Thursday 7 June 2007

The Bible and productivity

I remembered a Bible text recently and it set me thinking. It turned out to be quite profound. No doubt this view is not original, but still . . . . it's mine.
The text is Leviticus 19, v 9 - 10.
Extract (KJV): "And when ye reap the harvest of your land, thou shalt not wholly reap the corners of thy field, neither shalt thou gather the gleanings of thy harvest . . . . thou shalt leave them for the poor and the stranger."

The first thing that comes to mind is this: the Bible is telling us that we should not drive for maximum productivity and profit margin, but that we should consider the position of the poor and needy.
The context makes it clear that it isn't about giving alms to the poor, or paying taxes to support them. It's about the actual production process; we are ordered, by the Lord, no less, that the poor should be involved in gathering some sustenance at least from the productive capacity of the counry and region they live in.
Of course, not many live by gleaning nowadays (if ever). But there are numerous ways in which this Biblical injunction is still kept, quite unconsciously. It is kept, in short, whenever compassion for a person's circumstances leads managers and owners of businesses to be less than totally ruthless in getting value from labour.
For example:
The woman in the back of the office who makes mistakes but her workmates cover for her because she's going through an awkward divorce.
The old man who is kept busy doing work that a machine could do, but the foreman likes having someone he can call on for odd jobs.

The manager who allows the local scrap dealer to take away surplus metal but doesn't charge very much because it's good policy to buy services locally.

We can all think of similar examples. They are the little ways in which humanity takes the edge off the tough commercial world.

On the wider scale, it's always better for a society to allow the poor to work and contribute in some measure to the society, than to have them live off the latter day version of alms, the social welfare, which in the old English phrase is "as cold as charity".

The "Anglo-Saxon model", as it is called, maximises employment and then tops up earnings with welfare. The "Continental model" - such as France and Germany - attempts to help the poor by telling business to pay them the minimum wage. The result is unemployment and a ruthless drive for productivity which replaces men with machines at the lower end of the job market.

We shall see, eventually, which one will survive the longest.

Update: I had an e-mail from Germany querying the opposition to the minimum wage, and recommending a citizen's basic income.
Oddly enough, I support the idea in pinciple, though I wonder about the practicality. (Also a bit worrying - "You're a citizen, you get a basic income. You're not, so buzz off and starve.")
Leaving aside that, I wonder if there isn't a simple error creeping into the debate.
The distinction between "wage" and "income" isn't always clear. Guaranteeing a minimum wage per hour is nto the same as guaranteeing a minimum income over the year.
Furthermore, the concept of "income" ought to include the benefits provided in kind, in goods and services funded from taxation or national insurance.
And the traditional socialist argument that the "social wage" (roads, waste disposal, clean water, etc.,) must be taken into account in assessing welfare should be dusted off for a re-think.
Regarding the minimum wage: suppose there are three people doing a basic job in a factory. They are doing the same work, same output per hour. The work is simple so the wage is low.
But the workers are not identical in their needs. One may be a student taking a year off before going to university, and still living at home. One may be a person nearly retired, with no mortgage to pay and working to pay for a nice holiday. One may be a single mother with two children.
Their needs are different. If the wage is raised artificially to help the needy one (the third) then the others say "Thanks very much, more beer money for us".
(There's anecdotal evidence that the main beneficiaries of minimum wage legislation are young single people in rich areas who have easy holiday jobs).
And we should not assume that the employer is necessarily making a profit from the lowwages - that may be the case, but it might not be.
So the employer may decide to invest in a machine to do the job - he won't make anyone redundant, but the one will retire and student will go to univeristy and there are two fewer jobs for the next student.
If, however, the wage is set at the market level, then the employer still provides the jobs, and more people are involved in work.
The student will still get his subsidised training, the mother will still get help with rent and child benefit, the retired person can work to retirement.
Targetting benefits to need works just as well in a market-wage society as in a minimum-wage one. And it maximises contributions to society through work.
"From each according to his ability, to each according to his needs".

And before anyone says it: yes, some employers are making money out of paying low-wages for valuable work. Certainly unfree labour is an evil, and factory inspectors can shut down unhealthy workplaces. But the best weapon against such employers is free-trade. Other employers will offer better wages and still make a profit - if they are allowed to set up in that market. Barriers to entry have to be low.

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