Joseph Muscat and the Amazing Novel Concept of the Living Wage
Joseph Muscat discusses the novel concept of a living wage with Ray Azzopardi (yes, he's still around) and a future member of the electorate.
The Labour leader woke up a couple of days ago with a pressing need to be taken seriously after weeks spent fooling around with a mysterious medical condition that allows him to leave the house only to visit Dom Mintoff, take cruises and be interviewed on Super One.
And that was over and above the revelation that his father, far from being a humble salesman, is Malta’s leading supplier of chemicals to the fireworks industry, and that he was raised on the profit and lives at the address where the family business, Saviour Muscat Fireworks, is registered.
So he scanned the newspapers and spotted that Ed Milliband is talking about something called ‘the living wage’ in his attempt at being elected leader of the Labour Party in Britain.
Then, without further ado, he had himself interviewed on Super One last Sunday by a journalist from Malta Today, which is tantamount to admitting that the people he pays there can’t do the job themselves, and announced that Labour is looking at “this exciting new concept called the living wage”.
I could hear Alfred Sant weeping all the way from where I was sitting at the time.
Though he would have sympathised with Muscat’s habit of throwing something into the ring to gather votes and then working out the solution when it is too late and he’s painted yourself into a corner, he would have beaten his head against the wall at the thought that somebody with a doctorate in public policy, who calls himself a socialist and leads the Labour Party, had never heard of the living wage before Ed Milliband brought it up in Britain some weeks ago.
The idea that people should be paid enough for them to live comfortably on goes back to the Middle Ages at least, when wages were not determined by the market but by what the community thought to be fair and decent (though it rarely was).
At this stage, there was awareness already that man cannot live by bread alone, and that a hand-to-mouth existence is not decent. Adam Smith, in his Wealth of Nations (1789) had summed up already the thinking behind the concept that Muscat calls ‘new and exciting.
“By necessaries I understand, not only the commodities which are indispensably necessary for the support of life,” he wrote, “but whatever the custom of the country renders it indecent for creditable people, even of the lowest order, to be without…Under necessaries therefore, I comprehend, not only those things which nature, but those things which the established rules of decency have rendered necessary to the lowest rank of people.”
Christian leaders continued to develop the idea of the living wage right up to the 20th century. They spoke of the distinction between starvation wages, natural wages and just wages, basing their arguments on what a man required to support a wife and children in dignity.
The debate reached a height of intensity in the first years of the 20th century in America, where academics, priests and charities used their own definition of household requirements to arrive at a conclusion of what men should be paid.
The seminal study from this period is Father John Ryan’s A Living Wage: Its Ethical and Economic Aspects (1906). His argument was that a living wage would permit a man to provide for his family not only in terms of food, clothing and a dwelling with five rooms, but also pay for the education of four or five children, buy periodicals, pay for recreation, labour union dues and church contributions, and save money for sickness and old age.
We recognise Fr Ryan’s proposal now for what it is: the demand that working-class people be paid enough to live the quintessential middle-class life at a time when there was no welfare state or social services safety net. The mistake Fr Ryan made then is the same mistake others make now: the assumption that if working-class people are given the same income as middle-class people, they will spend it in the same way and on the same things.
This is rooted in the deeper error that all people share the same desires and aspirations and that they define their requirements in the same way.
This is the fundamental flaw in all talk about the living wage: people do not have the same priorities. Pay one man enough for him to educate his children and buy those periodicals and he might well spend it on a souped-up car for himself instead, with the approval of his wife and children who are not keen on either periodicals or education, but would rather have something flash to drive around in on Sundays.
There is, of course, another flaw, and it is possibly even greater. The living wage argument shifts the calculation of payment for services rendered from what the buyer is prepared to pay for what he needs and wants to what the provider wishes to receive so as to be able to buy what he needs and wants.
This blows all thinking on market forces – the very thinking which underpins free economies as opposed to the economies of totalitarian states – out of the water. The price of goods and services, and this includes wages for work, is what others are prepared to pay for them. It is not what we expect to get so as to be able to buy what we want.
