and welfare levels is tricky and risky.

Some sort of overhaul and simplification of our wage and welfare systems has some merit but would be very difficult to implement unless the country suddenly became rich enough to pay a lot more.


  1. Pantsdownbrown

     /  7th March 2016

    Former MP Laila Harré, now the co-owner of a living-wage restaurant
    …said full-time workers should not need to rely on government handouts.

    “If people go to work, one should expect to learn a living from that job,” Ms Harré said.

    Funny how Laila has only just raised her staffs wages to the old living wage the same month the new living wage is unveiled:

    “She said most of her six part-time waiting and kitchenhand staff earned $16 to $17.50 until this month”.

    If a living wage was so important why did she not pay a living wage to her staff when she first had an interest in the business? This same time 2 years ago she was also promising to lift all her staff to a living wage:

    “Ms Harre, a former Alliance MP and unionist who recently resigned as the Greens’ policy director, said she and her partner, Dr Barry Gribben, made support for the living wage a condition when they bought into the business in December”

    Four of the six staff earn over $18.80 an hour, with only Ms De Oliveira and a bartender below it.

    “We just need to increase volume [customers],” Ms Harre says.

    She’s a hypocrite.

    • Alan Wilkinson

       /  7th March 2016

      “We just need to increase volume [customers],”

      Harre discovers rewards depend on productivity after a lifetime of pretending they don’t.

    • Of all the things in the topic to pick up on, all the meaty stuff in there to discuss, and you two choose to attack Laila Harre. Unbelievable.

      • Alan Wilkinson

         /  7th March 2016

        Really? When her comment exposes a lifetime of deceit? Why not deal with the obvious first before tackling the contentious?

        • kittycatkin

           /  7th March 2016

          I wonder what will happen if the restaurant doesn’t do better business ? Will the wages go back down ? It would not make me go to a restaurant to which I wasn’t going to go anyway.

          It seems odd that she would own a business, anyway.

      • Laila Harré is a fine woman and the food at IKA is very good. In my experiences with Laila I’ve found her to be like any other political ideologue except she can cook and a lot of younger people respect her. She was brave to front the Internet Party. She’s had a long career on the Left of politics. Her character is many steps above those who smash her the most i.e. Mr Slater.

        I think any move by a business owner to pay their staff well should be applauded.

        IKA is an interesting venture. I imagine some of the song nights are a veritable delight XD

        Personal attacks being what they are and the non-presence of any lively or indeed readable debate except between the likes of PZ, Alan, Mefrostate, Jamie and PG have me a mite dismayed at some of the blog users here.

        I’ll stop commenting for a while so my presence doesn’t bring drama and wait for my own stuff to finish.

        Onwards! 🙂

        • Alan Wilkinson

           /  7th March 2016

          Don’t stop, Ben. Your views are always interesting. Just ignore the muck or deal with it as you wish.

          You like Laila and obviously know her much better than I do. I always found her speaking style rather grating like a lawyer pushing an angle but being deaf you would have judged her on different criteria.

        • Pantsdownbrown

           /  7th March 2016

          I agree Ben – I think we should all pat Harre on the back for taking money from a capitalist criminal (the type she has always railed against during her long career) and turning a blind eye to that same capitalist treating his own house staff like 3rd rate citizens – all admirable qualities.

      • Pantsdownbrown

         /  7th March 2016

        PZ “Of all the things in the topic to pick up on, all the meaty stuff in there to discuss, and you two choose to attack Laila Harre. Unbelievable”

        I think you, ben and some others have missed the point of my post (from going straight into defensive mode) – though Alan picked it up.

    • jamie

       /  7th March 2016

      Struggling to find the hypocrisy in what you’ve quoted there, PDB.

      Is your issue that she should be paying more or less?

      • Pantsdownbrown

         /  7th March 2016

        Simply put: For years she has wanted it made compulsory that businesses pay a living wage regardless of whether it is affordable for them to do so whilst at the same time running her own business that has paid some of its staff below living wage for years saying that it wasn’t economical for her to do so.

        • jamie

           /  7th March 2016

          I don’t know what you mean about “compulsory” and “whether it is affordable”.

          Is that something she actually said?

