The gales of creative destruction are quickening

Labour productivity growth in New Zealand since 1951

https://www.facebook.com/FigureNZ/photos/pb.374053709279073.-2207520000.1449201572./1070843926266711/?type=3&theater

What is creative destruction?

US, British, German, French and Japanese tax revenues as % of GDP, 1965 – 2014

Despite neoliberalism doing its worst, tax revenues as the percentage of GDP have been pretty stable across the G5.

Data extracted on 11 Dec 2015 09:39 UTC (GMT) from OECD.Stat.

Nothing has happened to tax revenues as a percentage of GDP in Germany for a good 40 years. The same pretty much goes for the USA as well but with some ups and downs around the time of the GFC.

Margaret Thatcher’s time as Prime Minister coincided with the fall in tax revenue as a percentage of GDP but John Major did his best to reverse that.

French taxes have been steady since 1981 but started to increase as a percentage of GDP after the GFC. Tax revenues also increased in Japan as a percentage of GDP after the GFC.

Manufacturing as a proportion of GDP

The long-term effects of vaccines

Why didn’t @MaxRashbrooke chart the top 1%’s wealth?

The latest research of Max Rashbrooke on trends in wealth was in the Dominion Post today. The breathless reporter used it to say that:

The elite and high-income earners of New Zealand have increased their wealth by almost $200 billion while debt among the poorest has climbed to $7b…

The net wealth of the top 10 per cent has increased dramatically while the bottom 10 per cent of Kiwis face increasing levels of debt in the billions of dollar…

The data in the Dominion Post today consisted of a time series of the top 10% and the bottom 10% share of net wealth and an interactive pie chart showing the distribution of wealth.

When you chart the data published by Max Rashbrooke as a time series rather than an interactive pie chart, today is not quite the day for the down-trodden proletariat to kick in the rotten door of neoliberal capitalism to start the permanent revolution.

It is not much of a call to the barricades to say that just about every section of New Zealand society became much richer in a short six-year period – their wealth increased by between 60-80% between 2004 and 2010 as shown in the chart below. The middle class has been doing just swimmingly between 2004 and 2010: up from $194 billion to $348 billion in a short six years. This is an increase of 80% in six years. So rapid an increase that the sceptics among you might start to doubt the accuracy of the data either at the beginning or by the end.

Source: Geoff Rashbrooke, Max Rashbrooke and Wilma Molano, Wealth Disparities in NZ Institute for Governance and Policy Studies (November 2015).

Furthermore, no section of society noticeably increased their share of wealth as shown in the chart below. Further evidence of how lazy is the top 1% is in New Zealand. Their wealth increased only by 56% between 2004 and 2010. Having the wealth of the top 1% increase by less than every group in society bar the bottom 10% qualifies as a dramatic increase in inequality by the journalistic standards of the Dominion Post. The wealth of the top 10% increased between 2004 and 2010 by 68% – no more than any other group in society bar the top bottom 10%. That too is a dramatic increase in inequality by Dominion Post standards.

Source: Geoff Rashbrooke, Max Rashbrooke and Wilma Molano, Wealth Disparities in NZ Institute for Governance and Policy Studies (November 2015) via The richest 10 per cent own $436 billion of New Zealand’s wealth: research | Stuff.co.nz.

Joan Robinson in the 1940s was on to this failure of capitalism to impoverish the proletarian when she said the battle cry of Marxists would have to change from the 1848 version “rise up ye workers, rise up for you have nothing to lose but your chains” to “rise up ye workers, rise up for you have nothing to lose but the prospect of a suburban home and a motorcar”.


Today that battle cry of the Marxist revolution would have to be “rise up ye workers rise up for you have nothing to lose but your iPhone and your air points”. As Joan Robinson observed in the 1940s, that’s not much of a basis for a revolutionary movement.

The Twitter Left are grumpy buggers because a rapid increase in wealth that is broad-based across New Zealand society – lifting up 90% of New Zealand society – for them is only another reason to complain.

Which occupations entered the top 0.1%

Image

The coalition of obsolete industries needs your support

The minimum wage increases the gender wage gap at the bottom

Geoff Simmons is one of many to argue that the gender wage gap is smaller at the bottom end of the labour market because of the minimum wage. For example, the explanation of the Economic Policy Institute for greater gender pay equality at the bottom is the minimum wage:

The minimum wage is partially responsible for this greater equality among the lowest earners—it sets a wage floor that applies to everyone, which means that people near the bottom of the distribution are likely to make more equal wages. Also, low-wage workers are disproportionately women, which means that the minimum wage particularly bolsters women’s wages.

This is plainly wrong as a question of economic theory and political history. One effect of minimum wages is it lowers the cost of discrimination against the employment of less-preferred workers. Since the employer has to pay the minimum wage hour no matter whom he hires, the cost of discriminating on the basis of sex or race is less.


That is why South African whites at the beginning of and all through the apartheid era demanded that blacks be paid the minimum wage: they wanted to cheapen the cost of discrimination.

Minimum wages were initially introduced in the USA shortly after 1900 solely for women and children. The express aim was to price women out of jobs and raise men’s wages by enough so that they could provide for their families.

Tim Leonard in Protecting Family and Race The Progressive Case for Regulating Women’s Work showed that these women-only minimum wages were justified by political progressive including women on grounds that they would:

(1) Protect the biologically weaker sex from the hazards of market work;

(2) Protect working women from the temptation of prostitution;

(3) Protect male heads of household from the economic competition of women; and

(4) Ensure that women could better carry out their eugenic duties as “mothers of the race.”

