John Humphreys

Alternative to the minimum wage

_{Published in The Drum ABC Online on 10 June 2013 under the title “Minimum wage is bad social policy”, with an opening blurb of “There are more efficient, equitable and transparent systems for fighting poverty than implementing a minimum wage”.}

Imagine a free-market economy with no government welfare. Some people earn high incomes and others earn low incomes. Now consider that some kind-hearted bureaucrats come along and want to introduce a government policy to help the low-income earners. How should they do it? Let’s consider two options.

Modelling the Australian GFC stimulus

_{Humphreys, J. (2012), “The Treasury’s Non-modelling of the Stimulus“, Agenda, 19:2, Australian National University, Canberra, pp39-51.}

In late 2008 the global financial crisis (GFC) sparked a boom in Keynesian economic commentary and activist fiscal policies. The Australian government responded with an immediate $10.4 billion ‘cash-splash’ to households (Commonwealth Treasury 2008), followed by a $42 billion ‘Nation Building and Jobs Plan’, which was to include $12.7 billion more hand-outs as well as a $28.8 billion increase in government capital investment. In total, the government ‘stimulus’ was estimated to be about $52 billion. If we included all discretionary government spending that happened after the GFC then the number would be far higher.

Review of 2012 QLD budget

_{Published in The Conversation on 11 September 2012 under the title “Queensland budget 2012: experts respond”, along with the opinions of two other economists.}

Before the budget came down, Campbell Newman described it as a “once in a generation budget”. That is certainly what Queensland needed. Our long-term budget position is actually worse than the audit report or old budget papers claim, since they don’t factor in the growing fiscal pressures over the coming decades caused by an ageing population. Put simply, current policies are unsustainable, and some tough decisions are needed.

Minimum wage destroys jobs

_{Published in The Drum ABC Online on 11 June 2012 under the title “Unseen damage of raising the minimum wage”.}

The announcement that the legislated minimum wage will increase by 2.9 per cent means that we can expect there to be nearly 100,000 fewer jobs in Australia. In response, commentators and unions have cheered and asked for more.

This is a great example of Bastiat’s old rule about what is seen and what is not seen. When a business downsizes and people lose their jobs, the impact is immediate and visible – resulting in news headlines and stern-sounding politicians. But when the government subtly destroys thousands of jobs slowly and indirectly, they are given a free pass. Of course, that is cold comfort for the unemployed.

We hope Joe Hockey is lying about his bank regulation agenda

_{Co-authored with Dr Joe Clark. Published in Menzies House blog on 5 February 2012 under the title “Joe Hockey, Political Lies & Bank Regulation“}

We hope that Joe Hockey is a liar. We can understand why a politician would want to bash banks, and we can understand why a politician would want to promise more regulation to control the “naughty market”. Both of these are populist positions which hit the political funny bone, and score cheap points.