Other economics
Morrison on small government
On Wednesday Morrison gave a speech to the Victorian Chamber of Commerce and Industry. For the most part it’s the usual load of spin with Soviet-style selected data pulled together by his apparatchiks to place their Dear Leader in a heroic light.
But from about halfway through (go to the words “Can do capitalism”) the speech becomes a disclosure of Morrison’s political ideology, and it’s about the supposed need to rein in the economic and regulatory scope of government, particularly in dealing with climate change. The rhetoric is about the power of unfettered capitalism and economic libertarianism, even though in reality the Morrison Government’s practice would be better described as crony capitalism. In terms of political philosophy it is more reminiscent of Campbell Newman and Jair Bolsonaro than it is of Friedrich Hayek and Margaret Thatcher. Unfettered capitalism for the masses, subsidies and protection of economic rent for the Coalition’s mates.
Unsurprisingly he presents no evidence or coherent argument to back up his assertions. There is no acknowledgement of the reality that Australia has one of the smallest public sectors of all “developed” countries, and is suffering the economic consequences of a 40-year obsession with “small government”.
“Who can you trust to keep the economy strong?”
That’s the Coalition’s latest slogan. Having advanced from three words to nine words they may be engaging in a real economic debate by 2050.
Peter Martin, writing in The Conversation, suggests that by mid-2022 employment and wages will be rising. Housing prices may have stabilized, and interest rates will still be low: Economically, 2022 looks like an ideal time for a government to land re-election.
Whether that is a sound political strategy for the Coalition depends on what comes to mind when people think about “the economy”.
If people’s political views respond to short-term economic improvements, and if they wrongly attribute those to the government rather than seeing them as then normal path out of a recession, then the economic gods are on Morrison’s side politically. That is, if they neglect the fact that the country would have been enjoying a recovery many months earlier if Morrison hadn’t screwed up vaccination and quarantine.
But if people reflect on the structural weakness of the Australian economy after three terms of Coalition mismanagement – stalled productivity, low wage growth, run-down physical infrastructure, widening inequality, a de-skilled workforce, declining education standards relative to our competitors, a tax system favouring speculation over real investment, a bloated financial sector, a volatile exchange rate resulting from commodity dependence, inadequate adjustment to climate change – they will realize that the Coalition is leading the country down a path to poverty, and will throw this mob out.
The challenge for Labor, Greens and independents will be to dispel the idea that the Coalition is competent at economic management. But as Goebbels said, “if you tell a lie big enough and keep repeating it, people will eventually come to believe it”. [1] Successive opinion polls confirm that this is a widely-held belief. Even experienced journalists who should know better seem to take for granted the Coalition’s economic competence.
Labor understands the challenge. On the ABC’s Breakfast program Labor’s treasury spokesperson, Jim Chalmers, says that Labor is ready to take on the Coalition on economic management: Labor welcomes election fight over the economy. He sums up the economy’s structural weaknesses – “eight long years of waste, stagnation and flat living standards”. He also reminds us that Morrison has outshone his predecessors in economic incompetence – $38 billion in wasted outlays in “Jobkeeper”, failures in ordering vaccines and in managing quarantine, and corrupt misallocation of public finances. (11 minutes)
1.„Wenn man eine große Lüge erzählt und sie oft genug wiederholt, dann werden die Leute sie am Ende glauben.“ – generally attributed to Goebbels, but some also attribute it to Hitler. ↩
Horror: we may have to pay more for strawberries and avocados
When the Fair Work Commission brought down its ruling that farm workers who are paid piece rates to pick fruit and vegetables must now be paid a base wage of $25.41 an hour there were squeals of protest from farmers. The Commission’s ruling resulted from an application by the AWU and other unions.
Michael Rose of the ANU, in an article in The Conversation, explains the Commission’s decision and puts it into context: Closing the loophole: a minimum wage for Australia’s farm workers is long overdue.
Piece rates are common in many industries, and they need not be exploitative, because they are generally a supplement to a base wage. Commonly, when piece rates cannot be achieved because of unusual circumstances such as supply-chain problems, payment falls back to the award, but the horticultural industry had a carve-out, meaning employers were not obliged to pay the award wage.
Rose points out that the farm sector, particularly the horticultural industry, is notorious for wage theft, a point stressed on Thursday morning by ACTU President Michele O’Neill on the ABC’s Breakfast program, where she disputed Agriculture Minister Littleproud’s claims that workers are protected from exploitation. ACTU warns new Ag visa risks foreign workers being treated like property. What the government and the industry call a “labour shortage” is really a manifestation of the consequences when an industry fails to pay adequate wages. (9 minutes)
In this industry many workers are foreigners on the Seasonal Worker Program (mainly Pacific islanders), on the Working Holiday Maker Scheme (so-called “backpackers”), and now on the new Agricultural visa scheme. Language barriers, a tether to the sponsoring employer, and a lack of familiarity with labour law make such workers ripe for exploitation. That exploitation can involve not only underpayment of wages but also outrageous charges for poor quality accommodation.
If there is adherence with the Commission’s ruling it will result in some wage justice for these workers. No farmers or horticulturalists would be disadvantaged because they should be able to pass any higher costs through to wholesalers, retailers and consumers. But there is a risk that, in a misguided idea that it should support small business, the Commonwealth will go easy on enforcement, thus putting ethical producers at a competitive disadvantage and driving them out of business. O’Neill points out that under the current schemes not a single employer has been prosecuted.
Rose notes that the Australian Fresh Produce Alliance, the Australian Industry Group and the National Farmers’ Federation all opposed the unions’ application. In doing so they are reflecting a model of business as a conflict of class interests, rather than a model of business as an opportunity to share prosperity between stakeholders. Morrison may prattle on about our capitalist economy, but some of our business lobbies haven’t advanced out of feudalism.