Wise Words on Minimum Wage, Jim Buchanan edition

While the ignorant and those with their own hidden agenda are out celebrating the imminent introduction of minimum wage in Hong Kong starting this May, I dig out this reader's opinion by my former teacher Jim Buchanan to share with you to celerbrate (?!) the occasion:


"The inverse relationship between quantity demanded and price is the core proposition in economic science, which embodies the presupposition that human choice behavior is sufficiently rational to allow predictions to be made. Just as no physicist would claim that "water runs uphill," no self-respecting economist would claim that increases in the minimum wage increase employment. Such a claim, if seriously advanced, becomes equivalent to a denial that there is even minimal scientific content in economics, and that, in consequence, economists can do nothing but write as advocates for ideological interests. Fortunately, only a handful of economists are willing to throw over the teaching of two centuries; we have not yet become a bevy of camp-following whores."

James Buchanan Wall Street Journal 1996

Here is a story on HK's minimum wage:

http://economictimes.indiatimes.com/news/international-business/Hong-Kong-OKs-minimum-wage-law/articleshow/6180516.cms

Exploitation, Minimum Wage, Hong Kong

Hong Kong is contemplating to introduce minimum wage, see here.

Now, Hong Kong's economy has consistently been ranked as one of the freest economies, if not the freest economy in the world.

Economic theory tells us that the presence of competition renders it impossible for exploitation to occur. As Professor Steven N S Cheung said in his latest column:

七十多年前英国的鲁宾逊夫人（Mrs. Joan Robinson）推出雇主剥削劳工的可能性，但只可以在缺乏雇主竞争的情况下出现。 (Gary's translation: Seven decades ago, Mrs J Robinson pointed out the possibility of labor exploitation in the absence of competition among employers)

Intense competition among firms should be one of the main characteristics of a Hong Kong's free market economy. If that is the case, there should not be exploitation. And if there is no exploitation, why the government is rushing to introduce minimum wage? Something is seriously wrong here.

Oh My Go......

Three in every four Catholics agree on the need for a minimum wage law, according to a survey by the Hong Kong Catholic Commission For Labour Affairs...

So reported in today's edition of the HK Standard, more here.

If people are so eager to help out, here is a suggestion, how about setting the minimum wage at say HK$ 10,000 and and ask those staunch supporters of minimum wage to pay a special fee to top up the wages of workers who qualify for the minimum wage (the rate of the fee can say vary according to different income levels). My bet is the proportion of minimum wage supporters will drop dramatically if the fee were to be imposed.

Afterall spending other people's money (employer's) to do good is not quite the same as spending one's own eh?