          As I understand it the living wage campaign is one of encouragement rather than compulsion.

          having said that, I think it’s a good thing that she pays her staff well above the minimum wage. If that’s what she advocates and that’s what she does then good on her.

  2. Myself and Mefrostate had some “to and fro” about this late last night. I am looking forward to hearing more from many commenters, I guess Mefrostate and Alan come to mind, but others too – anyone, of course – but are you still with us dave1924? I’ll just have a rave.

    I have to say I am sceptical about this “low-wage supplements” idea, although I see the rationale behind it and I see its virtual inevitability. Why sceptical? Well, for many years we’ve been told that both wages would increase (per worker &/or industry) and social welfare payments reduce (per “new worker” & overall) – allowing taxation to reduce – commensurate with the success of neoliberal economic reform. None of these things has happened in relation to cost of living. Both wages and welfare benefit levels have probably slid backwards? Or benefits slid backwards, wages and taxes remained static?

    We all know even this is not the whole story. The overall cost of welfare has actually increased dramatically with the never ending addition of targeted benefits, most notably the various provisions of WFF and ever increasing housing supplements. Most of these are supposedly to compensate for poverty, and one can only assume this means poverty generated by the very neoliberalism which is supposed to fix poverty? Liberal economics is already being “propped up” by welfare to an extent that may never have been properly measured?

    Now a policy of additional targeted “supplements” is suggested by someone representing an organisation – The New Zealand Institute – one might reasonably expect to be supportive of the original neoliberal ideas of “trickle down” and “social improvement through efficiency and competition” and all the rest, the “free market” ideology?

    It looks like an admission of failure to me? This may be a very positive thing, a beginning point for discussion? However, I can’t imagine it pleasing anyone much at all. Perhaps employers of low-paid workers, removing the burden from them? Perhaps some consumers, low prices will come under the auspices of tax maintenance like higher rents are already?

    Then, of course, there’s the giant elephant in the room. How will this be paid for? How can this be done without increasing taxation? If Crampton-NZI think it can be, why aren’t we talking about extensive reform of our tax and transfer “redistribution” system, rather than more add-ons?

    Every add-on costs more money to administrate and employs more government bureaucrats. Will the resulting decrease in unemployment be attributed to a rise in productivity and efficiency by low-paid workers because of welfare supplements? If so it will not be the case.

    I might as shoot myself in the head as mention his name here, but IMHO, one of the several useful things about Gareth Morgan/Susan Guthrie’s ‘The Big Kahuna’ is their analysis of our “piecemeal” tax and transfer system. “Piecemeal” might be called a massive understatement? It’s a bloody mess!

    “We’ve all but lost sight of why we tax and transfer in order to redistribute, the extent of redistribution that we deem desirable and whether or not we achieve those objectives” pg 9.

    Always ask, is there a hidden agenda? I suspect so. It may not be very hidden either. Mefrostate has already asked me about it, vis, the removal of a miniumum wage entirely.

    Okay, well, if we want to do something really retrograde, let’s do this? Introduced in NZ in 1894. Let’s have no minimum wage, allow the free market to decide wage levels, and make up the shortfall of “living wage” with welfare supplements paid for in reality – if my understanding is correct – only by the upper 5% or 10% or something of taxpayers, because all the rest are effectively non-taxpayer beneficiaries of the system? Okay, well, one might argue its just an extension of what we’re already doing?

    What I hear is: We’ve joined a global marketplace – which will not tolerate tariffs and import restrictions and that stuff any longer – where the primary competitive advantage is cheap labour. We must have this cheap labour. All other costs are already at rock bottom. So instead of subsidizing industries or regions or Kiwi workers in general (e.g. at border) – maintaining higher wages and prices – we’ll subsidize or “supplement” employers in workplaces and industries allowing them to pay workers less – maintaining lower wages and prices. Someone’s gotta pay either way. Surely this is a wage subsidy, isn’t it? It’s almost like State Owned Enterprise fake Free Marketplace?

    It’s a way around the non-acceptability of “protectionism” by realigning it and calling it something else? I’ve read predictions this is what some nations will do to circumvent some of the removals of protection in TPPA?

