Spanish Government Starts Reading My Blog

From EconomicPolicyJournal.com:

The governor of the Bank of Spain, Luis María Linde, on Friday called for suspension of the minimum wage.

The youth unemployment rate in Spain is at a record 57.2 percent. Spain’s overall jobless rate hit a record 27.2 percent in the first quarter, with 6.2 million people out of work.

“After five consecutive years of job destruction, the unemployment rate has reached unacceptable levels and the risk of long-term unemployment becoming chronic is a very serious concern, all the more so if the high incidence of youths and the least-skilled in this group is considered,” the Bank of Spain’s annual report said.

The higher the minimum wage, the fewer workers it becomes profitable for firms to hire. Eliminate the minimum wage and unemployment benefits, and the unemployment problem will disappear faster than you can say, “Algo es algo; menos es nada”

While the minimum wage is only one of many disastrous government interventions, getting rid of it would be a step in the right direction. Spain still has a long way to go before its unemployment rate hits “normal” levels (maybe I slightly disagree with Wenzel here? I certainly think the effect would be noticeable but I don’t think I can say that their problem would be gone).

I went to the source and particularly liked this quote from the Bank of Spain:

“The seriousness of the labor market advises maintaining and intensifying reform momentum through the adoption of additional measures to promote job creation in the short term and facilitate wage flexibility,” the report said. “Here it would be worth exploring the possibility of establishing new formulas that would allow, in special cases, temporary departures from the conditions laid down in collective bargaining agreements, or exceptional mechanisms to prevent the minimum wage from acting as a constraint on specific groups of workers with most difficulties in terms of employability.

The essential characteristic of all laws is force. But when legislation goes beyond laws based off of the non-aggression principle (which states an individual has just ownership of his body and his other physical property and can do as he wishes as long as he doesn’t aggress against someone else’s body or property), what they are doing is outlawing voluntary actions. All voluntary actions are aimed at a perceived benefit. Purposeful action aims to replace a situation that would have occurred in the future with one that is believed to be advantageous. Every voluntary action is based off of self-interest in this praxeological sense (for example, look at what I say here. Every voluntary exchange implies expected benefit to both parties.)

So a law like the minimum wage, which is not consistent with the non-aggression principle, is simply legislation outlawing voluntary actions that have perceived benefits. These individuals are being forced, against their will, to choose a worse option over one they believe is better. Specifically, in this case, they are being forced from choosing what they think is their best option, having a job at a wage lower than the minimum wage, over what they think are worst options, likely having no job at all.

Can a person be wrong in their beliefs? Sure. That happens all the time. But it’s certainly ridiculous and outright arrogant to think that an individual or group of individuals in the government know another man’s life better than he knows his own.

If you want to read more of my posts about the minimum wage, you can check here (this is more of an introduction before I go into the minimum wage), here, here, and here.

P.S. If you don’t get the picture…he’s using (the) force. Yes, quite a stretch 😉

Photo Credit: icedsoul photography .:teymur madjderey via Compfight cc

Advertisements

Posted on June 4, 2013, in Economics, Politics. Bookmark the permalink. 1 Comment.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: