Saturday, 2 June 2012

Careful what you plan

The government in Thailand recently raised the minimum wage - considerably. This was obviously popular with the voting public ... but is it 'sensible'?

Those who invest capital in new and existing ventures to create new work and new jobs are now much more reluctant to do so ... their competitiveness in international markets has been (artificially) lessened.

This means fewer jobs will be created, fewer taxes will be paid and almost everybody loses in the longer-term.

Unfortunately governments (of all persuasions) too rarely think through the issues concerned with what at first seem like fairly simple policy decisions ... or if they do, they let 'political' judgement cloud economic sense.

Wage rises not brought about or supported by productivity gains are always inflationary and damaging.

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