Tax Credits

dktreesea

gadgetmind wrote: »

For every share that anyone sells, there is someone who wants to buy, given the right price. This is the way markets work.

Ditto the jobs market. If you make it too expensive to do business in some territories, then companies will shrink their businesses in those territories, hence Tescos selling 43 stores in the UK alone. Keep cranking up the costs, and more and more people will be laid off.

Of course, if they are heavily skilled in things like stocking shelves, gutting fish, and pushing things, then they'll breeze into a new job paying much more than minimum wage. Or maybe start a new business that pays the "unskilled" huge amounts for doing these things, Who knows?

This is a myth. Companies tend to be efficient, especially big retail companies. They hire the minimum number of staff they can get away with, no matter what the price.


Yes, some companies may fail, but the business they were doing is still there, to be taken up by someone else. The customers don't go away because a business like Citylink fails. They just take their business to another courier firm.


Maybe a business like Caffe Nero would need to open an hour or two longer a day to maintain the same level of profits. The best value for money caf! lattes in the UK are probably Wetherspoons. Starbucks, Costa and Caffe Nero don't compete on price now, but they customers still roll in.


6 million people in the UK earn less than the living wage (just gone up to £8.25/£9.40 an hour, but at the time of the article, it was £7.85 an hour/£9.15 an hour in London).
http://www.bbc.co.uk/news/uk-34691404


We can't afford to keep subsidising businesses via the welfare system. We should remove the incentive to make everyone part time, i.e. make NI payable on the first pound earned (if the government want to give a rebate back to low income employees they can do it directly, when they fill out their tax returns) and increase the NMW to a level such that anyone on the NMW won't need a top up from the welfare system.

Generali

dktreesea wrote: »

It's getting on for 15 years since I lived in Australia and Cadburys chocolate is still cheaper here now than it was back then. But at least the state doesn't subsidise businesses in Australia, giving you a better quality of businesses as a result. Bluntly, the takeaway shops here would never survive in Australia. People who have enough money in their pockets without having to revert to the State for a top up at least have more choice on how to spend their money.


And some foods are cheaper in Australia than you can buy them here. For example rump steak. AUD$21.99 a kilo from Super Butcher. Over here, Carringtons (Yorkshire) have 2 * 250g of Aberdeen Angus rump for £14.45, a mouthwatering £28.90 a kilo. Pounds, mind you.


Plus, people won't squander money so readily that they have earned directly.

Yeah, red meat is cheap in Aus. I pay c.$10/kg for a good leg of lamb and you can buy rump steak from the supermarket for $15/kg for the cheap stuff. Harris Farm Markets, a chain of grocers, regularly has a deal whereby you can buy a beef fillet for $20/kg (£9.50).

CLAPTON

dktreesea wrote: »

6 million people in the UK earn less than the living wage (just gone up to £8.25/£9.40 an hour, but at the time of the article, it was £7.85 an hour/£9.15 an hour in London).
http://www.bbc.co.uk/news/uk-34691404


We can't afford to keep subsidising businesses via the welfare system. We should remove the incentive to make everyone part time, i.e. make NI payable on the first pound earned (if the government want to give a rebate back to low income employees they can do it directly, when they fill out their tax returns) and increase the NMW to a level such that anyone on the NMW won't need a top up from the welfare system.

what level of NMW will avoid state top up?
are you including rent, child support, disability etc etc

cells

CLAPTON wrote: »

what level of NMW will avoid state top up?
are you including rent, child support, disability etc etc

currently you get more benefits in more expensive areas to pay for the rent. This can be a huge differential. eg a £600pm house in the midlands vs a £2,400pm house in inner London. The state more or less pays all of that £1,800pm (£21.6k pa) difference

The long term impact of reducing benefits (especially housing) will be that claimants leave expensive areas (or don't migrate there in the first place)

I know one young couple who left Brixton in inner London and moved to a town outside Birmingham. Their near min wage jobs got them a better quality of life in an area with £600pm rent than a £2000pm rent area. They have now bought their own home too. Had they rented in brixton and recieved HB they may never have moved and may have received over 1 million pounds (in real terms) of housing benefits over the next 50 years.

michaels

dktreesea wrote: »

I would say they are only able to do the job for the price offered because the state is subsidising their income by paying working tax credits, child tax credits for their children and helping them with their rent and council tax.


It's about time we stopped this wholesale subsidy of businesses. I'd rather the money saved go into education.

Pricing the least productive permanantly out of the labour market is workign really well for social cohesion in France....

