catallaxy files

catallaxy in technical exile

Power imbalances and the last hurdle in globalisation

with 47 comments

Fred Argy is worried about power imbalances between employers and employees. He writes:

    The impact on workers of Work Choices and the welfare to work reforms is being mightily reinforced by what is virtually becoming an open door to labour from overseas – much of it from low-wage countries.
    Australian employers now have three ways of responding to domestic labour shortages without raising wages: they can import workers; they can off-shore some of their activities; or they can bully their workers by simply threatening to transfer their operations to a lower wage country.
    In theory a more flexible labour market and increased labour and capital mobility should have positive effects on overall economic wellbeing in the long term (in the same way as improved trade opportunities). But current policies have ugly implications for income distribution and for the nation’s social cohesion and sense of community.
    I would prefer to see some moderation in IR and welfare policy and a less open door stance on immigration plus a greater focus on training and active social investment to help build up the capabilities of less-skilled workers

Argy has usually been identified with the left of centre. But the concerns he expresses here may make for some unusual political bedfellows.

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Written by Admin

October 26, 2006 at 9:35 am

Posted in Uncategorized

47 Responses

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  1. Over at Club Troppo, commenter Don Wigan made this point:

    The aim of shutting unions out was more about payback to them and the ALP than seriously improving labour market flexibility. And it may well be to the government’s cost.The over-use of 457s to get in low-cost, low-cost labour, especially to country meatworks and similar could lead to a new outbreak of Hansonist xenophobia. There have already been some dog whistles from Beazley, with the government itself, having recently exploited the issue to the hilt in the ‘01 election deservedly looking shamefaced about it. It could become a very destructive and ugly situation if local low-income people perceive themselves as disadvantaged over it.

    If the government really believes it must use 457s, it would be much safer to have the unions on side.

    I don’t know about having the unions on side or his payback arguments, but I do think there is real potential for xenophobia to emerge. One of the local meatworks here employed a large number of Brazilians on 457 visas, when despite the mining boom there are a large number of indigenous people in town who don’t have work. This has definitely got the potential to be a wedge issue.

    skepticlawyer

    October 26, 2006 at 10:41 am

  2. So what is the problem about getting the local unemployed into work? What if the unions and the Argies of the world apply their minds to that question?

    The way Fred is travelling I suppose he really wants the full Federation trifecta, what Gerard Henderson and Paul Kelly have written about under various names like The Australian Settlement – central wage fixing, tariff protection and the White Australia Policy.

    Rafe Champion

    October 26, 2006 at 10:53 am

  3. Maybe he does want that, Rafe, although I’ve learnt through experience not to try to second-guess peoples’ motives. Courts routinely (and with much better evidence) get motive wrong.

    I do think Argy has a point with respect to the xenophobia issue, and that it needs to be addressed. Employing the local blacks may have a higher short-term opportunity cost, but the long-term cost of rupturing the social fabric in regional centres is, IMHO, much higher.

    skepticlawyer

    October 26, 2006 at 11:08 am

  4. of course we already had a flexible labour market indeed well before EBA Australia was more flexible than the USA.

    I assume people are talking about deregulation which has not happened here. the Labour market has been re-regulated.
    It takes longer to register a AWA now than previously with a EBA.

    Given the profit and wages shares of GDP I just wonder how much more it can go

    Bring Back EP at LP

    October 26, 2006 at 11:13 am

  5. Skeptic lawyer quotes Don Wigan’s reference to xenophobia and refers to it herself, but in connection with concern about displacement of local workers.

    It’s important to understand that concern about the labour market and social equity effects of contract overseas workers is not xenophobia.

    The effect on aboriginal workers is in fact an excellent example of the dangers of these programs. When employers are free to gorge themselves on dependent, non-unionised, low paid workers from overseas, they also become free to practise all sorts of discrimination against local workers.

    These sorts of programs effectively protect employers from having to compete in the labour market, and in so doing allow weak businesses to survive when other economic factors would normally shut them down. For example, growth in low-cost abattoirs encourages overstocking on dry Australian farms.