If I am a man with a wife who doesn’t work, four children to provide for and a house-loan to pay, I cannot expect to get a job stacking shelves at a supermarket and have my employer pay me €2,500 a month so that I can make ends meet comfortably, or €3,500 a month so that I can provide my family with recreation and holidays.
My employer will rightfully think that I need to have my head examined, and will point out that before I married a woman who refused to work, brought four children into the world and took on a bank loan to buy a house, I should have made sure I was trained for work that would net me more than the national minimum wage.
The national minimum wage is not there for people to raise families and buy houses on. Equally, arguing for a living wage that will allow clerks and shop assistants to keep six people in comfort while paying a house loan and taking holidays is not a substitute for the commonsense that should tell people they are paid what they are worth and not how much they need.
If they want to be worth more, then they should retrain and move up the income ladder.
There’s another flaw yet. Our society is now rooted in the principle of equal pay for equal work. You cannot pay a man more than you pay a woman, for the same work, or pay a black man less than a white man. The living wage flies in the face of this principle of social justice, while pretending otherwise.
It argues that people should be paid according to what they need rather than for the job they do. So if two men do the same job, and one of them has a wife who works and no children or loans, while the other has a wife who doesn’t work, three children and a large loan to pay, then the first is paid much less than the second. That makes for the gravest social injustice.
And of course, it begs the question: if working as a supermarket check-out clerk will allow you to keep a family of five or six in comfort while buying a house and going on holiday every year, why would anybody want to work hard at a demanding and complicated job or study to better his lot? We would all be supermarket check-out clerks.
This is entirely hypothetical, because the truth is that in a living-wage scenario, there are no jobs to be had because employers move out to a more congenial regulatory regime. Even if the living wage is optional and not mandatory, it will still create unnecessary stresses for employers faced with demands from employees wound up by unions and the Labour Party. Nobody needs that when they can move elsewhere.
The living wage, like social benefits, removes the economic incentive to work hard and make something better of your situation. Ultimately, free-market economies are great wealth-generators which do more to improve the lot of the poor than do socialist regimes founded on idealist and dysfunctional dictums like the living wage and narrowing the pay gap.
People will fight like crazy to get out of poverty and in doing so will make the country richer – that is the American story – but not if benefits and living wages are handed to them on a plate and they don’t need to bother.
The minimum wage in Malta is the highest in the European Union. But in the rest of the European Union, people don’t expect to raise families and buy houses on even two minimum wages, still less one. In Malta, they do – and in this great folly they are encouraged by the Labour Party and its outriders.
To make matters worse, Malta being the EU member state with the lowest rate of women’s participation in the workforce, talk of the living wage has begun to centre already on one breadwinner keeping a family of five and buying a house. The reasoning behind it is not just absurd but derisory: if a woman will not or cannot contribute to the household income, her husband can walk up to his employer and demand a bigger pay-cheque to make up for the shortfall in household revenue created by his wife’s lack of income.
How crazy is that?
Wages are compensation for work done. They are not a social service. Our private choices in terms of home and family cannot be brought to bear in the computation of what we are paid. Otherwise we may just as well argue that a woman who is married to a rich man need not be paid anything at all because she doesn’t need it.
That is how you test the logical strength of arguments in favour of the living wage, and find them seriously wanting.
It is the social services department, and not your employer, which computes how much it pays you on the basis of how many children you have. Those who, like Joseph Muscat, argue for a living wage are simply confusing the workings of the welfare state with those of the job market.
It is not a coincidence that the pressure for the introduction of a living wage is strongest where the welfare state is weakest or non-existent. Those who were not paid enough to live on starved in the gutter in 1906. The situation is rather different now that there is welfare to make up for inadequate wages. Talk of the living wage is still strongest in America, where the welfare system is famously weak.