    I’ll go along with it, of course, I probably have no choice. But it sounds like the ultimate lose/lose to me. If we do this, I want us to stop calling it neoliberalism, stop calling it capitalism, free market, “prosperity”, stop calling it “efficiency” … stop with the f#&king bullsh@t. Accept that your taxes may increase too!

    And this is not even to begin to address the question of how you “guarantee” welfare will actually support a “basic standard of living” and “opportunities” to “climb the ladder”?

    Raved way too much …. Sorry …. My opinion is not fixed …. just sceptical ….

    • Alan Wilkinson

       /  7th March 2016

      I am wary of solutions in search of a problem, which is what I think the Universal Basic Income is. Needs, and the weight we give those needs, vary dramatically which is why our welfare system is so complex.

      I like Crampton’s focus on principles, but Hazeltine also has a point that businesses are better able to adapt and find solutions than bureaucracies.

      Obviously the problem is so difficult that every nation has struggled to find an acceptable solution over many years.

      I’m inclined to take as a starting point that poverty is the consequence either of bad ideas, deliberate choice or misfortune and the appropriate action is different for each though there is some overlap between them.

      Bad ideas: provide a supported but incentivised escape route;
      Deliberate choice: leave as is;
      Misfortune: provide ongoing support as needed.

      • @ Alan – What you say makes considerable sense. But WFF doesn’t fall into any of those categories, does it? It is “making up for systemic deficiency”, surely? And why make it so complicated, requiring extra administration? By comparison, what was wrong with the old standard Child Allowance (or whatever it was called)? This could be means tested if that’s what “tax credits” are about?

        I don’t know. I only have half-baked ideas, information and suspicions about all this stuff. Here’s another thing I think. See if it makes any sense to you?

        If we were going to have wages without subsidies and supplements, or UBI + wages for that matter, something much closer to a “level playing field”, we’d surely have to, or want to, ensure that whatever the income is it can buy the necessities of a basic standard of living? This would have to include owned or rented housing? Food, clothing … etc etc.

        This surely must be some sort of ideal?
        Income = Necessities (at least)? Preferably more than just necessities?
        Why work otherwise? The alternative is like saying, “you can work all week but it won’t be enough to keep yourself.” This is a great message to send to the next generation, isn’t it?

        Today we are very far away from the ideal and more supplements to compensate for low-paid employment only takes us further away.

        This is why I get the feeling it is just another “finger in the dyke”

        • Alan Wilkinson

           /  7th March 2016

          Obviously the fundamental problem with welfare is that it reduces incentives to be more productive. However you dress up your solutions that issue is the killer.

          Any proposal for change needs to address it and at least manage it.

          • @ Alan – I know I shouldn’t ask you to provide evidence to my own question. I’ll ask it first and then go in search.

            1) Is there evidence that welfare actually reduces the incentives to be more productive?

            2) Is there really evidence that increased productivity (alone or even partially) will overcome the inadequacies and deficiencies of the neoliberal-mixed-social welfare system?

            Where in the First World has productivity accomplished this?

            I suspect the desire for automation is largely driven by the realisation that limits of individual human productivity have been reached in many instances. People, strangely, need to feel more than just “productive” to feel fulfilled and satisfied maybe?

            • Alan Wilkinson

               /  7th March 2016

              Re 1, apart from the obvious logic:

              Re 2, increased productivity gives both individuals and the state more resources. Beyond that, your question wanders into undefined territory.

            • Germany – particularly West Germany in answer to your question 2.

              Yes I am still around – just not commenting as much as I don’t like the trolls on the site and I suspect a number of peoples motives

            • @ dave1924 – Gooday! Okay, I take your point. So when are we talking about West Germany? Because surely there are two and maybe three factors which are peculiar to Germany? (Perhaps all nations have peculiarities?) But maybe some of these are outside the parameters of simple “productivity”?

              1) Post-War reconstruction? The Marshall Plan. Foreign aid.
              2) Massive immigration?
              3) Reunification? [You may not be including this?]

              Interesting Wiki on the subject –

              It looks pretty up and down to me. Certainly some extreme growth in the 50s and 60s. Germany became more and more Keynsian for some years until they began their version of neoliberal reform? It’s apparent success in the late 1980s is somewhat difficult to continue analysing because there it ends with reunification.

