Even the very notion of a government mandated minimum wage is nonsense but for a Chancellor to decide to raise it at a time when the economy is in dire straights defies belief. It is, of course, a direct and immediate tax on employers who are the foundation of economic activity. Apart from anything else, those extra costs will, like a game of 'pass the parcel', be passed on in one way or another. Either the business owners will raise their prices or they will cut back on staff. Well done, George!
Of course, even George Osborne understands that so one wonders - but only for about milisecond - why he suggests it? The reason is you - that's you, as in you, you, YOU! It's because he thinks that you all think that raising the minimum wage for 'the really poor' is nice and warm and cuddly and that any politician who does it will be loved and admired and thus garner votes. Also, of course, he knows that the 'Milipede' and his busted, flushed shadow-Chancellor are going to start their tedious chorus that all Tories are 'Lord Gradgrinds' - if only! Lest you doubt the spurious inanity, to say nothing of the economic illiteracy of this idea let me remind you that it was first urged by Vince Cable - yeeeeeeeees, quite!
On a similar subject, I have been amused by the antics of that ace windbag, Paul Krugman, economist of choice to Lefty 'diptoids' at the NYT. He has been urging that unemployment benefits must be extended for the long-term unemployed. Well, it's a point of view and he's entitled to it but, as Russ Roberts writes at The Cafe Hayek, it is his sneering attitude to other distinguished economists who believe that raising unemployment benefits actually makes unemployment preferable to working that is unworthy. These people, according to the Great Krugman, are simply laughable, and indeed, in his piece he actually does just that by finishing his paragraphs with "Hahahahahaha".
Well, Mr. Roberts manages not to giggle when he provides these quotes from none other than the Great Krugman, himself:
People respond to incentives. If unemployment becomes more attractive because of the unemployment benefit, some unemployed workers may no longer try to find a job, or may not try to find one as quickly as they would without the benefit. Ways to get around this problem are to provide unemployment benefits only for a limited time or to require recipients to prove they are actively looking for a new job. [Essentials of Economics (2010)]
Generous unemployment benefits can increase both structural and frictional
unemployment. So government policies intended to help workers can have the
undesirable side effect of raising the natural rate of unemployment. [His textbook Economics (2009)]
Who's laughing now, Krugers, old chap?
