I refer to the letter Minimum wage not a cure-all . In short, Rajan claims that by legislating minimum wage, unemployment would increase and the minimum wage law would hurt the very group it is designed to help. That would be true if we set minimum wage at a high rate.

Labour cost is only a portion of the total cost of production of good and services. Capital cost, patent, licencing and transportation are some of the factors influencing total cost of production. We should concentrate of moving up the economic ladder, investing more in capital hence improving labour productivity. Instead of competing in terms of labour cost, we should compete to reduce capital, bureaucracy and transportation costs, the other factors of production.

For example, lowering the cost of capital (lower interest rate) and simplifying bureaucracy will go a long way towards improving business profitability and our country's competitiveness.

We, as citizens of a country, should refrain from concentrating wealth within a small select group of citizens and try to reduce the gap between rich and poor.

Minimum-wage law is just a small step toward this. It's about providing a decent income for our workers. It's about preserving self-esteem, and that everyone's contribution is valued in our society. It's about projecting the message that no one is being disenfranchised in our society. It's about social justice.

Not so long ago, I read a malaysiakini report about bonded labour (another term for slavery) at some palm oil estates in Pahang. Even though people are supposedly free to seek higher wages 'elsewhere', for some people this is not possible because the barriers are too difficult to overcome. Problems with housing, languages and identity cards are involved. Should we just leave them making RM200 a month even though they work 10 hours a day, six days a week with their employers raking in most of the profit?

Opponents to minimum wage are typically from elitist and bourgeois backgrounds, who may study at 'elite' and 'prestigious' schools, their dinner spending may equivalent to a month's wages of a worker from the lowest income group. Yet they scoff the idea of paying their fellow countrymen more, those who work at the same establishment where they eat.

Last week, the Chinese government began cracking down on foreign firms who pay their employees below the minimum hourly wage of US$0.73 ot its equivalent. That's about RM2.52 per hour.

Milton Friedman proposed Negative Income Tax (NIT) during the Nixon era, but he opposed it when Congress was going to implement it as it was packaged with other measures. Yes, Milton Friedman opposed NIT! NIT requires considerable reporting and supervision, bureaucracy in another word. It provides a Guaranteed Minimum Income (GMI), which provides money to survive on.

If survivable income in Seremban is RM500 per month (just enough to pay a room's rent, food, power and water) then GMI should be RM500. If Rajan is working 10 hours a week and gets RM3 per hour, then he should get a top up of RM365. Fair enough, but this doesn't encourage Rajan to seek full-time employment, since for any amount he earns, as long as it is below RM500, he will still get RM500. So he might as well work less.

Technically, employers could pay wages of RM0.50 per hour (remember, there is no minimum wage here) and this still won't encourage workers to seek other employment. Workers would be happy getting their survivable income and stay in their jobs, with companies raking in huge profits. The government and taxpayers would be saddled with an ever-increasing wage subsidy.

This would result in higher and higher tax rates for the taxpayers. I don't think this is the path we are after. In Western countries, minimum wage is complemented with a Guaranteed Minimum Income in such a way that it encourages the unemployed to seek and gain better employment. Even the fabled free market America has a Minimum Wage Law in place.