miércoles, 30 de marzo de 2016

On minimum wage and youth employment

Working people in communist era earned a lot more than the would do in non-subsidized economic activity. Of course that was not the market prize they got for their activity. Not creating a market value means you are out. After long years of work they are made redundant.
Would they stay unemployed? Well, no. As Milton Friedman states they have a good working habits and will manage to reinsert working life again - one way or another. Which most of them did. Even in a toughest of the times labour preserves it's value.
The main point for me is to prove people that they are doing better that they really think they are in a capitalism society and try to make them think they can do even more.
One thing that the communist system did well is on creating good working habits, solidarity and it was high on discipline.
The human side of the capitalism shows when it recognizes all the benefits of the communist system that made capitalism works better today.
But than what happens with the youth unemployment from the 90-ties till Today?
The same as they are failing the system, the system failed them great.
If you are trying to create a demand for your product make that product appealing with all the attributes that the customer need so it "sells" well on the market. So, the Universities should start doing that and work closely with firms to met their demands.
The country would no more subsidize to meet the supply needs, but it's other way around now.
If other economies managed to succeed what we want to achieve, we want to know how.
If there is a cost, we wont to know at what cost.
If we need a little bit of communism to improve capitalism, I say why not.
What if communism has a market value?
As long as it does good, we would not argue the name.
We would like everything that makes our people happy, has value and therefore a demand.
As Milton Friedman says the disadvantaged are victims of low paid jobs all I can say to that is work hard on your expectation by starting from the bottom and never give up.

Milton Friedman on Unemployment.



Min wage and young unemployed


Good for those working now, but bad for young unemployed, unskilled.
As somebody working on youth unemployment I have no choice but to stand against. For some reason setting maximum and minimums never works in market economy. Wishing well is not enough.
At the end, if you´re poor better build a strong relation with your God. Not that I am religious but when broke it helps praying when nothing else works because psychiatrists cost money. Nobody gets rich working, same as good intention barely saved anybody.
The increase of min wage "looks good" but it can have negative consequences.
Milton Friedman calls them "the gooders" (government) and the "special interest" (trade unions). This unholy coalition is always there when it comes to minimum wages. "The gooders" would think that they implying to pay people more, but not. The "special interest" 
achieve to keep their members wages high.

The people that have low skills (young) that cannot justify the 7,20 pounds an hour would not be able to find a job. The firms must discriminate between people that have low skills ( Milton Friedman )
The one already working will certainly improve a bit their situation ( will continue to be poor, but less) and 7,20 will create an obstacle for other young people entering the labour market.



As part of my dissertation for youth unemployment i am completely obsessed with the concept of minimum wage as part of design a policy that work for young. How and why I don't know yet, but I know is very important.
I could see comments of people very happy about the increase of UK min wage from 6,70 to 7,20. Obviously they forgot or not have been ever in their life on minimum wages.
First of all, how can you call yourself happy living on minimum wage? You are poor! You are torn apart between the decision to continue your job as such or go on benefits.
It sounds good, but do you know what is life on minimum salary like?
It is like trying to make people feel less miserable, but still poor.
Second, nominal and real value are two different things. If you have studied economics you get sick and tired of hearing "nominal" and "real".
I must be missing something very important, but what?
Surviving on minimum wage takes guts.
Reading some psychology books, psychology students often do experiments between themselves to understand what are they studying. Call me crazy, but I got so excited by that fact and how important that is. How many times I have been praying in front of a cash machine there to be some money left on my account. And I am not even religious. There is no point to fight a cash machine. I tried, damn thing never listens.
So if you are not living on minimum wage in London, doubt you will understand what 7,20 an hour means.
The min wage is not set to promote or discourage employment opportunities but according to my understanding when thing go well in the economy to make the one on min wage to benefit from such economic success. UK doesn't have problem of high unemployment, but the opposite, so this makes sense.The min wage reveals the most vulnerable category in the economy whose earning fall bellow national average. Those are young, female and immigrants in most cases.The min wage tends to bridge the gap between the two extremes.So the main question remains an that is how to fit the concept of minimum wage in developing economy. I feel I have to discourage setting minimum for an "immature" economy.

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