Stern again

Finweek English Edition - - Letters - D DE VIL­LIERS

AT THE RISK OF en­ter­ing into a “pen pal” com­mu­ni­ca­tion through your mag­a­zine, I need to re­spond to the let­ter from Joel Stern head­lined “Stern re­buke re­peated” (31 July). First, I must thank him for sub­tly ac­knowl­edg­ing that he didn’t pro­vide the cor­rect facts in his ini­tial let­ter.

Sec­ond, the re­duc­tion in trade union labour in the United States might be due to a change in the macroe­co­nomic pol­icy from the Six­ties to the cur­rent, or per­haps it’s be­cause the US as a coun­try hasn’t signed the In­ter­na­tional Labour Or­gan­i­sa­tion’s Con­ven­tions on Col­lec­tive Bar­gain­ing and Free­dom of As­so­ci­a­tion. It’s eas­ier for US com­pa­nies to ex­ploit labour in East­ern coun­tries, where min­i­mum wages aren’t pre­scribed and the “free mar­ket de­ter­mined wage” keeps those em­ploy­ees in the poverty trap.

Third, thanks for re­fer­ring me to the im­por­tant work by Wal­ter Wil­liams. It makes for in­ter­est­ing read­ing, es­pe­cially the fact he op­posed the in­crease to the min­i­mum wage in 2006 at the time, while five win­ners of the No­bel Prize for Eco­nomics (Ken­neth Ar­row, Stan­ford; Lawrence Klein, Penn­syl­va­nia; Robert Solow, MIT; Joseph Stiglitz, Columbia; and Clive Granger, Cal­i­for­nia) sup­ported the in­crease, say­ing the value of the last in­crease in 1997 had been fully eroded.

But per­haps we should just ac­cept that economists get it wrong most of the time.

CEO, MISA trade union

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