From: yar@cs.su.oz.au (Ray Loyzaga)
Subject: Re: How Fightback Delivers Hi Unemploy
Reply-To: yar@cluster.cs.su.oz (Ray Loyzaga)
Organization: Basser Dept of Computer Science, University of Sydney, Australia
Date: Thu, 13 Aug 1992 03:54:10 GMT

In article <996200257@peg.pegasus.oz.au> agarton@peg.pegasus.oz.au writes:
>
>
>from David Nerlich posted c/o agarton
>
>****************
>
>This is for anyone with a stake in the result of the forthcoming
>Federal election - particularly in regard to the Hewson/Fightback
>approach to industrial relations.

We all have a stake in the forthcoming elections.

>
>It is not difficult to argue that Hewson's strategies for raising
>productivity and lowering unemployment will create entirely the
>opposite results from those intended and even cause lasting damage
>on both fronts.

Arguing is easier than proving, lets see which path you choose.

>1:  NO GAINS ON UNEMPLOYMENT
>
>To start with there are the obvious short term negative effects on
>private sector employment caused by dropping tarrif walls and and
>of course there will be extensive lay-offs in the public sector.

Please get your facts straight, the tarriff reductions are not going to
happen in the short term, they are long term aims set down to reduce
most tarriffs to the 0-5% level by the end of the decade, the
present Labor Administration has similiar long term goals.
You have also not bothered to factor in the "hidden" tarriff that
the GST as proposed in Fightback imposes on imports, in effect
it gives a 15% advantage to the Australian content of a product.
Yes public sector cuts will have a short term effect on domestic
demand, the associated tax cuts will have a short and long term
effect to boost domestic demand, so far you score O.

>But beyond this, the very idea that exerting downward pressure on
>wages (ostensibly because some workers are "pricing themselves out
>of a job") will reduce unemployment is flawed.

It would be nice to prove this, rather than just stating it as obvious,
rather it seems obvious to me that lowering the costs of employment
will achieve more employment, i.e. you can buy more for your dollar,
some projects become more viable with lower cost structures etc.


>In fact an overall lowering of wages will bring about a RISE in
>unemployment because it will DRIVE UP THE PARTICIPATION RATE (the
>demand for jobs). It stands to reason that if a breadwinner is
>working at 70% of the current award it's far more likely that that
>person's spouse will also have to go out and look for work.

Ok, since we are attempting to discuss the Opposition's Fightback
document, please give me a page and line number that details
the policy to reduce wages to 70% of the current award, or is this
a figment of your imagination? If so you are nothing but a pathetic
liar. I will argue that if you reduce the intelligence of the average
human being by 70% one can assume that they will join the ISO and
get an instant connection to the Pegasus network, but without
any proof both your statement and mine are worthless, at least
I can offer your previous postings (and of your ilk) as evidence
of some intellectual impairment, all I want it the reference to
the 70% figure in Fightback.

>It must be remembered that "unemployment" is not a simple measure
>of the amount of work being done or not being done. It is a
>measure of DEMAND for jobs just as much as a measure of supply (or
>to be precise, its the extent to which demand outstrips supply).
>This is how we can have in the ten years to November 91 a rise in
>unemployment from 5.5% to 9.6% -  a 4.1% rise - while the actual
>employment/population ratio dropped only .9 of a per cent.  And
>the rise in the last year to 11.% is largely attributable to a
>roughly 1% rise in demand (to a participation rate of 63.5%).

Gosh golly, its amazing what one can do with statistics, you are
of course correct, there is no unemployment problem, its
just that too many people want to work. The participation rates
count part time employees, this is what has grown, in times
of unemployment, both the husbands and the wives go looking for
jobs, this pushes up the participation rates, the unemployment
rates DO NOT count part time job seekers as unemployed.
The unemployment figures do not count people, who are on the dole
but on one of the training schemes. The government training scheme
is a "cheap" way of reducing the unemployment figures.
The unemployment figures are produced by a survey, where the questions
that are posed are, Are you unemployed? Are you looking
for full time employment? Are you immediately available?
The last question eliminates trainees because they theoretically
cannot resume fulltime employment until after the end of the
training course.

