(Original post by Nick100)
It isn't a two or three pound wage difference; it's a two or three pound per hour
wage difference. If you are employing someone on a 40 hour week for 50 weeks of the year then increasing their wage by two pounds costs £4000 (ignoring that some of that increase will disappear to taxes).
Yes but in the short run, if the firm has no spare capacity to expand production, they will not be able to hire any other workers. On top of it this windfall in wages will be taken as profit by the company. If you are proposing a drop in the minimum wage, one obvious effect is a fall in consumption in the economy due to lower wages, causing a lower level of demand, which as you stated earlier is a cause of unemployment.
Hence why I think the minimum wage is unnecessary; the market sets a lower limit anyway. All the minimum wage does is prevent people from gaining experience.
Yes it does; if it market signalling didn't work didn't then we'd all still be agricultural workers.
People change careers when they are able to get a higher wage in a job they are able to do. The jobs with the highest wages many people are unable to do as they have not been educated to do so. People do not decide to become educated in a certain field/ at all to a certain extent based on the wages. There are many other factors such as the enjoyability of school, parental pressure etc.
Firstly, a five year old's parents have an incentive to give him a good education. If they don't they will pay the price in the long term. Secondly, a lot of children (not quite so young) want to be successful and want to take education as far as they can.
The children in question here are the ones who's parents perhaps care less about their education; the ones who have not been to college or university and do not consider it important that their children do. This is not fair on the children, who did not choose the parents, nor on society, who will pay for the shortcomings of the children. This often leads to the emotional appeal of if the parents don't care, why should society pay for the errors, but I'm sure you're intelligent enough not to fall for this flaw.
Secondly, market forces don't stop just because the timescale is long; what would occur is that the number of people training to become accountants would drop as those people would go into other more profitable professions, and supply would decrease. If market forces didn't apply then people would continue to training to become accountants regardless of the decrease in demand. There's also the possibility of existing accountants applying their skills and experience elsewhere.
The only way to increase labour productivity is through capital investment; the problem with the UK is that there are a lot of obstacles to capital investment including the high tax rate. Low wages don't increase productivity, low benefits only reduce consumption (and hence increase investment). And Hong Kong is as rich as London; its economy is growing away from the UK economy.
But historically the poor have doubled their incomes without state help. If the minimum wage is removed then it becomes easier for youths from poor families to gain experience and hence, when they leave their families, support themselves with higher wages later on. If the state makes it illegal to employ youths for less than minimum wage and reduces the incentive to find work (as the welfare state is a burden on the working) then people will stay poor for longer. And the skills of employees do not deteriorate; they improve. Your suggestion that people can only increase their wealth with significant state help conflicts with history.
Where is the evidence for this? Over what time period? You refer to history a great deal but you neglect the shift from overwhelmingly unskilled labour dominating the economy to skilled labour being the more important deiving force of the economy. There is nothing to prevent youths gaining experience, and the apprenticeship scheme ensures that if firms really do want to train young workers and not just exploit them, they at least give them experience and training for a minimal wage.
Children's consumption is paid for by their parents; it isn't a problem. What is a problem is when someone is entitled by law to be allowed to consume without producing; that creates a burden on other people in society.
...And to avoid this situation we must educate them properly to allow them to work in the future.
It wouldn't result in hyperinflation because there isn't enough money in the economy for it to do so; hyperinflation only occurs if the money supply is rapidly increased. Hyperinflation would be necessary for full employment on a £50/hour wage - without it unemployment would occur.
Not necessarily. Inflation can be caused by large increases in the average wages, look at the 1970's and the Philips curve, not requiring a rise in the money supply, though in the 1970's there was not hyperinflation, it was not a 900% rise in average wages. If everyone was made to pay their employees this much I very much expect that all firms would agree to increase prices to ensure that a profit is made, not the firing of their employees, but it is a ridiculous scenario anyhow.
Society was correcting itself or we would have never reached this level of wealth. The UK went from a poverty striken agricultural economy to a rich, industrial economy over the course of the 1800s with very little in the way of a welfare state, and even substantial burdens in the form of military conflicts around the world. The poor of the 1920s were far better off than the poor of the 1810s. And we could achieve the level of growth in Hong Kong; Hong Kong has no natural resources. If we cut the welfare system we could also cut taxes; do you not think that having the lowest tax rate in Europe would generate a lot of investment?
Sorry who benefited from the industrial revolution? The poor, who moved from the simple but relaxed life of the country to the busy uncomfortable, long hours, low aid jobs in the factories? I think you will find that it was the rich who exclusively benefited. It was not until the 20th century that universal free schooling was introduced, which gave the poor the opportunity to move up the social ladder. Growth was achieved, but this ultimately would not benefit the poor until the mid 20th century. If you read these history books you seem so fond of, you will see that slums dominated London, and these were slowly eradicated with the help of the welfare state. Please also note that workhouses were not abolished until the 1930's, this being the last option for the poorest of the poor, and largely worse than a life in agriculture, where the industrial revolution meant that there were now far fewer jobs, once again at the expense of the poor.
And foreign aid is nowhere near as useful as competent government.