              But I take your point, honestly I do. It’s interesting there was a post-War Japanese economic miracle as well?

            • Mashall plan got the country back up – doesn’t account for their focus on high value goods and high end engineering. That is something intrinsic to the german work ethic and desire to produce quality

              Massive immigration? Well yeah a lot of ethnic cleansing by the Soviets pushed a lot of ethnic Germans East to West 19945-46. But I suppose you mean the the Turks in the 80’s to do the dirty low paid jobs?

              Reunification has slowed the old West German down in some ways. East German is really only getting integrated now

              Japan – US investment in the 40’s and 50’s but that is a diversion, though I see you maybe be say you need to destroy a country before rebuilding it to make it successful?

              But the point you are missing is this PnZ. Productivity in Germany is HIGH because their do value add, they invest in mechanisation/robotisation, the do design to make their pricey consumer goods desirable, they build high quality to attract repeat business – couple that with a Union movement that wants to work WITH the owners and you get a different outcome than NZ. you get large revenue that can support higher wages… which fuels the domestic economy via workers spending

              We focus on commodities, no bad thing as we are good at some of them and efficient, but that makes us price takers. We need more Icebreakers, Orion Healths, Xeros, Jackson, value add agricultural business – more value add here to grow the whole pie and allow the essential but poorly paid jobs to be paid more.

              Personally one a small government, less welfare, much lower taxes and a focus on growing businesses so everyone can benefit.

            • @ dave1924 – Fair enough. One thing – I sense an implication, if not an explication in your comment, that poor workplace relations are always entirely the fault of Unions?

              The owners always want to work WITH the Unions, or non-unionised employees for that matter, and the Unions are always AGAINST them. Not so I think. I suspect antagonism goes both ways, there’s people with good and bad intentions, poor communications skills and abrasive attitudes in each bunch?

          • Mefrostate

             /  7th March 2016

            Right, so the question is whether Crampton’s proposal better targets the problem we’re trying to solve (poverty, both for the unemployed and working poor), and whether it creates incentives to be more productive.

            I’d suggest that with the right combination of income supplements and abatement rates, his policy would do better at both of the above than a high minimum wage.

            • Alan Wilkinson

               /  7th March 2016

              With the caveat that such targeting depends heavily on bureaucracy’s skill and implementation.

            • Mefrostate

               /  7th March 2016

              Sure. As is the case for all state support.

      • Pete Kane

         /  7th March 2016

        “I might as shoot myself in the head as mention his name here, but IMHO, one of the several useful things about Gareth Morgan/Susan Guthrie’s ‘The Big Kahuna’ is their analysis of our “piecemeal” tax and transfer system.”

        I quite agree. What I hope though is that as a UBI debate unfolds (and it will) we do not become to prescriptive too early. The concept of ‘income’ is one of the (if not the) great challenge of out time.

        “I am wary of solutions in search of a problem, which is what I think the Universal Basic Income is.”

        I couldn’t disagree more

        • Alan Wilkinson

           /  7th March 2016

          Surely there are so many devils in the detail the UBI appeal to simplicity collapses. UBI in Kaitaia doesn’t pay the rent in Auckland. Sick and handicapped children need extra funding. Couples live cheaper than singles. Welfare tourism beckons. The incentive to work conflicts with the living wage.

        • The problem with the UBI in my view Pete is that IF you tear down the current rotten welfare edifice [ I compare it to the hull of a ship which has been in the water too long and is encrusted with all sorts of barnacles and weeds and moulds which slow the Ship of State down] and replace it with the UBI, that as sure as dollars to donuts there will be calls almost immediately for additional supplements and the cycle of random additional benefits will restart.