>Now the issue of rising jobs-demand may be clouded somewhat by the
>increasing opportunities for women to enter the workforce, but it
>would seem that higher demand would correspond to comparative
>financial hardship, declining living standards, real-wage
>restraint etc. Whatever the changing gender ratio in the
>workforce, the two income family has become the de-rigueur
>situation for servicing mortages and so on.

Two income families are also a sign of a better educated female workforce,
delays in child bearing, smaller families (earlier ability to resume
fulltime employment), slightly improved childcare facilities, and that
funny old effect of wealthy countries that reduces the number of children
being born with increased income due to the pursuit of quality of life.

>So, if we appreciate the significance of the jobs-demand factor on
>unemployment its not hard to start shooting the wings off the
>Coalition's supply-side approach to the problem.

Yeah, but since the participation rate is a furphy, due to the counting
of part-time workers/seekers you see that your argument is hopeless.
Even neglecting this, you argue that a two income familiy is almost
a necessity so the participation rate is irrelevant, the increased
demand for jobs needs to be serviced to allow people to live.

>The demand factor is an index of financial pain. The Libs however
>would attempt to get unemployment down by cheapening the value of
>jobs, thus INCREASING the pain, thus achieving precisely the
>opposite result - getting unemployment UP by driving up demand for
>more jobs! (To complete the picture you can count in the GST
>jacking up the cost of living that little bit extra).

But since your assertion that the Libs want to decrease the
award incomes to 70% of their current values is completely
baseless your conclusions are equally bogus.

>Idiotic isn't it? It's a classic case of one-eyed, supply-side
>economics.  And everybody loses.

I agree, up until now, what I have read is idiotic.

>2:  NO GAINS IN PRODUCTIVITY / EFFICIENCY
>
>To set the scene we could make a simple observation that it is not
>countries with cheap labour that are leading the world, it's
>countries
> with advanced technologies. As Dawkins has recently observed,
>Australia, with a fraction of the population, constitutes an
>economy larger than most of the Asian 'tigers' put together.

Having just shot yourself in the foot by promoting advanced technologies
as a means of creating a wealthy country, you compare the performance
of the "asian tigers" against the Australian economy, without considering
that most of our GDP is generated in non-technology related industries.
If Singapore, Hong Kong, South Korea and Malaysia had anywhere near our
natural resources at the same level of exploitation that we have, they
would have much larger economies than our own, the fact that pip-squeek
resource barren islands like Hong Kong and Singapore are even a force
in world trade is a credit to the people that live in those countries
and serve as a good example of what can be achieved despite enormous
disadvantages.

>However Hewson and Howard seem to want to change all that. They
>point to superficial gains in productivity that can be had by
>cheapening the cost of human labour and with typical
>singlemindedness ("to gain we simply must have more pain!") they
>ignore the importance of the race for technological productivity
>and efficiency in the world economy.  Cheapening human labour puts
>it in competiton with technological labour and serves to slow the
>introduction of new technologies and before long we would see many
>Australian industries out of the race for good. So much for the
>clever country, so much for the lucky country.

Hewson and Howard want to cheapen labour by reducing the impediments to
employment and productivity, these include at the periphery things
like excessive penalty rates and leave loadings, which the media
like concentrating on, but more importantly want many of the restrictive
practices that have become endemic in our economy removed, they also
have policies to remove payroll tax which is a cost of employment
that impacts on the number of people being employed by an organisation
and on an organisations ability to expand.

>So again we can see the Liberals' strategy delivering negative
>results, precisely the opposite from the ones they apparently
>expect. We can see and show what a pair of pathological ideologues
>Hewson and Howard really are and what an unmitigated disaster
>their election would be.

I think you have certainly pointed out a "pathological ideologue"
in our midst. 

>I hope some of you find this information *useful* in the coming
>months.  Most of the statistics I've quoted are available in a
>free pamphlet from the Australian Bureau of Statistics.

And some of the rest you have invented like the 70% which premised
your whole argument.
>David Nerlich
>
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