Unexpected Consequence of Higher Minimum Wage

[Michael Hardner]

44 minutes ago, TimG said:

The majority of people benefit from trade deals. It a gross misrepresentation suggest otherwise. Closing off trade would harm more Canadians than would be helped. 

This is not for me - but probably for MLW as a whole: can you provide a cite for this ?

Many people dispute your statement, even though it is part of economic orthodoxy.

[?Impact]

10 minutes ago, TimG said:

If Canada wants free access to other markets it must reciprocate.

I don't want free access to any market, I want fair access. Yes, nothing is easy but let's get the right goalpost first.

[TimG]

21 minutes ago, Michael Hardner said:

This is not for me - but probably for MLW as a whole: can you provide a cite for this ?

Many people dispute your statement, even though it is part of economic orthodoxy.

You are using a computer to type that which I assume cost between $500 and $1500. It was likely assembled in China with Japanese and Korean parts. A Canadian made version would be much more expensive and would still likely require imported parts. You benefit form trade because you have access to better tech at a lower cost than you would otherwise. This means a larger portion of your income can go to other things. That is a benefit.

Of course, importing tech that we can't build here requires exports to generate the foreign currency required to pay for the foreign tech (without exports to balance imports the currency would collapse and the tech would become unaffordable). We export oil and coal or farm products but we also export a lot of manufactured goods: http://www.worldstopexports.com/canadas-top-exports/ 

25% of economic activity in Canada comes from exports. If this activity was cut because of other countries did not want competition from Canadian products then companies would go out of business and tax revenues would drop (as would the currency). There is no one in Canada who does not directly or indirectly benefit from the economic activity created by exporting companies. 

Edited October 20, 2016 by TimG

[TimG]

15 minutes ago, ?Impact said:

I don't want free access to any market, I want fair access. Yes, nothing is easy but let's get the right goalpost first.

Your goalpost means nothing since "fair" is a completely subjective term. If you ask 10 people in Canada what 'fair access' means you would get 11 answers. The problem multiples exponentially when you start talking to people in different countries with different self interest. 

[?Impact]

7 minutes ago, TimG said:

Your goalpost means nothing since "fair" is a completely subjective term.

 

Let me simplify, Fair is not using borders to circumvent worker and environmental regulation.

[TimG]

11 minutes ago, ?Impact said:

Let me simplify, Fair is not using borders to circumvent worker and environmental regulation.

That is completely subjective too since different countries have completely different ideas on what the minimum standard for workers rights should be. In Canada, mandatory union membership has been upheld in courts yet in the US many states pass laws explicitly prohibiting mandatory union membership. Questions of what a fair minimum wage is or the number of working hours per week. Whether overtime means bonus pay. There is no universal standard that Canadians would agree to - never-mind people from other countries.

The same goes with environmental standards. CO2 is an obsession of the wealthy left but it is not shared by many in Canada or abroad. When you dig down in to the minutia of regulations it is impossible to find a minimum standard that is not meaningless.

[Michael Hardner]

It's hard to accept that the task of outlining basic 'fairness' is an impossible task.  Has it been tried and failed or is the task just too vague/complex to start ?  I have never seen it discussed to any depth.

[TimG]

11 minutes ago, Michael Hardner said:

It's hard to accept that the task of outlining basic 'fairness' is an impossible task.  Has it been tried and failed or is the task just too vague/complex to start ?  I have never seen it discussed to any depth.

I would say it would be as easy as getting the CPC, the Libs, the NDP and the Greens to agree on a proposal for electoral reform. 

Keep in mind that international agreements work on consensus - not majority vote. This makes the problem particularly intractable.

Edited October 21, 2016 by TimG

[Michael Hardner]

Yes, I understand that but I'm looking for a deeper examination of the problem, or maybe a history of attempts to solve it.  If that doesn't exist, then fair enough, but I can imagine such frameworks and I imagine others can too.

 

I am just asking for context here, not taking a position pro- or anti- trade.

[dre]

On 10/20/2016 at 3:47 PM, TimG said:

The majority of people benefit from trade deals. It a gross misrepresentation suggest otherwise. Closing off trade would harm more Canadians than would be helped. 

You don't have to close off trade, and trade was never closed off before we started making ill advised deals with slave states where workers have no human rights, and no representation into their own government. "Free Trade" is at best a mixed bag for North American workers.

