Tim Worstall

Timmy Elsewhere

Aha, my piece which I thought would go in last week’s is in fact in this week’s.

Timmy at the Press Gazette on Polly Toynbee and why I read The Guardian.

Ahem. Polly responds to my email alerting her to the piece:

No, unlike you, I don’t spend my every waking hour scouring the internet in order to …Oh hell, I won’t bother … But the idea that I get GDP ‘wrong’ or that your eccentric view about the minimum wage is some kind of economic ‘fact’ is worth a bit of questioning of you own so called reliability…if
I were an obsessive, and a serial harasser and if life weren’t full of better things to do.
Pedant I meant..it was a typo, of course. But it was the wrong word, as pedantry implies accuracy.

Polly on GDP.

A real economist on Polly’s views on gambling and GDP.

A real economist on the effects of the minimum wage. Including these figures from The Low Pay Commission:

In particular, appendix 3, which starts on page 213 of this pdf. It contains a survey of employers who were affected by the rise in the minimum wage in 2003. It shows that: 37 per cent of them cut staffing levels, whilst only 4 per cent raised them; 31 per cent cut basic hours worked whilst 3 per cent raised them; 28 per cent cut overtime hours; 81 per cent said their profits fell; and 63 per cent said they raised prices.

A serial harasser?

In

19 responses

  1. Peter Briffa Avatar
    Peter Briffa

    That Polly line asking why people read stuff they disagree with is a weird one. You might as well ask Polly, given that she slags it off so often, why she reads the Daily Mail. Unless, of course, she doesn’t.

    Reply
  2. dearieme Avatar
    dearieme

    No doubt she has the servants read it for her, Peter.
    Tim adds: ?? Shurely the Chatterly line here? Is this something you would want your servants to read?

    Reply
  3. Scott Campbell at Blithering Bunny Avatar
    Scott Campbell at Blithering Bunny

    Good Lord, you’re using that photo I took at the ASI bash? Much as I like the idea of now being a press photographer, we had been putting a few away. I advise you to get the wife to take a more sober photo in softer light.
    On the other hand, perhaps that photo captures something of the anarchic, gonzo spirit of the modern blogger, high on life and booze, a twinkle in the eye, a half-smile readily discernable around the corner of the mouth, etc. etc. etc.
    (Speaking of photography, it occurs to me that technology has helped photographers more than it has writers. Sure, the internet and blogging software helps writers get their stuff out there, but it won’t write your columns or posts for you. Whereas digital cameras do actually do take care of a lot of the photographic work for you. Even I can take a half-decent picture with a digital camera).

    Reply
  4. dsquared Avatar
    dsquared

    I’m a real economist and I think Polly has a point; you are about as often wrong as right in your spotting of “errors” (usually you mistake a very tendentious right-wing interpretation of something for “the truth”) and far too free and easy with your “economic idiot” awards. The bloke who wrote “Worstall Watch” was able to pick up quite a lot of simple errors in the two weeks he wrote it.

    Reply
  5. Matthew Avatar
    Matthew

    Agreed, in fact your Press Gazette column paragraph starting ‘As’ and ending in ‘productive’ contains at least two assertions that you can’t justify, on Monbiot and the minimum wage.

    Reply
  6. Diddle Avatar
    Diddle

    >I’m a real economist and I think Polly has a point; you are about as often wrong as right in your spotting of “errors”
    About the same as dquared’s ratio, then.
    >The bloke who wrote “Worstall Watch” was able to pick up quite a lot of simple errors in the two weeks he wrote it.
    Hmm, I must have been reading an entirely different Worstall Watch, all I saw was some guy saying “He’s wrong about this, and I could back this up if I could be bothered” a lot.

    Reply
  7. Bob B Avatar
    Bob B

    I did enjoy the references to Richard Layard and Happiness. He is an esteemed economist at the LSE for sure, a Labour Party adviser on economic issues by reports and renown as an enthusiastic advocate for Britain joining the Eurozone:
    http://cep.lse.ac.uk/layard/RL334D.pdf
    From online interchanges just a few years back, he was much concerned about the adverse impact there would be on inward investment into Britain if we didn’t join the Eurozone. It was most instructive then that the last piece of official news on inward investment into Britain that I read a year back reported a record number of inward investment projects:
    “The UK attracted a record number of investment projects from foreign firms last year, official figures have shown. Government body UK Trade and Investment said nearly 40,000 jobs were created in 2004/05 from 1,066 investment projects. That was an increase from the 25,463 jobs created by 811 projects in the previous year. The figures showed a 61% increase in the number of IT and software projects to 240, with research and development projects up 22% to 101.
    http://news.bbc.co.uk/1/hi/business/4632923.stm
    Curious that but I’m sure that he has something valuable to say about Happiness.
    “JACQUES DELORS, the former President of the European Commission, fuelled the controversy over the euro yesterday by admitting that Britain was justified in opting out of the single currency because its launch was flawed.
    “In a remarkably frank interview with The Times, the one-time bogeyman of Eurosceptics also predicted that Britain would stay out for years, not least because Gordon Brown was so ‘passionate about his contempt for Europe’. . . ”
    http://www.timesonline.co.uk/article/0,,740-967150,00.html

    Reply
  8. The Pendant's Apprentice Avatar
    The Pendant’s Apprentice

    Was Layard one of the notorious 364 “real” economists?