    Tony Healy

    October 26, 2006 at 12:50 pm

  6. That may be the economic rationale, Tony, but local reaction is usually couched in xenophobic terms, which I will not repeat here but you get the idea.

    skepticlawyer

    October 26, 2006 at 1:12 pm

  7. If Freds worried about the share of gross domesticl revenue going to profits he ought to be talking about lower and more stable monetary growth.

    If Freds worried about real wages falling or stagnating he should be talking about a higher rate of capital formation.

    Get with the program Fred.

    GMB

    October 26, 2006 at 2:58 pm

  8. “That may be the economic rationale, Tony, but local reaction is usually couched in xenophobic terms, which I will not repeat here but you get the idea.”

    Perhaps on the ground (and even there only amongst people who are predisposed to racism and xenophobia anyway), but by Zappa’s ghost I’m sick of hearing about Beazley ‘dog-whistling’. The closest he came to xenophobic was mentioning the particular nationalities of the majority of 457 workers. He could, I suppose, have just said “foreign workers” – would that have made any difference?

    FDB

    October 26, 2006 at 3:47 pm

  9. “but by Zappa’s ghost ”

    Their might be a hidden, buried sublimated tad of righteousness to work on in this lefty after all.

    GMB

    October 26, 2006 at 3:54 pm

  10. I don’t think Beazley was or is a racist, FDB. I do think that people on the ground respond in a xenophobic way. And the problem is, they may have the right answers but for the wrong reason.

    This is a large and complicated issue for libertarians and immigration advocates alike. It shouldn’t be pushed aside or written off as ‘dog whistling’. And it may mean that the preservation of social cohesion means spending money on training Australians and preventing certain types of immigrants (mainly low-skill) from coming here. Steve Edwards has libertarian, property-based arguments for this. I don’t.

    I just know what happened in poor communities when I was a kid when ‘outsiders’, be they Aboriginal or immigrant, got something that other (equally poor) Australians didn’t. It wasn’t pretty, either.

    skepticlawyer

    October 26, 2006 at 5:01 pm

  11. This fear of an outbreak of xenophobia is unreasonable, for years the construction industry has been run by migrants. On some Mirvac jobs it was ‘spot the aussie’, it was more like a meeting of the UN. Ditto Transfield and Westfield.

    The unions are the xenophobics, one of the key speakers Doug Cameron against migrant workers taking away honest battler jobs has a broad Scottish accent.

    rog

    October 26, 2006 at 5:15 pm

  12. I was referring to your Wigan quote above, as well as 5 thousand or so bars of CL’s hit single: The Labor is Worse Variations.

    FDB

    October 26, 2006 at 5:18 pm

  13. Rog – practically all the union movement is Scots, for some reason. I think if foreign workers were allowed and willing to join a union then their race would be of little consequence.

    Doug Cameron campaigns against 457 workers taking away UNION jobs – you might not agree with him but it’s simply not xenophobia.

    FDB

    October 26, 2006 at 5:22 pm

  14. Didn’t think you were, FDB. Not for a moment. I do think – regardless of whether it’s xenophobia, rank prejudice, fear, or whatever – it should be considered and taken seriously. Australia will become an unpleasant place to live in if it isn’t, IMHO.

    skepticlawyer

    October 26, 2006 at 5:43 pm

  15. Fred wants to go back to the future. He wants to bypass Hawke/Keating and travel back in time to the 50’s or some time such as when we needed import quotas on foot wear. Nothing wrong with nostalgia. I also think back to the wonderful times when I was kid.

    The point is Fred can close off immigration to reduce supply of labor, he can do that and the price of labor may go up. However he also wants to reregulate the labor market again with…. intelligent policies this time ( as though newly discovered brain waves). If he does that we need to make sure the RBA is geared to run an inflationary monetary policy to ensure that a wage (and labor restrictions) adjustments by central authorities are depreciated back through inflation in order to keep wages below the clearing rate. We can do all that, however unless Fred is better than God and can undo economic laws he cannot push wages up higher than the rate the market can clear without causing a rise in unemployment.

    So, it’s not goood saying we can’t go back to the future with fred’s “bright ideas”. However if he’s looking to increase living standards by regulating the labor market, Fred better have higher powers than god.

    Now let’s compare Fred’s thesis to an open and free labor market.