CLAPTON wrote: »

what level of NMW will avoid state top up?
are you including rent, child support, disability etc etc

Don't forget that a higher minimum wage will lead directly to price rises in many industries that are labour intensive and thus with those higher prices, the higher wages won't go as far as at current prices...so that minimum wage will have to be increased even further to make up....

Still 10%+ unemployment is a price worth paying for those who do have jobs to have a wage that indicates 'respect' and to ensure that families enjoy a standard of living good enough to appease those who feel that 'everyone deserves' a certain standard of living regardless of the productive potential of the country.

cells

michaels wrote: »

Pricing the least productive permanantly out of the labour market is workign really well for social cohesion in France....

Don't forget that a higher minimum wage will lead directly to price rises in many industries that are labour intensive and thus with those higher prices, the higher wages won't go as far as at current prices...so that minimum wage will have to be increased even further to make up....

Still 10%+ unemployment is a price worth paying for those who do have jobs to have a wage that indicates 'respect' and to ensure that families enjoy a standard of living good enough to appease those who feel that 'everyone deserves' a certain standard of living regardless of the productive potential of the country.

the min wage in France is 9.47 euro/hour now, in the UK it is 9.58 euro/hour (at todays exchange rate)......so not really supportive of lower min wage = more employment

in fact I think only Luxembourg is currently a higher min wage in Europe than the UK.

in a near zero cost marginal society a higher min wage just gives access to poorer people to more of this near zero cost marginal output. the nation just commands its machines to output more for the poor

michaels

cells wrote: »

the min wage in France is 9.47 euro/hour now, in the UK it is 9.58 euro/hour (at todays exchange rate)......so not really supportive of lower min wage = more employment

in fact I think only Luxembourg is currently a higher min wage in Europe than the UK.

in a near zero cost marginal society a higher min wage just gives access to poorer people to more of this near zero cost marginal output. the nation just commands its machines to output more for the poor

There are other reasons in France why it is very expensive to employ people. The impact is the same.

I would guess that for most minimum wage labour intensive industries such as carers the marginal cost is very similar to the employee wage.

princeofpounds

near zero cost marginal society

Are you kidding?


There is very little in this world that is zero marginal cost, apart perhaps from public goods like air and perhaps the electrons that drive internet entertainment.


As Marie Antoinette might have said "Let them have unlimited blog posts about eating cake".


Most real things are almost by definition high marginal cost, or at least high enough to curtail supply for a given level of demand.


Zero marginal cost society is a nice idea to sell books about e-commerce long tails and the internet of things, but I don't think it has much applicability to real life economics.

cells

princeofpounds wrote: »

Are you kidding?


There is very little in this world that is zero marginal cost, apart perhaps from public goods like air and perhaps the electrons that drive internet entertainment.


As Marie Antoinette might have said "Let them have unlimited blog posts about eating cake".


Most real things are almost by definition high marginal cost, or at least high enough to curtail supply for a given level of demand.


Zero marginal cost society is a nice idea to sell books about e-commerce long tails and the internet of things, but I don't think it has much applicability to real life economics.

Near zero marginal cost

Software film music TV radio internet mobile information education drugs water and many manufactured goods

And we are near the beginning of this. Imagine computer programs good enough to be competent solicitors doctors architects.

Also a lot of things are close to near zero marginal cost. Eg electricity is about 2p marginal cost which is about 1/7th the price.

princeofpounds

There is a huge difference between low marginal cost and zero marginal cost.


2p per kWh electricity might sound like it's nearly free. And it is in terms of keep on an LED lightbulb perhaps. But if you are using that electricity to smelt an extra tonne of aluminium - a real marginal use - it's still a vast cost, and one that is forcing aluminium capacity to close down at current prices.


That's why poorer people still have to cycle around on heavy steel framed bikes rather than picking up their zero marginal cost aluminium frames.


There is also a vast difference between no opportunity cost and opportunity cost. Watching educational videos online might be nearly-free in terms of marginal cost of the electrons.


But the opportunity cost is huge - all that time sitting in front of a computer when the person involved could be doing something else productive.


That's why we still have vastly expensive teachers and schools, rather than internet terminals we plug kids into.


Maybe this will change when we get the internet injected into our heads


Anyway, the point here is that in economics costs are always measured as real opportunity costs (when you dig down to the fundamentals; obviously for simple stuff it doesn't matter).


But I do agree that we are near the beginning of something special. In many ways, I actually think that since the industrial revolution we have been going through something, and the information revolution is very important too. Even your average welfare claimant in the UK is rich by the standards of human history.