    Reply
  9. stuart Avatar
    stuart

    “your eccentric view about the minimum wage”
    It isn’t an eccentric view among economists, it’s the consensus, and you don’t need to be an economist to know that’s a fact. It may be eccentric to people who don’t know much about economics, like Polly.
    Talking about eccentricity, claiming that a minimum wage has no impact on employment contradicts the basic idea that if the price of something is raised there will be less of it demanded. So the idea that minimum wage doesn’t affect employment negatively is more eccentric right off the bat.

    Reply
  10. angry economist Avatar
    angry economist

    The “Polly line asking why people read stuff they disagree with” – Well – that might well be the reactions of your average communist or socialist worker acolyte. What Polly writes is often religion – i.e. an article of faith or belief, nowt to do with the facts.
    Its not just that Polly gets the facts wrong very frequently, but even when the facts are right her interpretation is often flawed.
    I read the Guardian for 10 years and 3 months ago was so disgusted at the lack of actual news and facts and in its place unsubstantiated columnists waffle that I simply ditched it and now read other papers, or use the internet.

    Reply
  11. Jim Avatar
    Jim

    “A real economist on the effects of the minimum wage. Including these figures from The Low Pay Commission:
    In particular, appendix 3, which starts on page 213 of this pdf.”
    Both you and Chris seem to have missed this rather important caveat attached to that survey, all the way over on page 215:
    “It is important to note that the responses to our questionnaire are likely to overstate the impact that the National Minimum Wage has had on businesses for two main reasons. First, the survey specifically targeted
    those low-paying sectors that were most likely to have been affected. Second, even within these sectors, those who responded were more likely to have been significantly affected than non-respondents. We tested the hypothesis of an upward bias in our fourth report (2003) through a telephone survey of a random sample of non-respondents. This confirmed that the proportion of those affected was considerably lower than in the postal survey. Those in the telephone survey had also experienced a smaller impact on their wage bill. Given these factors, the survey responses should not be taken as indicative of the overall impact on business, even in low-paying sectors.”
    If you’re going to set yourself up as a fact-checker you might want to develop at least a passing acquaintance with those facts yourself.
    Tim adds: Any reporting that it actually helped their business? That general demand had risen (the Card and Krueger supposition)? That’s what you’d need to find to show that the minimum wage did not reduce the incomes of the working poor.

    Reply
  12. Matthew Avatar
    Matthew

    Stuart:
    “claiming that a minimum wage has no impact on employment contradicts the basic idea that if the price of something is raised there will be less of it demanded.”
    This ‘basic idea’ refers to something like corn. There’s no particular reason to think it’s true of labour, as labour also responds to being paid more. I’ve never heard it expressed with reference to the market for CEOs.
    Tim – On the minimum wage report it also says that it raised the income of many low-paid people. You don’t need to find that demand has risen or that it helped businesses to show that it raised the incomes of the ‘working poor’ – there is such a thing as distribution.
    Tim adds: I’ve never doubted that a minimum wage raises the income of some of the working poor. While I admit to overdoing the rhetoric at times my point has always been that this comes at a cost. That cost being a fall in the income of those previously working poor who are now non working poor, and in those working poor who get their hours cut.
    I’ve no objection to the more nuanced discussion on the subject, those who say, yes, but that’s a price worth paying (I might disagree but that’s not a root objection), whereas I do have an objection to those who argue that there is no such price that has to be paid: an all too prevalent attitude in political and commentariat circles to my mind.

    Reply
  13. Matthew Avatar
    Matthew

    Surely though your quote:
    As when Polly …thinks that minimum wages do anything other than lower the incomes of the working poor
    is in the tradition less of ‘I’ve no objection to the more nuanced discussion on the subject and much more like ‘those who argue that there is no such price that has to be paid’?
    Tim adds: indeed. I did admit to overdoing the rhetoric already.

    Reply
  14. Jim Avatar
    Jim

    “That’s what you’d need to find to show that the minimum wage did not reduce the incomes of the working poor.”
    No, you’d need a representative survey, and that survey is obviously not representative. So why did you act like it was? And please don’t tell me you didn’t read that far, because then I’d lose all my faith in your scientific integrity.
    Tim adds: you had some?