    We can achieve economic growth, higher living standards and an open vibrant economy not scared of the outside world with healthy levels of immigration by simply leaving all well alone.

    jc

    October 26, 2006 at 5:56 pm

  16. actually JC I think you are reading Fred the wrong way.
    He is by no mrans advocating a protectionist policy more an active labour policy as I read it

    Bring Back EP at LP

    October 26, 2006 at 6:56 pm

  17. FDB the union movement is NOT practically all or even slightly scottish. In construction many of them are from north england or ireland.

    And lets get one thing clear, unions do not own jobs so they cannot “lose” them. What unions have lost are members.

    rog

    October 26, 2006 at 11:13 pm

  18. Homer

    fred’s system would require protection even if he doesn’t now this.

    jc

    October 26, 2006 at 11:22 pm

  19. The unions argument falls down when it was revealed that the biggest customer of 457 workers was the NSW health service – nurses. This is common with oversease where HCW move freely around the globe to fill shortages.

    http://www.thinkingaustralia.com/migration/brief_view.asp?id=46

    rog

    October 26, 2006 at 11:27 pm

  20. FDB’s one Top 40 tune is the hiphop mouthful entitled “I’ll Be Obsessive About CL and Thereby Win Friends At LP”. Macklin, Smith and others have gone out of their way to name ethnicities in their ongoing visa scaremongering campaign. The Premier of Western Australian has even argued – without chastisement from his fellow Sandgroper, Mr Beazley – that foreign workers might cause riots and that WA might one day regret welcoming such people. Beazley has also been hitting the dog-whistle over “Australians First” at TAFE colleges. All of this is unreconstructed Hansonism.

    C.L.

    October 26, 2006 at 11:36 pm

  21. Before the debate goes further off the rails, let me explain further my position. I am all in favour of helping workers in less privileged countries but the best way to do this is by stepping up our foreign aid (with strings attached if necessary to ensure it is not wasted). Our aid program is pathetically low.

    To help disadvantaged foreigners with an open door guest migration program threatens to undermine the bargaining position of Australian workers, create general resentment against migrants and increase resistance to future stuctural economic reform of the liberal kind. In other words it runs the risk of being socially and economically counter-productive.

    Fred Argy

    October 27, 2006 at 9:52 am

  22. JC, no it doesn’t.
    It merely needs a pretty active labour policy.

    If we need skilled labour here why are all the problems occurring with unskilled labour?

    Bring Back EP at LP

    October 27, 2006 at 10:21 am

  23. Good one, Fred. So you would be upping foreign aid when the Australian worker could least afford it. That would make that element of policy about as popular as Keating at his wife’s party.

    As I said, Fred, you had better make sure monetary policy is no longer independent as you need to run a pretty high inflation rate to keep the boiler running. While your at it I would also suggest you cap the long end of the bond market through interest rate controls as yuou don;t want those rates to go through the roof. do you?

    jc

    October 27, 2006 at 11:17 am

  24. jc, Australian workers would prefer to pay $1 per week towards foreign aid rather than having no pay at all. They would also be much happier doing this if they could see that all the nice people in suits were doing the same instead of giving lectures about protectionism.

    rog, the use of 457 visas for doctors and nurses doesn’t invalidate concern about contract overseas labour at all. The problems are in other sectors, including construction, manufacturing, IT and abattoirs. If the shills had got their way in 2004, we would also currently have problems in agriculture.

    To those of you who are business guys, understand that these programs protect weak or dumb companies from competition. They let used car salesmen set up in competition against you. In the long term, it’s a bad move for the economy.

    Tony Healy

    October 27, 2006 at 11:38 am

  25. “FDB’s one Top 40 tune is the hiphop mouthful entitled “I’ll Be Obsessive About CL and Thereby Win Friends At LP”.”

    Hey, there’s a new verse! “FDB is worse”.

    Kinda catchy.

    I stand corrected.

    FDB

    October 27, 2006 at 11:38 am

  26. Consider the currently topical area of drought-affected farms. If the agricultural guest worker schemes had been approved, there would be more use of marginal land and more pressure on dwinding water.

