Monday, September 27, 2010
Wage Laws Batter South Africa's Poor
Article for 1 Oct 2010. What are the backend costs of government regulation?
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Welcome. This is a blog dedicated to the students enrolled in the CSHS AP Economics classes. Click on the title of the article, read, and click comment.
Government regulation basically eliminates individualism. Regulation can lead to numerous nuisances in the economy such as creating obstacles to the economy from attaining economic growth. Furthermore, the minimum wage law can also raise the cost of hiring individuals as employees. Ultimately, enforcing government regulation in businesses and/or the economy, will eventually impair the individual consumer.
ReplyDeleteBy its nature, government regulation interferres with the free market. As we see here, an attempt at "improvement" is causing more harm. Increasing minimum wage forces businesses to have higher operating costs, which many will deal with by raising prices or (in this case) cutting workers. If the free market were left untouched, things would remain balanced, where there would be more jobs, even if the workers in those positions are paid less.
ReplyDeleteBy raising the minimum wage, government in Africa attempts to improve the living conditions of the lower class. But, by raising the minimum wage, the government also raised the price of production. To cut these costs, numerous employees are fired. In an economy where everyone is trying to cut costs by laying off workers, these unskilled workers have no chance at getting another job.
ReplyDeleteThe backend cost of government regulation is that there are more and more people becoming unemployed. As stated before, raising the minimum wage raises operating costs. Factories are unable to keep as many workers with a high minimum wage. Thus, many people are being fired and are unable to support there families. The government thinks that raising the minimum wage will help the people, but it is hurting them instead. Furthermore, the government thinks that by improving schools it will help the population. But, if the government looks at Maslow's Hierarchy of Needs, they would be able to see that people need to take care of their physical needs before anything else. Education does not matter when your family is starving and you are out trying to earn money to provide for them. The government needs to provide food for the people first before any other steps are taken.
ReplyDeletegovernment regulation is a detriment to the free market system. It makes companies and corporations less likely to partake in the economy and this in turn causes less business to the public and this in-turn has a large back-end cost.
ReplyDeleteGovernment regulations, in this case, are hurting the people even worse by enforcing the minimum wage laws. Now, people that were being paid less then minimum wage, aren't being paid at all.
ReplyDeleteIt is obvious that in certain situations government regulation turns out for the worse. The back end costs of government regulation are pretty much that there is no guarantee that what the government is regulating will actually positively impact the individuals in society. In South Africa, these families depend soley on these poor wages, no matter how much less they are than the minimum wage. So regulating the minimum wage and making these factories that pay less go out of business is completely detrimental to the majority of Africans since they are being left jobless and overall incomeless, which will lead to them becoming homeless.
ReplyDeleteThe African government which is imposing a minimum wage law to help out its citizens is actually hurting the poor instead. By enforcing a minimum wage law, which is higher then what people are being paid causes the business to shutdown due to insufficient funds/profits. Either the company will close down or turn to recruitment of illegal workers. In turn this hurts its citizens because they are left without a job.
ReplyDeleteThe minimum wage laws only hinder those trying to make a living, instead of shutting down the factories they should seek to fine the factories that do not pay minimum wage but are making large profits and redistribute that to the workers and not to aim at companies that can barely clear their operating costs. The minimum wage laws are causing the factories to be unable to compete with the cheaper imports and this in turn is causing factories to make smaller profits, it is a vicious circle.
ReplyDeleteSome back-end costs of raising minimum wage and government regulations is the loss of jobs and the interference with the free market system. By raising minimum wage, the government is subsequently forcing companies to sacrifice paying the salary of other possible employees. This leads to the unemployment rate raising, as well as an increase in the consumer price index.
ReplyDeleteThe back end costs of government regulation are shown in the example of raising the minimum wage in Africa. When the government raises minimum wage, it is thought that it will help the people in that economy prosper, although it doesn't actually help all to much. Companies have advanced notice that th minimum will be raised so they have time to gradually increase their prices so that they won't be losing any money. This hurts the employees, and the rest of the consumers. The consumers have to pay more for the product because the government raised minimum wage.
ReplyDeleteThe backend costs of government regulation according to the information in this article include the opposite happening of what the government is trying to do. In other words, the government was trying to help people get higher wages by enforcing minimum wage but in turn made factories close leaving people without wages in general. This made the unemplyment rate shoot up and the economy suffer. The scenario shows the backend costs of government regulation are that the efforts can backfire and actually make things worse.
ReplyDeleteGovernment regulations usually backfire. In this case, by punishing or closing down the factories that are paying their employees wages that are under the minimum-wage, it causes the unemployment rate to increase dramatically and people suffer from it more than they suffer from the low wages. This also inhibit economic growth in South Africa, considering how the country already has a slow economy recovering rate in the beginning. The failure of the education system in South Africa contributes greatly to this dilemma since there are an abundant supply of unskilled workers and not enough skilled laborers.
ReplyDeleteBy shutting down factories that don't pay the minimum wage, the government is causing more harm than good. The workers are fired and unable to find new jobs in most cases due to the lack of jobs in Africa. This only causes the jobless rate to increase. The economy also suffers because people do not have enough money to support economic growth.
ReplyDeleteThe backend costs of government regulation can drastically affect the African government. The closing of factories that do not suppport min. wage will create a skyrocketing increase in the umemployment rate. In addition, other unforseen circumstances could arise such as increase in poverty and a reduction in production rates.
ReplyDeleteGovernment regulation specifically regarding wages ideally helps those at minimum wage but in reality does more harm then good, especially in countries like South Africa. People unfortunately many times have the mentality "better this than nothing" when it comes to wages. They will do difficult labor for extensive hours and get paid a far cry less than "minimum wage". But 20 dollars a week is much better than nothing at all. The unemployment rate is low as it is, and government regulation is making it even lower because factories cannot afford to pay more for the uneducated labor. There are too many people that are desperate for a job. The government is making less jobs with more pay, but South Africa really needs the opposite right now. If the government wants to interfere, they need to find a way to increase quantity of jobs, not wages.
ReplyDeleteThe government has shut down many factories because they are not paying enough minimum wage to the workers. Because of this, many lower class workers are unemployed and have no money to support their family. In my opinion, the backend cost of this government regulation is that it will cause less consumer goods to be bought because the unemployed civilians will have no money. Therefore, it may cause a depression amongst the country.
ReplyDelete