Fakes left and right duke it out over fake wage gains

Here at MB, we have chronicled the long term decline of the Australian political economy. Often times we castigate the “fake left” for abandoning basic economic principles and the defence of workers in favour of identity politics. Yet, in truth, it is no better on the “fake right” which has abandoned basic economic principles and the defence of markets in favour of its own identity political grouping, labeled “business”. The folks we know as vested interests and rent-seekers.

Nobody encapsulates this philosophical degeneration better than former great intellect Paul Kelly who, on the weekend sank to an all-new low. His subject was industrial relations and his target was Labor. But his methods were absurd:

  • Albo is seeking to rerun an industrial relations election over higher wages and better working conditions via his new policy regulate casual work and the gig economy.
  • But it has already backfired because Innes Willow of Australian Industry Group says its anti-business.
  • The Government says it’s a $20bn cost and it would never lie.

That’s the nub of his argument, believe it or not. Dressed up with cherry-picked statistics supplied by Willox that seek to make the casualisation trend a myth, without any research or fact-checking from Mr Kelly.

Yet here are the raw facts of the matter:

Obviously, this is fertile ground for a “labour” party amid concerns about inequality. Not least for a labour party seeking to recapture some modicum of its former class warfare focus. And one that needs to recapture blue-collar areas of QLD to win power.

What credentials does Innes Willox have to attack it? None. He is a business lobbyist and head of the Migration Council, a double conflict of interest if there were ever two. In both of these roles, he has dedicated himself heartily to crushing Australian wages on behalf of AIG members. That is, he is seeking rent. Does that make for good or even credible macroeconomic policy? Pfft.

Once upon a time, Paul Kelly would have laughed at such simplistic notions. Back in the day, he focused on what does matter to economic outcomes: productivity gains. But, in Australia today, and for the fake right, which likes to protect “business” not markets, that has long passed as legitimate. Never a thought is given to the fact that this is disproductive, especially when it comes via Innes Willox’ ceaseless campaigns for ever more cheap foreign labour.

What Australia needs is stronger wages growth to reboot productive investment. Sure, this will cost a few jobs. But that’s good! Those jobs will go because capital is forced to find new efficiencies in automation and better processes. The freed-up labour is reallocated to more productive areas of the economy.

This is the push/pull of an advancing economy with productivity-driven rising profits that are shared between capital and labour resulting in rising living standards.

Willox (and Kelly’s) alternative “trickle-down” path is a flattened mass of poverty-stricken drongos exploited by a tiny number of robber barons. Moreover, it is the key driver of the rise of western populism that Kelly spends half his time wailing about.

The Paul Kelly of yesteryear knew these basic truths. But, hey, when Kelly’s boss and the great robber baron himself, Rupert Murdoch, speaks, all minions must listen:

Better material came from Peter Hartcher who noted:

  • Gig economy regulation and entitlement portability is already used in construction. Labor plans to roll it out into other appropriate sectors. The $20bn cost is a concocted lie.
  • Morrison started the fight with his omnibus bill which weakens worker bargaining power.
  • This presents Labor with a political opportunity that it has seized even if the omnibus bill is withdrawn.

True enough. In symbolic terms, the industrial relations debate is a win for Labor.

That said, the difference is only at the margin given industrial relations is microeconomic and the real issue is macroeconomic. The permanent labour supply shock delivered by mass immigration will be just as bad under Labor. Even as Labor pretends to care with temporary visa cuts that are offset by an expanded permanent migrant intake and the same old commitment to cheap foreign labour masquerading as international students:

Neither side is serious about higher wages but both will debate it all the more furiously for that.

David Llewellyn-Smith
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Comments

  1. In an era a central bank can effortlessly create fiat “money” by pressing a button, everything said fake money can buy (including the pollies) will be equally fake and rightfully so. History will show that QE, not the USSR, destroyed capitalism.

    Now the “generation fake”, who grew up after the GFC and the original QE, are approaching the voting age. Fun time ahead.

    • The central banks seem well aware that printing money doesn’t actually increase production capacity within the economy.
      All this printed money is being directed at inflating the prices of pre-existing assets.

      • Be that as it may, they (the CBs) do not appear to comprehend the generational impact.