    An economy is a balanced system. There’s an important role for competition to play. That is, if companies can’t afford to pay market wages, they should make way for better companies.

    Tony Healy

    October 27, 2006 at 11:43 am

  27. Healy
    A dollar week a per worker is hardly going to make it to Fred’s objective of increasing foreign aid.

    That’s $360 million per year. big deal.

    “They would also be much happier doing this if they could see that all the nice people in suits were doing the same instead of giving lectures about protectionism.”

    Could you try again as this makes no sense to me.

    jc

    October 27, 2006 at 11:45 am

  28. So back in 2001 the lefties couldn’t queue up quick enough to condemn anyone who suggested that illegal immigrants shouldn’t be welcomed immediately allowed to stay. Yet now the same lefties want to blackball legal immigrants because they could “steal” union jobs.

    What is this fascination with illegality that infects the sensibilities of our left wing friends? it’s such an adolescent trait.

    And what’s all this guff about possible xenophobia? Let me see, this argument runs something like: someone may commit an offence if we take a certain course of action. so we should not take that course of action. That’s the same genus as the argument that we can’t publish pictures of the prophet becasue mad islamics will hurt people as result. And it’s just as much a load of shite.

    We have to stop giving to blackmailers. We have to deny at every opportunity the left’s silly idea that if someone is willing to break the law for a cause that cause must have some merit.

    Rococo Liberal

    October 27, 2006 at 12:22 pm

  29. RL, sometimes it sounds like the Left’s idea of the perfect immigrant is that moocher Sheikh Hilaly. He isn’t going to take away anyone’s job except the village idiot’s.

    Jason Soon

    October 27, 2006 at 12:24 pm

  30. Your giving lefties too much credit for actually being able to think. Most are friggin stupid anyway.

    Look at the preference they show. they would rather an illegeal who jumps the line to someone who is actaully in the line.

    Fuck em the war continues with this brainless lot .

    jc

    October 27, 2006 at 12:32 pm

  31. What a pile of shit, you disingenuous twits.

    REFUGEES. Got it? No?

    RRRREEEEFFFFUUUUfuckingGGGEEEESSSS

    If a person’s life and liberty are threatened in their home country for no good reason (say, by a dictator we’re funding in breach of international law and basic morality) then we should give them a fighting chance to enjoy the wonderful opportunities here in the merry old land of Oz.

    Legal immigrants, who get their papers together and get in line deserve a fair go too. I welcome them, and lots of them and their children are my personal friends.

    Illegal immigrants (most of whom come here on 747s as tourists, not on deathtrap boats as miserable ghosts) can fuck off, as can companies who aren’t prepared to pay a basic living wage AS ECONOMIC CONDITIONS STAND IN THIS COUNTRY WHERE THEY ARE DOING BUSINESS.

    FDB

    October 27, 2006 at 12:52 pm

  32. FDB
    That was a bit of a cheap shot on my part but even taking account of your argument, RL’s point is that strictly on a national interest basis, the left’s priorities seem ass backwards.

    Jason Soon

    October 27, 2006 at 12:57 pm

  33. No one has a problem with refugees, FDB

    everyone wants to see legitimate refugees enjoy the freedoms we do. However in amongst those gettign here by boat are those who aren’t legitimate refugees and are correctly described as line jumpers. We of course need to figure who is and isn’t legit which of course takes time. Your side of the political fence doesn’t like that it takes time to process these as it wants to release them as soon as they get here without us knowing who they are. This of course problematic.

    So it is correct that the left wants to support illegal immigration while trashing legal immigration.

    You’re fantasy is wrong.

    jc

    October 27, 2006 at 1:06 pm

  34. “….can fuck off, as can companies who aren’t prepared to pay a basic living wage AS ECONOMIC CONDITIONS STAND IN THIS COUNTRY WHERE THEY ARE DOING BUSINESS. ”

    So Fred and FDB will now decide what is a reasonbale wage. A living means what Fred and FDB want it to mean. And if firms can’t afford it, they should fuck off.

    jc

    October 27, 2006 at 1:10 pm

  35. FDB: Howard is worse than Labor’s Yellow Peril theory of IR.

    C.L.