          Free stuff attract free loaders – and in modern society where everyone is “special” and there is no losing, then whining to get more is the inevitable consequence of “special” people feeling they have lost out somehow and that is “not fair”

          In theory a UBI is not a bad thing IF coupled with a low Tax [personal, sales, CGT] structure AND with a no more tops for the able bodied – i.e. you choose not to work its the UBI and no more. Its Utopian idealism and being a bit of a cynic I see it collapsing under the weight of the pressure of whining about not enough money to live on…. and almost immediately [within 5 years]

          And agreed Morgan/Guthrie in the early chapters of Big Kahuna do a great job of mapping the ever expanding nature of taxation in this country since the late 1800’s

          • Pete Kane

             /  7th March 2016

            Hi Dave .sorry running around a bit, will come back in full. (Just had last reply wiped – not even address). I honestly think this is the across left/right divide to how we deal with “what’s needed’ in a thoughtful way in terms of income for the time ahead. talk soon. Very best wishes – and to Alan, his point is critical.

  3. Zedd

     /  7th March 2016

    methinks if Team-Key thought it was popular enough.. they would scrap both the ‘minimum wage’ & the dole.. & ‘let the plebs fight for the scraps falling off their top tables !’ :/

    ho hum…. 😦

    • Zedd

       /  7th March 2016

      … this is why they are still pushing a ‘Dickensian-style’ ZERO-hour contract… ‘nothings guaranteed.. for ‘the workers’ !

      oh dear 😦

      • @ Zedd – Cynic!!! Nah, just kidding. 🙂 Really though, in the Lockean, Rothbardian economy, nothing is guaranteed for anyone, workers or employers, except that a portion of the population have greater accumulated wealth and an expectation of higher income?

        Well, theoretically anyway. The wealthy probably have social ‘class’, status connections and nepotism in their favour too? :-/

        Transposed back to an agrarian human (pre-money) ecology, I guess this uncertainty equates to the uncertainty of food supply, the possibility of crop failure, famine and the like?

        Nonetheless, it doesn’t explain to me why we wouldn’t TRY to take the uncertainty out of it? Try to “guarantee” it for everyone? We’re an scientific-industrial-information economy now, hardly masters and serfs. 😦

        That’s the part I don’t get, and when I don’t get something I next ask, “Who benefits most from things remaining as they are?”

        • Alan Wilkinson

           /  7th March 2016

          “Who benefits most from things remaining as they are?”

          The answer depends directly on the alternative. Or to put it conceptually, on the inequality vs poverty surface. For example increasing the minimum wage may benefit many a little and harm a few a lot.

          • kittycatkin

             /  7th March 2016

            Anyone who uses the expression Dickensian should read about the 19th century before they apply to this one and anything in it.

        • Zedd

           /  7th March 2016


          Mind the Gap.. BUT, what can we expect from a Govt. who only cares about the top 50.1% who are keeping them in power & shits on the rest ?

          btw; you’re not the first person to call me a cynic..(even in jest) BUT “I sez wot I seez !!!” 😦

          • @ Zedd – Sorry! And sorry, I don’t get the “Gap” reference? Ohhhh, maybe I do! But didn’t you ask me to call you a cynic once? Or was it Jamie?

            Anyhow, I like wot you sez wot you seez! K? 🙂 No offence meant.

            I tend to agree about 50.1%, which I also discern in almost everything Doc Newman utters. “Exclusion” rather than inclusion. I personally think the further Right you go the more you encounter this. I suppose the counter-argument is people “earn” inclusion? Conform and you will be included?

            A feeling of inclusion, eg participation in sports and arts, has measurable benefits in positive individual and civic behaviours, according to both CreativeNZ and Arts Council England (regards arts) – just one example.

            Imagine if harmless cannabis users felt included rather than excluded from our society? :-/

  4. kittycatkin

     /  7th March 2016

    In a small business-or any business-there will be a finite amount of money for wages, and if the amount paid to workers is raised by law, it is likely to mean a sinking lid policy. If it costs the equivalent of an extra worker on the staff-when a worker leaves, they won’t be replaced. QED.

    • @ KCK – Yes, and I guess maybe the choice is very simple? Pay more for your cuppa coffee or supplement the low wages from your taxes? Which will you choose?

  5. kittycatkin

     /  7th March 2016

    When is it a zero hours contract and when is it being on call ? If it suits someone to be first in line when there’s some work going, then that should be their decision. If they need full-time work, they won’t be interested in being on call. When I worked as a relief teacher, there were no guarantees that I’d be working on any given day and I knew that.