Ed Milliband’s essential argument for the living wage was missed completely by Joseph Muscat: taking people off welfare and saving taxpayers’ money. Or perhaps he noticed that but thought it wiser not to frame his exciting new concept in that context for his largely welfare-dependent audience.
Milliband argues that by giving employers tax credits for paying people enough to live comfortably on, more people can be taken off welfare and the welfare bill is cut. But in practice, that is not how things play out, and his rival Ed Balls has put a very large rocket under that one.
As he courts Dom Mintoff’s supporters by visiting him repeatedly in hospital and acting as the Mintoff family’s unofficial mouthpiece to the media, Joseph Muscat would do well to remember why those supporters were alienated from Labour in the first place: by his predecessor’s habit of acting first and thinking later.
The living wage, if he continues to harp on about it, may well prove to be Joseph Muscat’s repeater class. He might as well go down to the wharf now and call Mintoff a traitor.
This article is published in The Malta Independent today.
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In the above few paragraphs lies the difference between being factual as against being a charlatan, between respecting the intelligence of others as against taking people for a ride!
The thing which irks me most is that most probably you are preaching to the converted. I doubt whether anyone who could learn from this article would, or could, actually read it.
This is not the first time that Muscat has come up with a ‘great’ idea about the economy. I just hope it is all bluff.
Might as well close down schools and the university, at least the funds which are being spent on them right now will then be used to pay the living wage.
I am still waiting for Joseph Muscat to come up with ONE, just one, idea, proposal, call it what you wish, that can be taken seriously. In the 2 years he has been Labour Leader, which should have been spent trying to convince people that his party is a better alternative government, all we have heard from him is total and utter rubbish. Half baked ideas, copied from other countries, or even books or magazines he might have read.
Unfortunately, the chances of him winning the next election by default, for various reasons you have already mentioned (hdura, egoism etc) are so big that even he probably knows that he does not really even need to propose anything sensible.
Here’s hoping for a Lawrence Gonzi magic trick again.
We are not impressed, Joey.
A magic trick, you mean, like the famous (more so, infamous) income tax carrot trick? I don’t know you from Jesus (pleased to meet you btw) but I trust you are a rational man, as much as I trust that you aren’t the type that hopes his party wins an election with the help of these cheap, last-minute popularity stunts. But in the end, to each his own.
That’s rich, coming from someone who would dearly love all that racanc to get into the driving seat, even though they’re not even capable of discharging their current duties as the opposition.
Magic trick? Like Dr. Sant’s (in)famous ‘Tax Holiday’ scheme on the eve of the 2003 elections maybe? This to name but one of his hare brained ‘magic tricks’ aimed at vote grabbing and borne of sheer desperation and ‘thirst for power’.
Best leave magic to the magicians I think.
Lejborist…why did/will you vote for Labour?
As Baxxter summed it up in another post, not all of those who vote PN do so because they are Nationalists at heart, but because they weigh the evidence that recent history presents and find that the PN is better.
Why do you think that the people currently running the Labour Party are better?
I am genuinely interested and not trying to take the piss.
@il-lejborist
You say
“you aren’t the type that hopes his party wins an election with the help of these cheap, last-minute popularity stunts.”
You probably mean that Gonzi promised to reduce the highest band of income tax before the 2008 general elections, and then went on to win those general elections.
What you are missing is that when Gonzi made that promise, he was (most probably) planning how to win the 2013 general elections also, by thinking through the timing of the implementation of that measure. Think through that.
Daphne, there is one flaw in your argument. People on a minimum wage usually do not buy houses but apply for a government’s apartment.
When you remove 350 to 400€ loan payment from a decent salary of a hard working person you are not left with much more than the minimum wage.
With Dr Muscat’s ideas the middle class would actually earn less than the working class!
Mintoff iehor dan.
“Pay one man enough for him to educate his children and buy those periodicals and he might well spend it on a souped-up car for himself instead,”
We already have ample proof of how these things work in practice. The children’s allowance paid out to enhance the welfare of children within the family is, in a majority of cases, used for anything but.