        Think about it – a whole generation that grew up without knowing what is NOT fake. For them, fake is the norm.

        • Jumping jack flash

          This is correct!

          Debt money is fake money, but nobody can tell the difference if you hand them a pile of money that was obtained through productive enterprise, or a pile of debt money magicked up from the bank. Debt looks, smells and tastes exactly the same as real money. The most important difference though is that one pile of money is “free”, and the other pile costs money while it exists.

          However I digress. The solution to the problem is to find the missing feedback between debt and wages, and that feedback is CPI.

          Wage theft suppressed CPI (and obviously wages too). Missing inflation in goods and services couldn’t then be used to inflate wages. Wage theft was absolutely necessary though because the economy had stagnated to the point where if raising CPI was attempted, then demand would crater. It was a catch-22.

          Stagnant wage growth in turn stagnated the debt growth, leading us to economic devastation, which was completely obvious by 2019.

          If they want an economy based on nothing but debt growth then they need high CPI to feed back into wages to support the debt. They can’t have their cake and eat it.

          • Any solution must involve reviving of capitalism.

            Capital was supposed to be scarce and precious. That drove the capitalists to strive for efficient allocations of scarce capital. Now that the QE destroyed the basic premise, there is no longer any need to efficiently allocate capital – which is abundant and in fact unlimited. No wonder the Moron Side of the Force rules.

            The generation fake do not know how capitalism works, let alone how scarce and precious capital is meant to be. The longer the CBs kick the can, the greater proportion of the population will become the generation fake.

            But my sense is that the CBs will not act. After all, the blue pill looks more beautiful than the red one.

  2. For business and the Coalition, it is easy to see their motivation for wage-crushing behaviour. Lower wages mean higher profits for business who, in the game of mates, pass back largesse to their corrupt political friends.

    But what is the advantage for Labor to cling to the core of the policy set that delivers this – super-charged immigration? Why has Labor ditched the twin notions that underpinned the Hawke-Keating years – productivity and a square deal for workers?

    The obvious response is that they’re both stupid and as corrupt as the LNP – but can it be quite that simple?

    • Arthur Schopenhauer

      Lol. 🤣 For the people working in part time and casual
      positions, they are effectively the same thing. For employers they are not.

      The argument stands.

      • robert2013MEMBER

        I am part time and permanent. I get long service leave, holiday pay and sick leave, and job security. I’ve been a casual. In my field it usually means either you don’t know if you’re working on a particular day or not, or it means that you are filling in for someone on some kind of leave. The two do not compare.

  3. It’s interesting that the RBA has been justifying their decisions based on increasing wages to create inflation. Along with a lower dollar they know that is the only possibility of creating inflation in the 2-3% band. Yet we have a LNP government, supported by business, doing everything they can to keep a lid on wages.
    We see it perfectly encapsulated around fruitpicking and the threat of higher vegetable and fruit prices resulting from a shortage of labour and the unwillingness of farmers to pay higher wages to attract workers. The RBA claims to want higher prices but does anyone else? I think they need to explain why exactly they want 2-3% inflation.
    I think it is much easier for wealth inequality to creep up while the money supply is expanding. The proles think they are making progress with wage growth but relatively speaking they are going backwards. I think the RBA love this current scenario whereby all this QE is ending up in the pockets of owners of capital.
    Even Jobkeeper was designed so that the 100B ended up in business owners hands as a wage subsidy. The workers were just happy to keep their jobs.

    • RBA charter:
      It is the duty of the Reserve Bank Board, within the limits of its powers, to ensure that the monetary and banking policy of the Bank is directed to the greatest advantage of the people of Australia and that the powers of the Bank … are exercised in such a manner as, in the opinion of the Reserve Bank Board, will best contribute to:

      the stability of the currency of Australia;
      the maintenance of full employment in Australia; and
      the economic prosperity and welfare of the people of Australia.

      The stability of the currency is maintained by targeting a fixed and known level of inflation. Why 2-4%? You basically answered it yourself.
      “The proles think they are making progress with wage growth ”
      A population seeing their wages increase and the value of their assets increase is much happier than the same one watching them decrease.

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