    • Alan Wilkinson

       /  7th March 2016

      As I understand it, the distinction is whether the employee can decline to work when offered. The zero hours contract supposedly requires the employee to be available without committing to any offers.

    • I wonder if employees really feel as if they have any choice in these situations? Let’s say you’ve grown up in poverty in South Auckland or something? Let’s say the education system has failed you? I’m just hypothesising …

  6. @ Alan & Mefrostate – this Wiki link is very interesting too –'s_effect_on_poverty

    Clearly whether welfare is a trap and its effects on poverty are debatable, although the weight of evidence seems to fall in the affirmative in both cases. So welfare has a mitigating effect on poverty and is also a negative-productivity trap? We are proposing to extend it? Okay. An interesting statement from the above is –

    ” … in essence, social welfare policies cripple the capitalist system and increase poverty. By implementing public or cooperative ownership of the means of production, socialists believe there will be no need for a welfare state”

    I’m fine with our government removing the minimum wage and introducing supplements, provided my Prime Minister stands up and makes a speech something like this –

    “The promised ‘trickle down’ economic benefits of Rogernomics, Ruthanasia, market reform and libertarianism have not eventuated. We are also so fully committed now to globalisation we couldn’t extricate ourselves from it even if we wanted to.

    All along we have found widespread redistribution, accommodation subsidy and supplementary welfare payments necessary to maintain low-paid employees basic living standards plus, for the purpose of (perceived) equity and Party popularity, many of these taxpayer funded advantages were also extended to middle income earners. The burden of this welfare falls disproportionately or “progressively” on a tiny percentage of high income earning taxpayers.

    Today we acknowledge the failure of the Free Market system and instigate even more taxpayer funded supplements in order to expiate competitive advantage for some of our industries. The benefits have not trickled down to you lowly paid workers, so we are forced to flush them down to you.

    Taxes will increase somewhat across-the-board to pay for these measures and their complex administration, largely forced upon us by neoliberalism and globalisation, the very things which were supposed to fix the system and make it independently “market” viable. Our lack of foresight and reliance on severely limited ideology has come home to roost.

    We can no longer rationally or realistically call our system Free Market or even Market-Oriented, we must refer to it as State-Market-Welfarism and this is how it shall be known henceforth. It can correctly be called a two-tier system. Unfortunately, not a Free Enterprise Market system with Welfare Safety Net, but one system for profitable businesses paying higher incomes; and one for less profitable businesses reliant on low income employees, industries we need to be competitive in the global marketplace. We will not allow any business to go unprofitable” …. and on and on it might go … I wonder what might be in it for the unemployed …?

    It has to come to a end sometime I guess … By rights I should welcome it but I find I am sad and angry …”They sentenced me to thirty-one years of boredom, knowing we couldn’t really change the system from within …”

    I predict something like this aimed at farmers, effectively the reinstatement of a kind of farm subsidy, will come next ….

    Raved on again!!! Damn!

    • ”They sentenced me to thirty-one years of boredom, knowing we couldn’t really change the system from within …”?????

      “They sentenced me to twenty years of boredom for trying to change the system from within. I’m coming now, I’m coming to reward them. First we take Manhattan, then we take Berlin.” Leonard Cohen

      When are you taking Manhatten PnZ and when Berlin?

      • dave1924 – Part of me thinks they will “take” themselves down. This system will collapse.
        That each “buttressing” of it after each boom and bust cycle will eventually result in a complete bust. Or, alternatively, the rich-poor iniquity will reach a point where it triggers radical regime change or possibly revolution?

        That won’t be the case if greater than 51% (or some majority %age) continue to reap its rewards or want to enough to support it.

        Part of me thinks the ruling elite have such absolute control over it they can essentially do exactly what they like and no-one can prevent them. It might be possible to influence them somewhat through so-called ‘democracy’, I don’t know.

        Part of me doesn’t care. I just get a good buzz out of the song!

