Monday, June 05, 2006

A wage too far

The Philippine Congress is getting itself way over its head with its latest plan to hike wages by 125 pesos. In terms of the minimum wage that's nearly a 40% increase in Metro Manila. NEDA is against it, and for good reason. I think their projections are believable. I mean for heaven's sake, take a look at this chart: the high end of the minimum wage (presumably in the capital) is a whopping US$6.30 in the Philippines, two-and-a-half times that of China (whose per capita income is above ours). It's also far in excess of Thailand (double our per capita income), Indonesia, and Vietnam (a fast-rising Asian tiger economy.) Earlier I have written about what it really takes to help the working man and woman. I have little to add to that, except to wonder in disbelief how brainlessly we approach economic policy. Can the law of the downward-sloping demand for labor be repealed? Do causes have effects? Can something be had for nothing? Is there such a thing a free lunch?

Speaking of free lunches, read this if you're interested in interpreting the latest economic figures. I also have little to add to it, except to say, more important that expertise is common sense. Precisely what is the scarcest resource in the body politic.

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