Why Mr Wang is wrong: telling only half the story
Posted by admin on January 19th, 2007 filed in GeneralMr Wang says :
On labour freedom, the study gives Singapore the world’s highest score, and makes the following comments:
“The non-salary cost of employing a worker is low, and dismissing a redundant employee is costless. Regulations on increasing or contracting the number of work hours are very flexible.”
What does this really mean?
Singapore is the easiest place in the world to pay a worker peanuts; make him work overtime; and then sack him without compensation.
Respectfully, I disagree with Mr Wang.
First, I will borrow the words of those more knowledgeable than me. Taken from the World Bank Doing Business report [PDF] that was referenced by the Heritage Foundation study cited by Mr Wang:
Next, an examination by The Economist on why Germany and France suffer from high levels of unemployment :
For the biggest failings in the euro area remain microeconomic, not macroeconomic. There is a reason why Denmark and the Netherlands have higher employment and lower unemployment than Germany and France: it is that the latter two have overly regulated labour markets, tougher hire-and-fire rules and high minimum wages. The evidence that excessive interference to “protect” people in work penalises those who are out of work has seldom been as clear as in Europe over the past five years.
And last, The Economist comments on the riots by ethnic minorities in France due to high levels of unemployment :
For all young people in France these days, proper jobs are scarce. As Mr de Villepin has acknowledged, 70% of all new contracts are now only temporary, and half of those last less than a month. For young people, the figure is four-fifths. The reason is what economists call an “insider-outsider” labour market:full-time permanent jobs are so protected by law that employers try not to create many, preferring instead temporary workers or interns whom they can shed more easily when times get tough. This suits the insiders, particularly those on sheltered public-sector contracts.But it leaves a whole swathe of youngsters with the very sensation of insecurity that the social system is designed to prevent.
I have provided links to further arguments as to why Mr Want is wrong at the bottom of this post, you could check it out.
Next, I take issue with Mr Wang’s reply to Gabriel’s comment to his post :
“I do not disagree with all you said, but inflexible labour markets are not a good idea either.”
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True, but when Singapore is world no. 1 for “labour freedom”, I think it’s obvious to see which is the direction in which we have gone too far.
The question then is, when is it “too far”? If the proposition is that Singapore has somehow “gone too far”, then where is the appropriate point of moderation? Until Mr Wang provides the answer to this question, his argument holds no water, because if he himself cannot identify a point which is not “too far”, then he has failed to prove that it is possible to legislate on labour markets and not go too far. In fact, the evidence is overwhelming that labour market regulations result in negative unintended consequences on the very people that those regulations are meant to protect.
The most important fact we must understand is this: Singapore does not suffer from a lack of regulation. In fact, the reverse is true. Singapore suffers from too much regulation, from the social, personal arena to areas such as media and information dissemination, the hand of the state controls what we can or cannot do. For Mr Wang to argue that the government should step in and regulate contracts made between individuals, is to subvert the most important right that individuals have in dealing with each other. It is to argue for a massive expansion of government into areas of our lives that are not already controlled by them. How can this make sense?
Some of the commentors have expressed sentiments that Mr Wang understands their plight. I highly doubt that this is the case. The problem with Singaporeans is not that the Government has not protected them, the problem is that there is no way for the Government to protect them from themselves. And sometimes, even worse, these people assist the government in sabotaging themselves.
For example, why do so many people find it difficult to find jobs or to make ends meet? They suffer because they had abdicated their own personal responsibility to make decisions for themselves, and instead slavishly obey the latest Government proclamations of manpower needs. How often do you hear people pursuing a path in life on the basis that “Gahmen say can make money, so we must do, because they are always right!”
Needless to say, when every mother’s son and daughter flocks to a particular area of study, the end result is grief. The laws of demand and supply are immutable, and even our self-proclaimed omniscient bureaucrats cannot predict nor control them. If you behave as the lemmings do and jump of the cliff of individuality, and opt to be a mere digit in the sea of supply, then you have no right to blame the government when the consequence is that you are treated as such. Your market power is directly commensurate with how rare and needed your skills are, not how well you obey the edicts of the state.
Mr Wang is wrong because the problem is not that the Government has not protected us. The problem is that we do not know how to think for ourselves, and shed the paternalism that the Government has foisted upon us.
Mr Wang Says So: No Cause for Celebration
Get Papers & Reports - Doing Business - The World Bank Group : 2006 Creating Jobs report here [PDF].
When Protecting Jobs Only Destroys Them: The Naked Economist - Yahoo! Finance
The Indian Economy Blog » Hard To Fire Is Hard To Hire
European economic reforms | Economist.com [subscription required]
An underclass rebellion | Economist.com [subscription required]