        • I like the song… Cohen is a great writer

          If you are going to take something down, you need something coherent to take its place otherwise anarchy and rule of the jungle will prevail….a mixed economy with a harnessed capitalist beast yoke to a light social infrastructure works well. Extremes deliver only failure

    • Mefrostate

       /  7th March 2016

      PartisanZ, you seem eager to take this specific policy debate and expand it into some general proof that neoliberalism itself has failed. It just seems like a big leap into a different topic, and one I’m not prepared to have.

      The real topic here (in my opinion is): in today’s economy, what is the best policy course to improve outcomes for those whose labour is low-value?

      • jamie

         /  7th March 2016

        I agree that that is the immediate issue.

        However if the answer is anything other than “pay them more for their work” then certain obvious questions about the efficacy of the system do become relevant.

      • @ Mefrostate – I know you are highly academic or something. I can’t match you there. I’m likely to just piss you off some more now. You may not wish to read on …

        So, okay, I agree this is the immediate issue. I also agree with Jamie above.
        I also sense a trap. Not one laid by you (I hope) but implicit in the Crampston argument.
        These are the options: Higher minimum wage = consequences. Targeted supplements = lesser consequences. Now choose?

        Is putting up the price of the cuppa coffee an option?

        This has actually happened where I live. Here you can buy superb Home-Made pies at the cafe. They used to be $6 but recently went up to $8. I cannot justify buying them any more. On the rare occasions I can afford a pie I have no choice but to buy a Commercial pie at the dairy for $3 or $4. I don’t know whether HM pie sales have suffered, only that I have.

        I have no choice but to reserve my opinion. I am simply not prepared to say, “Yes, let’s do away with minimum wage legislation”. I can’t do it. Maybe someday …. dunno …

        As I said last night, I know for absolute certain low-wage rates will go down, sure as the sun will rise tomorrow. Lower wages = higher supplements. Can wages more reliably be said to achieve the objective of paying for Basic Living Standards than targeted supplementary benefits? Or vice-versa. Which better reaches the mark? If its wages, put the prices up and lets live in the real world.

        I didn’t listen to the whole Crampton interview so I don’t know. Maybe we’re not talking about paying the supplements as money? Maybe this is like the Youth Benefit, where it gets loaded onto a WINZ card and you can only use it for certain purchases. This’d be a good thing for low-paid workers eh?

        What happens when the effective hourly rate for being a street beggar in Auckland (or any large town/city) beats finding work? “Oh, on any good day I can earn $8 an hour busking or just plain begging.” I can still get the benefits but I’m effectively self-employed, off the grid?

        We didn’t get where we are today just because of the excessive, unreasonable, unrealistic demands from greedy workers and even greedier Unions. Much of our (and England’s) original employment legislation was to protect workers from exploitative, dangerous, greedy, vicious, heartless employers and society’s other agents of abject usury.

        Now a tendency back towards that except supplemented by the State, for the sake of falsely maintaining low-prices. Is this going to result in dave1924’s “high value added” economy …. I doubt it.

        I can’t do it. I just can’t agree to it. And damn right I’m angry. I never for one moment, one nano-second believed the lie of 1984’s “end game”. We never needed to do that brutal shit we did then to our own way of life … You can do things gently, even in politics and economics. My main-man Michael Joseph Savage proved it to be so.

        • Mefrostate

           /  7th March 2016

          You’re fluent in prose, but I only speak economics. Let’s leave it there, as our heads are in entirely different clouds.

          • I’m happy to stay out of future debate on this subject so you can talk economics with others. I hope it gets some more airing. I’ll be interested to read it if it does. Maybe tomorrow? Over and out.

            • Pete Kane

               /  7th March 2016

              Raising of the UBI debate very worthy. We’ve had good support here, left and right (both thoughtful). I’m hoping again we can do it again when I have time to participate properly. Economics is an art, not a science.

            • Pete Kane

               /  7th March 2016

              I meant to say your raising the UBI Partisan. Thank you.

            • Cheers Pete. Strangely enough, I didn’t mean to raise UBI as such. I was citing Morgan & Guthrie’s analysis of our piecemeal ‘mess’ of a tax and transfer system, which Crampton appears to me to be advocating more of? I guess UBI just comes along for the ride though …

            • Pete Kane

               /  7th March 2016

              More than just the ride I hope. That’s assuming we want us ‘all’ to share in a ‘decent’ life.