Perhaps that could be solved with something akin to the smartcard, or whatever it’s called. Then again the student stipend system is another illustration of how such schemes can and do go awry.
You’ve heard the one about taking horses to water, I take it.
You left out Marx, yet mentioned some obscure Fr Ryan that the average joe, like me, knows nothing about…
… but then I don’t come here for impartial advise.
You could, of course, do your own research. Better still, you could advise (it’s a verb, not a noun) your preferred political party to do that research themselves. That’s what you pay them to do. Isn’t it time you got your money’s worth?
Unfortunately my ‘preferred’ political party sees Reagan as a world-class leader and dances to the church’s tune. I doubt they’ll ever say anything nice about the rise of socialism and its positive effects on the life of the average European.
U trid tmur il bingo hux, u fis-sajf trid tmur cruise ma Norman Hamilton wara sena tahdem u tistinka biex tlahhaq mal-hajja.
While on the subject, is a Euro 40,000 salary more or less equivalent to a living wage?
@Daphne. Are the living wage and minimum wage one and the same thing or is there a difference between them?
[Daphne – They are different. The national minimum wage is exactly what it says it is: you can’t pay people less than that. It would be illegal. Malta’s minimum wage is one of the highest in the European Union. However, a minimum wage is not intended to allow one person to keep an entire family, pay for fun things and buy a house. The ‘living wage’ proposes to do that. The minimum wage is pay for work and is based on sound economics. The living wage is a sort of social service, and is not based on sound economics. The reasoning which underpins it is that your employer should pay you as much as you need, rather than compensating you for the work that you do.]
I appreciate you may have done a bit of research to write this, but I’m afraid that such a complex issue needs even more work(!)
For instance, it is not enough to say that people may spend money intended for eduction on a flashy car. You need to quantify this.
Do you really think that leaving people in poverty is a great way of making them work hard for the benefit of all? Have you tried this on your children? I mean, did you have them malnourished, or deprived of a proper education?
[Daphne – I write newspaper columns, not position papers for political parties who are incapable or unwilling to do the work themselves. A newspaper is not the place for research analysis. I find this quite amazing, really. Some people want me to do the Labour Party’s job and act as the Opposition, and others want me to do the Labour Party’s job and prepare a position paper on its ‘policies’ after they have produced them without one.]
Thanks.
There’s another side to discrimination. If the living wage is implemented employers might fire employees who have larger families to keep costs down, as is being done with women who get pregnant.
I agree with you that the concept of a ‘living wage’ is not a new one by any means.
However, it is not an idea that should be thrown out of hand or rubbished off just because Joseph Muscat spouted it out of his magic political hat.
In England, besides the USA as you say, the concept has been accepted and promoted by employers and entrepreneurs like PricewaterhouseCoopers, Barclays as well as many others.
I fully agree with you that our welfare system, as we have it now, while essential is not really encouraging people to become responsible earners. Maybe, this could be another way of looking at the whole “poverty’ question and invest money more wisely into getting people seriously out of certain vicious circles.
Moreover, the idea of a “living wage” is indeed also heavily enshrined in Catholic social teaching especially in the encyclical “Rerum Novarum”.
Interestingly, to such social teaching, several young British, Anglican scholars are turning and promoting precisely such ideas.
David Cameron, for one, is very keen in promoting the “Big Society” idea in Great Britain which is also based on Catholic social teaching.
Thank you for a good article, however, where I find numerous ideas challenging my thinking.
[Daphne – I am a committed liberal. The idea of a living wage is anathema to me, as it is to any person who espouses liberal politics. Joseph Muscat is discovering, I suspect, that socialism and liberalism are two different things, and that he cannot be one while being the other.]
PWC and Barclays promote a living wage? Do they pay managing partners or senior management the same amount as they pay cleaners?
No they don’t. They, like many other good firms, are based on meritocracy. Good people who perform valuable work get paid more.