These days some argue that minimum wages actually increase employment. Times change, and the slopes of supply and demand curves for labour must change with them.

If there is a minimum wage, the cost to employers of indulging their conscious prejudices or an unconscious bias are less. This is because a minimum wage set above the market clearing wage will cause unemployment. Because jobs must be rationed, the costs of indulging a prejudice or succumbing to an unconscious bias are reduced and along with that the market mechanisms that wear down discrimination by employers.

Part of the explanation of the gender wage gap is interruptions in labour force participation because of motherhood reduces the time available to them for job shopping. The first 10 to 15 years of most careers, most working lives, is spent job shopping.

Job shopping is where wages grow through the accumulation of search capital. By moving between 6 to 10 jobs in their first 10 to 15 years in the workforce, a worker finds better and better matches for their skills and talents. They worked their way into the better paying job simply because they have had more time to find a good job match between the changing array of vacancies and their idiosyncratic set of skills and work history.

The minimum wage frustrates this job shopping by denying some women their initial stepping stone into the labour market both when they are a teenager and when they are returning from time spent caring for children. This is in addition to the minimum wage increasing the gender wage gap from reducing the costs of discrimination to employers.

The minimum wage reduces women’s opportunities to get a foothold in the labour market and build on that foothold through job shopping.

Corruption vs. Human Development

More on The Great Enrichment

Crime has been trending downwards for 20 years in New Zealand

https://www.facebook.com/FigureNZ/photos/pb.374053709279073.-2207520000.1449201572./1084317054919398/?type=3&theater

Voter turnout in New Zealand

The Uncomfortable Truth About American Wages

Source: The Uncomfortable Truth About American Wages – The New York Times.

Previous Older Entries Next Newer Entries

Arin’s Substack

Celebrating humanity's flourishing through the spread of capitalism and the rule of law

David Andolfatto

Celebrating humanity's flourishing through the spread of capitalism and the rule of law

Monetary Non-Neutrality

Celebrating humanity's flourishing through the spread of capitalism and the rule of law

Reason Magazine

Celebrating humanity's flourishing through the spread of capitalism and the rule of law

Coyote Blog

Celebrating humanity's flourishing through the spread of capitalism and the rule of law

Thoughts from the North

Celebrating humanity's flourishing through the spread of capitalism and the rule of law

Fardels Bear

A History of the Alt-Right

Vincent Geloso

Econ Prof at George Mason University, Economic Historian, Québécois

Bassett, Brash & Hide

Celebrating humanity's flourishing through the spread of capitalism and the rule of law

Truth on the Market

Scholarly commentary on law, economics, and more

The Undercover Historian

Beatrice Cherrier's blog

Matua Kahurangi

Celebrating humanity's flourishing through the spread of capitalism and the rule of law

Temple of Sociology

Celebrating humanity's flourishing through the spread of capitalism and the rule of law

Velvet Glove, Iron Fist

Celebrating humanity's flourishing through the spread of capitalism and the rule of law

Why Evolution Is True

Why Evolution is True is a blog written by Jerry Coyne, centered on evolution and biology but also dealing with diverse topics like politics, culture, and cats.

NoTricksZone

Celebrating humanity's flourishing through the spread of capitalism and the rule of law

Homepaddock

A rural perspective with a blue tint by Ele Ludemann

Kiwiblog

DPF's Kiwiblog - Fomenting Happy Mischief since 2003

The Dangerous Economist

Celebrating humanity's flourishing through the spread of capitalism and the rule of law

Watts Up With That?

The world's most viewed site on global warming and climate change

The Logical Place

Tim Harding's writings on rationality, informal logic and skepticism

Doc's Books

A window into Doc Freiberger's library

The Risk-Monger

Let's examine hard decisions!

Uneasy Money

Commentary on monetary policy in the spirit of R. G. Hawtrey

Barrie Saunders

Thoughts on public policy and the media

Liberty Scott

Celebrating humanity's flourishing through the spread of capitalism and the rule of law

Point of Order

Politics and the economy

James Bowden's Blog

A blog (primarily) on Canadian and Commonwealth political history and institutions

Science Matters

Reading between the lines, and underneath the hype.

Peter Winsley

Economics, and such stuff as dreams are made on

A Venerable Puzzle

"The British constitution has always been puzzling, and always will be." --Queen Elizabeth II

The Antiplanner

Celebrating humanity's flourishing through the spread of capitalism and the rule of law

Bet On It

Celebrating humanity's flourishing through the spread of capitalism and the rule of law

History of Sorts

WORLD WAR II, MUSIC, HISTORY, HOLOCAUST

Roger Pielke Jr.

Undisciplined scholar, recovering academic

Offsetting Behaviour

Celebrating humanity's flourishing through the spread of capitalism and the rule of law

JONATHAN TURLEY

Res ipsa loquitur - The thing itself speaks

Conversable Economist

In Hume’s spirit, I will attempt to serve as an ambassador from my world of economics, and help in “finding topics of conversation fit for the entertainment of rational creatures.”

The Victorian Commons

Researching the House of Commons, 1832-1868

The History of Parliament

Articles and research from the History of Parliament Trust

Books & Boots

Reflections on books and art

Legal History Miscellany

Posts on the History of Law, Crime, and Justice

Sex, Drugs and Economics

Celebrating humanity's flourishing through the spread of capitalism and the rule of law

European Royal History

Exploring the Monarchs of Europe

Tallbloke's Talkshop

Cutting edge science you can dice with

Marginal REVOLUTION

Small Steps Toward A Much Better World