I stumbled upon two pieces of news today, appearing at first unrelated but after connecting the dots the real culprit became glaringly obvious. The first article was published on Business Spectator, entitled Low pay, high stakes.

"For the past three hearings, the commission has operated in an economy where aggregate demand was rising, and its economic modelling rightly suggested that increasing the minimum wage would have virtually no impact on employment...

...Not surprisingly, Harper is telling the key bodies that make submissions to the commission - unions, employer bodies, and governments - to recalibrate their economic models to factor in falling aggregate demand."

Ah economic modelling, my old friend. Any economist worth his salt (not many these days) knows that economic modelling is about as capable at guiding decisions as is a blind man is at guiding a car down a street. Luckily we have the brilliant Professor Harper at the helm (that is, of course, until the new Minimum Wages Panel arrives -- ugh!), making sure the models that failed to predict the current situation are sufficiently up to date so that they may fail again in the future. What fantastic use of our tax dollars!

The inaccuracies of economic modelling alone should tell us that their figures on the minimum wage are off the 'mark' -- but the bigger problem is that the Fair Pay Commission's 'mark' is about, oh, $14.31 too high! That's right, there shouldn't be a minimum wage. I don't want to get into the fine details about this right now, so i'll just borrow a few words from Mises himself:

"The market wage rate tends toward a height at which all those eager to earn wages get jobs and all those eager to employ workers can hire as many as they want. It tends toward the establishment of what is nowadays called full employment. Where there is neither government nor union interference with the labor market, there is only voluntary or catallactic unemployment. But as soon as external pressure and compulsion, be it on the part of the government or on the part of the unions, tries to fix wage rates at a higher point, institutional unemployment emerges. While there prevails on the unhampered labor market a tendency for catallactic unemployment to disappear, institutional unemployment cannot disappear as long as the government or the unions are successful in the enforcement of their fiat. If the minimum wage rate refers only to a part of the various occupations while other sectors of the labor market are left free, those losing their jobs on its account enter the free branches of business and increase the supply of labor in them. When unionism was restricted to skilled labor mainly, the wage rise achieved by the unions did not lead to institutional unemployment. It merely lowered the height of wage rates in those branches in which there were no efficient unions or no unions at all. The corollary of the rise in wages for organized workers was a drop in wages for unorganized workers. But with the spread of government interference with wages and with government support of unionism, conditions have changed. Institutional unemployment has become a chronic or permanent mass phenomenon." -- Ludwig von Mises, Human Action

Now for the good part! In an article later in the day, Kevin Rudd announced that the government was going to fund apprenticeships around the country, costing taxpayers about $1 or $2 billion (what's the difference, right?!).

Thousands of school and university leavers will also be offered special assistance to find work under plans for a national "jobs compact".

Companies seeking a slice of lucrative infrastructure contracts may be forced to take on young workers, as the Rudd Government pushes for an apprentice-led recovery.

So companies no longer want to employ young workers. In other words, as employers will only pay the value of an additional hours work, the (government induced) credit crisis has resulted in many workers with low productivity (usually those with low education, job experience, and maturity) to be laid off by their employers. So rather than scrapping minimum wage laws and allowing people to work for what they're worth (shocking, I know!), the Rudd Government plans to 'redistribute' income from the rest of the nation and hand it to the people that their own policies put out of work! Our leaders truly are incompetent, both liberal and labour. To quote Donald Horne from 45 years ago (sadly nothing has changed),

"Australia is a lucky country run mainly by second-rate people who share its luck. It lives on the other people's ideas, and, although its ordinary people are adaptable, most of its leaders (in all fields) so lack curiosity about the events that surround them that they are often taken by surprise" -- Donald Horne, The Lucky Country

Maybe one day we'll stop riding on other people's backs, living off of nature's gifts (resources) and get our act together. We can dream...