January 30, 2013 at 5:54 p.m.
Why an $18 an hour minimum wage is like invading Iraq
Mind you, I am merely a hearer of music and I'm often more impressed by the rhythmic bashing of drums and volume of choral voices than by the finer nuances of keys and cords - or is it chords?
I love hearing choirs that have a good balance of male voices. I find myself drawn to African, especially South African, choral music, and I love the sound of a good Welsh choir.
I am an individual. I do like what I like. And, so far, nobody's passed a law that tells me what I must like. But that day might not be too far off.
That set me thinking about things that make sense, and things that don't make sense. One of the things that makes sense is that Governments don't generally do too well when they try to either act in the face of history; or try to legislate against the laws of economics.
History lessons
Stretching way back into the time of the empire carved out by Alexander the Great, coming forward to the Mighty Roman Empire, and on to the globe-girdling British Empire; at the end of all these empires, the same thing happened. The people who were running the empires got tired. Worn out. Worn out by the unrelenting tribal resentment of the people they were ruling. At some point, all those old empire people started asking the same final question: 'Is it worth the effort?'
Each imperial power, from Alexander the Great to the Roman Caesars to those last holders of empire - the Portuguese - came to the same conclusion: 'It isn't' Now, Dubya is slowly walking his cowboy boots towards that same conclusion.
Out here, at 64W32N, there's a suggestion that Bermuda should have a national 'minimum wage' of about $18. That makes sense, but only if you ignore everything else. Our 300,000,000 population western neighbour is wrestling with the idea of moving their minimum wage from $5 to something closer to $6. There's merit in their plan. But if we, at 64W32N have a minimum wage so far above theirs, we'll be moving in exact opposition to all the laws of economics.
Far more obvious than twenty years ago, we, at 64W32N, are part of an increasingly integrated global economy. An absolute impact of this mingling of national economies is that Bermuda wage rates are now significantly affected by global changes in the global supply and demand, and the global increase in a mobile and better-educated labour force.
Bermuda is full of workers from Eastern Europe, India, South America, the Philippines, the Caribbean, the African continent. Some of these workers are drawn into our Bermuda economy that allows many of them to SAVE [that is, put aside and send home] more than they could EARN if they had stayed home. This means that the rate of pay for a whole range of guest workers in Bermuda is not driven by the same economic factors that affect Bermudian workers. Instead, economic reality is determined by this simple calculation:
'At the end of one workweek, will I have $100 left over to send home?' If the questioner is able to send $100 a week to his family; if his family lives in an economy where the average annual family income is $2,400 or even $4,800 a year; then the questioner will happily stay and accept any combination of pay and hours of work that leaves him with $100 a week to send home. If, by sharing accommodation and living very frugally, that worker can send home $100 a week from a low net income of $450-$550 a regular workweek; then that worker will consider himself fortunate and extremely well-off.
That's the impact of globalization. That's what has changed globally over the last twenty years. Globalization is real, absolutely real. It's knocking mighty General Motors Corporation for a loop and Bermuda's whole national economy is smaller than GMC's. If we legislate against the laws of economics, against the impact of global reality, we'll be acting the way Dubya acted when he un-holstered his six-guns and swaggered into Iraq.
Ultimately, we'll get the same result.[[In-content Ad]]
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