Daphne, in your reply to CRA you say “Joseph Muscat is discovering, I suspect, that socialism and liberalism are two different things, and that he cannot be one while being the other.”
It seems to me that Joseph, probably after his years overseas, would really love to be a liberal, and, frankly, he seems to be pushing his party in that direction, orange ties, talk of divorce and everything.
[Daphne – THAT IS NOT LIBERALISM. LIBERALISM HAS NOTHING TO DO WITH SEX, DIVORCE OR ORANGE TIES. ]
But of course, he finds himself in a highly conservative Labour party (no contradiction intended), dominated by people with a truly low level of education, where change cannot be implemented without a lot of difficulty, and surrounded by the old guard, which he himself brought back (and he continues to work on it with his association with Mintoff).
So therefore, I believe that this must be very frustrating to Joseph, and I do not know if it explains his recent public absence. I am starting to think that his party is now taking over (I always thought this may happen – he is too young for that sort of party), and if so, Joseph is likely to end up in a very unpleasant situation.
He is more likely to make the same mistakes of Alfred Sant when he was ready to make alliances with the devil to get into power.
“Liberalism has nothing to do with sex…”
I did not mention sex but I am not sure what you were referring to there – must be the time of day/night.
I do maintain a view that divorce is a liberal issue. As for orange ties, I was as serious as the annoying orange.
[Daphne – No, divorce has NOTHING to do with liberalism. Why would it, when every country in the world has divorce except ours and the Philippines? It’s not an issue anywhere else and it is not related to any political philosophy. Some parties may argue over tighter or more lax divorce legislation, but that’s about it – the debate is long, long dead. Liberalism is related mainly to economic policy.]
I’m going to be lazy and refer to an interesting Wiki page:
http://en.wikipedia.org/wiki/Political_compass
Naturally wikipedia is not a Bible.
Personally I’m more of an anarchist, but that’s wishful thinking at it’s extreme. In reality society needs a government that represents the people with enough teeth to protect the people.
[Daphne – If you’re referring to my comment about liberalism having nothing to do with divorce or matters of sexuality (I can’t tell from the moderation end), then what you have here on this link is LIBERTARIANISM not LIBERALISM. The first refers to personal freedom, the second primarily to the economy and matters of the market.]
@ daphne: as I said in my comment, it’s not a perfect, exhaustive description. It’s more of a comic, shorthand view that at least gives some orientation to the laymen (including me). Many descriptions end up overlapping and changing from person to person. The compass helps discern where we all stand on what really matters in today’s world.
Libertarians are really fighting for markets to be unencumbered by governments. They are a bunch of nouveau riche desperate to get richer (Mr Virgin), gloating at how good they were at the game, or, paraphrasing Warren Buffet, “selfish sperm that won the lottery” (Koch brothers, Hilton). It’s a relief that we can still find rich people with a moral spine and some sense advocating for proper government control that benefits the people, government assisted education and health care as well as government funded research (buffet, gates, jobs etc…)
The libertarian’s strident calls for moral freedom is just a whitewash to get the poor on their side (eg: the tools at tea party conventions who are asked to believe in the American dream and suck it). Till a few years ago these same people were fighting for a Christian america complete with intelligent design thought in science class …
Any sane, intelligent citizen that is NOT in the 3% of the wealthiest will work and vote for a strong and compassionate government. Unfortunately the rich 3% are very good at the divide and conquer game and find a ready pool of greedy cynics to push their agenda.
The so called living wage of Joseph Muscat is only Utopia. That is day-dreaming. The only way forward is the social market economy as followed by the PN government.
@ R.Camilleri
The idea of a “living wage” does not imply that the CEO and the cleaners are paid the same wage.
[Daphne – No. It means that cleaners are paid enough to keep their families, a non-working spouse, buy a house and go on holiday. So why don’t we all become cleaners?]
I doubt you’d become a cleaner, Daph. You seem to like what you’re doing more than shuffling along Mater Dei’s corridors with bleach in hand
“The mistake Fr Ryan made then is the same mistake others make now: the assumption that if working-class people are given the same income as middle-class people, they will spend it in the same way and on the same things.”
