Minimum wage coverage in Europe

Germany, Denmark, Italy, Austria, Finland, Sweden, Iceland, Norway and Switzerland do not have a statutory minimum wage. Capitalist hell-holes all.

A common feature of this group of countries is the high coverage rate of union agreed minimum wages, generally laid down in sectoral agreements by employers associations with unions.

The percentage of employees covered by union agreed minimum wages ranges from approximately 70% in Germany and Norway to almost 100% in Austria and Italy (though excluding irregular workers, who make up a relatively large share of the Italian labour market). Italy has a huge underground economy.

In Denmark, the percentage of employees covered by union agreed wages is estimated at between 81% and 90%, while in Finland and Sweden, this figure is 90%.

Scandinavia is a capitalist hell-hole that every true blue social democrat must denounce without reservation. Their so called left-wing parties as traitors to the working class and to the least powerful of all workers – the low-paid and unskilled.

The poor should not have to rely on scraps from the tables of the middle-class unions. They have been deserted by their so called social democratic governments.

Whether the low-paid and low-skilled get a fair consideration from unions in collective bargaining given these unions will be driven by majority rule – by the median voter/union member who is older, senior and of high job tenure – is a question worth exploring.

The evidence is not good. In the Finnish depression in the early 1990s, the unions refused to agree to nominal wage cuts despite 20% unemployment – the worst since the 1930s. They protect those that still had a job.

Most European labour markets are dual labour markets. Unions and employment protection laws ensure that they are made up of two-tier systems with ultra-secure permanent jobs with the rest on temporary contracts.

Richard Epstein lecture on Piketty 19 June 2014


Stronger road safety laws kill more pedestrians

File:USA annual VMT vs deaths per VMT.png

Sam Peltzman likes to point out the road fatalities in the USA fell pretty much at a steady rate of 3% for the entire 20th century. There was no break in trend with the drop in fatalities  after major road safety legislation was passed by Congress in 1966.

The composition of who died changed: Peltzman found fewer drivers and passengers died but the more pedestrians were killed because drivers drove faster and with less care. Alma Cohen and Linan Einav (2003) found that seat-belt laws, in the absence of any behavioural response, were expected to save three times as many lives as were in fact saved. This shortfall because of greater risk taking is the Peltzman effect:

the hypothesized tendency of people to react to a safety regulation by increasing other risky behaviour, offsetting some or all of the benefit of the regulation.

My week without a credit card version

Credit cards

I had to go without my Visa card because it was swallowed by the ATM. It had been cloned. It took five days to replace

Talk about going back to the mid-20th century. I had to remember to carry cash, how much cash I would need each day, how much would I need for emergencies.

Wallet with New Zealand Money  - Stock Photo

I had to remember how much I spent day to day and then budget for this and that. I never had thought about that much before. Carrying cash and remembering how to budget your wallet every day is a skill that I lost 20 years when I got my credit card.

This is was in my home town. Imagine the horrors if you were abroad and having to travel without a credit card.

Last time I had to do that was in Japan in 1993. Credit cards are not widely accepted in Japan. Cash is king. There were a few international ATMs in Japan at that time, maybe three in all of Tokyo.


On independence, Jamaica was rated a better prospect for economic development than Singapore!

Upon Singapore’s independence in 1965—three years after Jamaica’s own establishment as a nation—the two nations were about equal in wealth: the gross domestic product (in 2006 U.S. dollars) was $2,850 per person in Jamaica, slightly higher than Singapore’s $2,650.

Both nations had a centrally located port, a tradition of British colonial rule, and governments with a strong capitalist orientation. (Jamaica, in addition, had plentiful natural resources and a robust tourist industry.)

But four decades later, their standing was dramatically different: Singapore had climbed to a per capita GDP of $31,400 (2006 data, in current dollars), while Jamaica’s figure was only $4,800.

Josh Lerner

Both countries were ruled by political parties that were members of Socialist International.

Both countries had a Prime Minister who held office for a long time in the period after independence. Both countries had a father and son follow each other in short order as Prime Minister.

Alchian and Allen on the irrelevance of economists and economic principles to progress


W.S. Jevons and peak coal

HT: The Oildrum

In The Coal Question from 1865, William Stanley Jevons examined for how long British prosperity could rely on cheap supplies of coal. His estimate was that within a hundred years, or perhaps one or two generations, coal production would decline due to increases in the cost of mining.

Picture of jevons.jpg

Given that coal was a non-renewable energy resource, Jevons raised the question

Are we wise in allowing the commerce of this country to rise beyond the point at which we can long maintain it?

His central thesis was that the UK’s economic prosperity was transitory given the finite nature of its primary energy resource, which was coal.

I must point out the painful fact that such a rate of growth will before long render our consumption of coal comparable with the total supply. In the increasing depth and difficulty of coal mining we shall meet that vague, but inevitable boundary that will stop our progress.

Although British coal production peaked in 1913, plainly Jevons got peak coal wrong in terms of limiting economic growth and this Industrial Revolution.

Jevons failed to appreciate that as the price of an energy source rises, entrepreneurs have a growing incentive to invent, develop, and produce alternatives, use coal more efficiently and develop technologies that cut the cost of discovering and mining resources.

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