Wednesday, October 1, 2014

Neo-conservative assault on minimum wage based on manufactured evidence

To free-market purists, the 19th century was a golden age. Back then the size of government was miniscule. The rich paid ultralow taxes. Regulations were little to nonexistent. There were no worker benefits, either private or public. There was no overtime pay, vacation pay, 40-hour work week or minimum wage.

So it’s not surprising to find these market fundamentalists waging a war against minimum wage increases in Canada and the US.

Creative Economics

One of the most ridiculous attacks comes from esteemed neo-conservative economist Stephen Gordon, who the Liberals point to as the “expert” they base their new EI “job creation” tax cut on.

Using flaky math to massage the statistics, Gordon claims a 13% rise in Canada's real minimum wage (adjusted for inflation) from 2008 to 2013 killed “between 70,000 and 164,000 jobs” among young Canadians.

Counter-factual counterfactuals

Here’s Gordon’s graph showing the difference between what happened — and what could’ve been — if only we had left minimum wage alone:

Of course, Gordon's weaselnomics leave out the fact that the Great Recession — which all Western economies have yet to recover from 6 years and counting — is the actual cause of the drastic drop in youth employment.

Canada’s minimum wage not high

When compared to other Anglo-Saxon countries, our minimum wage is far from the maximum.

International comparison

According to Gordon’s hypothesis, Australia should’ve suffered the worst losses in youth employment because they have the highest minimum wage, by far.

But the evidence doesn’t support this self-serving claim. In fact, all countries faced similar drops in youth employment:

Peak to 2013 levels

To get a better picture, here’s a comparison of drops in youth employment from peak to 2013 levels: Canada 8%, Australia 9%, US 14%, UK 14%.

Canada and Australia fared better because they didn’t have financial meltdowns and their economies were boosted by resource exports.

Krugman on young workers

In Paul Krugman’s book, End this Depression Now! he talks about the terrible toll the Great Recession has had on workers, especially the young:

Not since the 1930s have so many Americans found themselves seemingly trapped in a permanent state of joblessness. …
Meanwhile, there’s the plight of those who don’t have a job yet, because they’re entering the working world for the first time. Truly, this is a terrible time to be young.
Unemployment among young workers, like unemployment for just about every demographic group, roughly doubled in the immediate aftermath of the crisis, then drifted down a bit. But because young workers have a much higher unemployment rate than their elders even in good times, this meant a much larger rise in unemployment relative to the workforce.


Stephen Gordon exemplifies why economics is dismal, but doesn’t remotely resemble a science. In the hands of market fundamentalists, economics is nothing more than politics with math thrown in to lend authority to political agendas.

A higher minimum wage could cause a drop in employment, or it could create jobs as people spend and save more boosting the economy.

There are too many factors involved to calculate its precise affect. All that can be said with certainly is that it hasn’t had a pronounced effect either way — not in Canada, and not in Australia where the minimum wage is currently $16.50 CAD (and unemployment is 6.1%.)

Given we have returned to Gilded Age levels of inequality, it’s better to err on the side of social justice than the plutocrats’ bottom line.


  1. no: Mr. Goodale made a mistake invoking Stephen Gordon as being a critic of the CPC EI tax cut, & agreed to correct the record when that was pointed out after QP.

    1. This is what Gordon's tweet was on the subject:

      "WTH? Ralph Goodale misrepresents my views to the House of Commons: I never said anything nice about LPC EI proposal"

  2. (and not only was Stephen Gordon not a critic of the new CPC EI rate cut, but he had nothing to do with the LPC's counter-proposal)

  3. Like the Democrats aren't f*cking racists. If the Democratic party nominated Nixon, that would make them socialists compared to what they are now.

    There's actually a video of Hill Billy scolding African Americans claiming he created African American jobs throwing single moms into the streets when he slashed welfare benefits for "super predators."

    The Clintons are bribe-taking POS. If anyone thinks they are less dangerous than Trump, they aren't f*cking thinking.

    Hill Billy deregulated the banks laying the foundation for the 2008 meltdown. Obviously you can't have politicians in the pockets of Wall Street looters and have a stable financial system at the same time.

    Glad we get to figure this out the hard way. Maybe 2 or 3 more meltdowns and we might figure it out. Or maybe the next one will cause fascist revolutions and world war to break out. Then we can all join hands and sing Kumbaya because f*cking Hillary made it possible for all young women to grow up to liquidate the public trust -- if they can survive a nuclear winter.

  4. I think in order to understand this paradox you have to consider whether the physical universe is comprised of mutable or immutable information. Also one must keep in mind that according to the uncertainty principle and chaos, the future is always non-deterministic; so just by going back in time you will alter its course.

    So if the physical universe is comprised of immutable information, every 'frame' in time exists immutably and eternally. So scan back through 50 years of information, and all the frames are causally linked. But insert yourself in a frame, then all future frames will branch off on a different course. It's not a copy of the past physical universe. It IS the past U. Now it just produces different immutable information as the future progresses.

    (The information from a frame from 50 years ago has potential/energy. So, the information on its own is like a physical universe engine.)

    If the U is comprised of mutable information, like in computer memory, then paradoxes might be possible. There seems to be a problem with causality, however. How would changing an event from 50 years ago change the present? The speed of information through time is 1 second at a time. This is related to Special Relativity and space-time. Information can't travel any faster.

    So my guess is that the U is made of immutable information. (With immutable information, developing through time, and increasing in information towards entropy, copies are continuously made. Like the number 2 must have two copies of the number 1, or else both numbers couldn't exist simultaneously in the natural set. With mutable information, copies aren't made; the information cells/variables can take on different information. Either way manifests itself as time and change.)


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