[dre]

On 10/20/2016 at 4:54 PM, TimG said:

You are using a computer to type that which I assume cost between $500 and $1500. It was likely assembled in China with Japanese and Korean parts. A Canadian made version would be much more expensive and would still likely require imported parts. You benefit form trade because you have access to better tech at a lower cost than you would otherwise. This means a larger portion of your income can go to other things. That is a benefit.

Of course, importing tech that we can't build here requires exports to generate the foreign currency required to pay for the foreign tech (without exports to balance imports the currency would collapse and the tech would become unaffordable). We export oil and coal or farm products but we also export a lot of manufactured goods: http://www.worldstopexports.com/canadas-top-exports/ 

25% of economic activity in Canada comes from exports. If this activity was cut because of other countries did not want competition from Canadian products then companies would go out of business and tax revenues would drop (as would the currency). There is no one in Canada who does not directly or indirectly benefit from the economic activity created by exporting companies. 

Right but when the economy was a "bit" more closed, wages were increasing at a much faster pace. So we traded rising wages, for cheap stuff. Which would be fine except that lots of things didn't get cheaper. Energy, medical care, education... all have gone way up in price. The net result is that Canadians, who's wages have been stagnant for nearly 30 years, have been buying all those foreign goods with credit, and we have a 20 billion dollar current account deficit which means overall we are on the losing end of all these deals.

Also... Exports as a percentage of GDP were growing at roughly the same rate before all these free trade agreements as it has since then. There was a bump in trade following the agreement but it didn't last.

Quote

25% of economic activity in Canada comes from exports. If this activity was cut because of other countries did not want competition from Canadian products then companies would go out of business and tax revenues would drop (as would the currency). There is no one in Canada who does not directly or indirectly benefit from the economic activity created by exporting companies. 

80% of that trade is with the US, and it makes good sense to have trade agreements with them because they are our neighbor and have a similar standard of life and similar wages.

We use to try to contain countries like China  that treat their citizens like human cattle. Now we spend billions on goods made by workers who are forced to work 70 hour work weeks, and in many cases aren't even allowed to speak to each other at work. Workers that have zero participation in choosing their leaders. And they are taking the profit and spending it on a military build up. 

Free traders would have lost the cold war, because instead of isolating the USSR economically we would have imported cheap products made by prisoners in soviet gulags, and funded the Russian military build-up.

"Free trade" deals are just like any other deal. You can make a good one, or you can make a bad one.

[TimG]

3 hours ago, dre said:

Right but when the economy was a "bit" more closed, wages were increasing at a much faster pace.

All that means is you want to cherry pick winners and losers. i.e. decide which industries will be protected and "tax" all Canadians to pay higher than necessary prices for the output of those industries. Industries not special enough to be "chosen" will face higher input costs and while still facing competition from low wage countries. I guess it works great if you assume you are the one getting to choose the winner and losers. Not so good if the normal political process is used to pick the winners. 

3 hours ago, dre said:

80% of that trade is with the US, and it makes good sense to have trade agreements with them because they are our neighbor and have a similar standard of life and similar wages.

Except once you start bashing trade deals, special interests make all kinds of excuses to go after imports. Look at softwood lumber where the US has long complained unfair competition from Canadian wood. This is a good example how slippery the term "fair trade" is and why it can never be the basis for any trade policy. 

The main criteria for trade deals should be reciprocity. i.e. countries must provide the same access to their markets as they get from ours. If China does not want to allow Canadian mining companies to buy up rights in China then China should not be allowed to buy mining companies here.

[Ash74]

So much of our economy is driven by the service industry but we are all seeing signs that these jobs are being phased out.

Self serve checkouts are popping up all over Canada.

McDonald's installing computer order kiosks

I from personal experience am dealing with the cost of Hydro and government regulations. Now I can control neither of these things but what I can control is the amount of labor I use.  Minimum wage just went up in Ontario and it has really done nothing to my bottom line but the cost to keep the lights on and employees trained is a much bigger issue for my costs of doing buisness .

 

[cybercoma]

Businesses are going to eventually find out that they're killing their customer base by eliminating jobs and driving down wages. That's one of the reason growth continues to be so weak.

Edited October 23, 2016 by cybercoma