You couldn’t have put it better. It never ceases to amaze me – even at basic supermarkets – how the trollies/baskets of working-class people tend to be piled high with “kapricci”, rather than essentials.
They also tend to be the people who have a “Sunday car” with all the optional extras.
Is that a study you’re citing or prejudice?
In the paragraph before last, you say that Joseph’s predecessor acted first and thought later. That was probably a slight improvement on the previous predecessors, who had a habit of acting without ever thinking.
@R.Camilleri
A fair question deserves a fair answer but let me first point out the premise that, though I come from a family who always voted labour, I am not an extremist, at all. Actually, I would be lying to you if I told you that I am enthused of Labour’s offerings so far. It is a no brainer that many of Muscat talk is cheese and as much as I’d love to be proven wrong, he gives me the sense of being, yes, relatively intelligent and ambitious but ultimately too young and inexperienced to lead a country. Some of his ideas look like they’re straight out of a politician’s handbook bought off ebay at the spare of the moment rather than the result of sophisticated research and analysis.
On the other side of the political spectrum we have a gang disguised as a political party led by a lying cheat who promises wonders before elections with a ginormous corny smile on his face only to give back a pile of stinky horse shit. He thinks the country is a courtroom where good lawyers can bullshit their way through to win their cases (no disrespect to lawyers intended). Similarly to the Democristiani who reigned in Italy for like 50 straight years, the PN is an incumbent party that made this country so corrupt that even a Mario Puzo book wouldn’t do it justice. Sadly, this power of incumbency that is magnified by their day-to-day flagrant abuse and manipulation of state machinery has guaranteed them one victory after the other in the past twenty or so years.
As much as I’m tempted to stay at home come next election, between an inspired naïve man who might not know exactly what he is doing and the leader of a marmalja, I’d pick the first one anytime, any day.
[Daphne – Oh, no, you’re not an extremist although you come from a family who always voted Labour: you just think that the Nationalist Party is a gang disguised as a political party led by a lying cheat who promises wonders before elections with a ginormous corny smile on his face only to give back a pile of stinky horse shit. What an idiot you are, I mean really. That’s a perfect description of the political party your intellectually challenged family voted for and foisted on the rest of us – the difference being that Mintoff, KMB and Sant couldn’t smile if they were paid to do it. They glared their way to the top. Cut that political umbilical cord. You know you want to, and that’s why you’re here. You’re not arguing with us. You’re arguing with yourself. I’m old enough to recognise it.]
Lejborist I suggest that when you draw references to Puzo you do that in terms of his physical short sightedness, which in your case translates into the quality of your political critical analysis! Maybe you could also refer to the fact that his masterpieces where a direct consequence of his tough childhood as much as your analysis is a direct consequence of your glorious MLP roots!
@Two birds with one stone
“What you are missing is that when Gonzi made that promise, he was (most probably) planning how to win the 2013 general elections also, by thinking through the timing of the implementation of that measure. Think through that.”
Of course, nothing beats a well-crafted PN marketing strategy. Gonzi is so good in this shit he could sell ice to to an Eskimo. But that doesn’t make him worthy of respect however. Quite the contrary I might add.
[Daphne – If there’s anyone who’s ‘good in this shit’, lejborist, it’s the pigs and sows mucking around at Mile End. They’re up to their eyes in it.]
@Lejborist –
Gonzi is worth my respect – even if I will never light a candle in front of his image. You need to learn to respect him as your prime minister who helped steer the country clear through the worst financial crisis in our living memory.
I would rather have a capable strategist leading the government than an ambitious and inexperienced man in his 30s. Leaders need to be able to think through the short and long term consequences of their decisions.
I’m not surprised at Joseph Muscat not knowing about the living wage; David Miliband didn’t know about Robert Mugabe receiving a knighthood until he became Foreign Secretary.