    Reply
  15. angry_economist Avatar
    angry_economist

    I can’t see why the report’s researchers or economists didn’t attempt to design a weighting matrix to attempt to calculate an estimation of the total business population. Its not difficult to do this if you know the size and sectoral composition of the businesses in the sample.
    i.e. its possible to take a sample survey that is not representative and weight it so that it gives estimated representative results.
    PS – all surveys and other facts to is give estimates of the situation – some give more accurate estimates than others. There’s no such thing as a perfect fact in economics or social science. Its always worth reading the methodology section though before giving a publicly stated opinion – i.e. checking your facts. This is economics. Not checking facts thoroughly is something else – journalism.
    Jeez – do I get the box “real economist” ticked for that!? can I wear a badge at the next ASI event!?!?

    Reply
  16. paul ilc Avatar
    paul ilc

    Matthew
    The company I work for employs a lot of people – mainly women – on or near the NMW. As the NMW increases, we are cutting hours and jobs in order to do the same with less. It may be difficult for you and dsquared to grasp this, given your ideological baggage, but, in the real world, the NMW is costing relatively poor women income and jobs. And I know my company is not alone in doing this.

    Reply
  17. johnny bonk Avatar
    johnny bonk

    Trivially, a NMW will costs some jobs/hours – however there may be enough slack elsewhere in the economy to absorb the workers. Happily, this does seem to be the case at the moment. Indeed, with the currently bouyant UK economy, who can say that we could not push the NMW to say 10GBP per hour without losing (many) jobs? Obviously a high NMW will feed through into prices and be felt most by those earning about the NMW, though extra tax collected from those who benefit from the NMW could be rebated to those who have only experienced price rises, to lessen the pain.
    The real danger of a NMW comes when the economy is not so frisky, when if might throw millions out of work – and the fear is that the government might not spot the danger even when the damage has been done.
    As things stand, with there seeming to be plenty of work for those that want it, I can see no problem with a law preventing very low wages. Indeed, the NMW is still quite low, I can’t see any reason not to raise it towards 8GBP per hour – but being alert to the dangers of unemployment. Most low paid workers are being shafted royally by the rest of us, they tend to do the crappest jobs which should command a premium in a fairer world (and may indeed happen at some time in the far future when there is no longer an near infinite pool of poverty ridden potential workers across the world). The lowest paid tend to be the least educated and articulate – they need a bit of the break from the rest of us. The big dangers are a
    A: doing more harm than good through a tightening labour market.
    B: the burden falling disproportionately on the workers on the next rung up of the wages ladder.
    And Toynbee? – she loves too much to spend other peoples money – remain ever vigilant else her baliffs will be calling.

    Reply
  18. Devil's Kitchen Avatar
    Devil’s Kitchen

    “Indeed, with the currently bouyant UK economy, who can say that we could not push the NMW to say 10GBP per hour without losing (many) jobs? Obviously a high NMW will feed through into prices and be felt most by those earning about the NMW, though extra tax collected from those who benefit from the NMW could be rebated to those who have only experienced price rises, to lessen the pain.”
    Are you mad? You want to push the minimum wage to £10 an hour (or £20,800 a year), which you freely admit will raise costs (and, of course, inflation) and then use redistribution to solve the problem of raised prices? I thought that the minimum wage was a kind of redistribution anyway?
    At £10 an hour, you are going to start forcing all median paid job prices up too (because people will take a less demanding minimum wage job instead, unless they are paid more). I’m a graphic designer and, when I wasn’t freelance, my hourly rate was never more than £9.90 per hour. All prices will rise. Substantially. Your pound will buy you less: almost a classic definition of inflation.
    Inflation is usually combatted by raising interest rates; this will also impoverish those who have borrowed. It will also discourage companies from borrowing (or make the cost of it higher) and thus expansion will be more difficult and fewer jobs wil be created. So, lovely situation for those with jobs (although they will end up not much better off because of all the price rises), but not so good for those who would not now be employed.
    And then you want to tax people in order to compensate your NMWers, thus employing more people (at substantial cost) to decide who gets more money to help them afford the goods with the higher prices.
    Absolutely incredible.
    DK

    Reply
  19. Matthew Avatar
    Matthew

    Well in the post below David Gillies did say:
    Thirty grand a year? Is there anyone in the UK who isn’t working in Dixon’s who makes less than that? I wouldn’t even get out of bed for that sort of income.
    And good chap that he is, I don’t think we can assume he’s particularly talented. Perhaps 20k a year minimum is possible?

    Reply

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