    October 27, 2006 at 1:28 pm

  36. If firms can’t afford it, they should put up their prices and/or get out of the way and let a better firm take their place. You do understand competition in industry, right? Everyone thinks it’s hunky-dory to use cheap labour until it’s their job on the line. How would you feel, Joe, if Catallaxy started getting some Bulgarian ex-worker to incoherently stoush with Fyodor and Munn?

    “Your side of the political fence doesn’t like that it takes time to process these as it wants to release them as soon as they get here without us knowing who they are. This of course problematic.”

    Whatever makes you think locking up children is unproblematic? Or indeed that processing refugees wouldn’t be inherently problematic? I say err on the side of dignity and liberty – you say razor wire. Who’s the libertarian?

    FDB

    October 27, 2006 at 1:28 pm

  37. oops. left me bold open.

    Emphatic, no?

    FDB

    October 27, 2006 at 1:29 pm

  38. ” If firms can’t afford it, they should put up their prices and/or get out of the way and let a better firm take their place. ”

    Ha. The one sided market regulator. If you can guarrantee the worker a living wage, why can’t you and Fred do the same or the firm? That’s ” unfair” isn’t it?

    ” mYou do understand competition in industry, right?”

    I do actually, but it appers that you don’t seeing that you’re off regualting the world to make it look the way you want. I don’t believe in union closed shops, do you?

    jc

    October 27, 2006 at 1:39 pm

  39. ” Everyone thinks it’s hunky-dory to use cheap labour until it’s their job on the line. How would you feel, Joe, if Catallaxy started getting some Bulgarian ex-worker to incoherently stoush with Fyodor and Munn?”

    Show me where I have ever said I wish to see the use of cheap labor. Anywhere????? Don’t be stupid, I wanna see job choices for workers.

    ” Whatever makes you think locking up children is unproblematic? Or indeed that processing refugees wouldn’t be inherently problematic? I say err on the side of dignity and liberty – you say razor wire. Who’s the libertarian? ”

    Thats a difficult one. Are the kids better off with their parents or outside, in a foster home? You tell me. I’ll go with with which of these two you think is the better choice for the kids.

    jc

    October 27, 2006 at 1:43 pm

  40. Parents and all, JC.

    It’s much cheaper and easier to keep track of them in the community than keep them locked up – in pure dollar terms certainly, but also in terms of the ongoing cost to incarcerated refugees mentally and physically, and the cost to our moral standing globally. Call me conceited, but I prefer it when the world thinks well of me and my country.

    If the cost is a few non-refugees slipping through the net, I’m happy to wear it. Semms to me they’ve earned it by risking their lives on a leaky boat operated by ruthless shonky pirates (as opposed to the fun kind). Pretty entrepreneurial, really.

    Anyway, back on topic.

    “I wanna see job choices for workers.”

    Can a worker who lives and supports a family in Australia “choose” to bargain their wage as low as one from certain places overseas? No they patently can’t.

    FDB

    October 27, 2006 at 2:00 pm

  41. “It’s much cheaper and easier to keep track of them in the community than keep them locked up ”

    Yea, of course it is. Like the succes America has had in containing its own illegals……12 million and counting who are pressuring the wages of the low skilled Americans…… you know the battlers you and fred want to “help”.

    “Call me conceited, but I prefer it when the world thinks well of me and my country. ‘

    Call you concentied? No, I would just call you an idiot for thinking that what the frogs, krauts and wogs think counts. Who gives a shit what those
    those pricks think of us… or what Indonesia thinks.

    “Anyway, back on topic.

    “I wanna see job choices for workers.”

    Can a worker who lives and supports a family in Australia “choose” to bargain their wage as low as one from certain places overseas? No they patently can’t. ”

    FDB, you and Fred have been told many times that it not the wage rate that is the only factor, Wages are only one factor of production. If they weren’t Malawi would have full employment and kicking arse in the world export stakes. Get a grip doofus.

    jc

    October 27, 2006 at 4:10 pm

  42. FDB

    My point was that the “refugees” committed several criminal acts to get here. It was that which excites you little dicks of the left. You are all such prissy little girly men that you get the hots for anyone who has committed a crime.

    Did you see what some of those bastards did to the war ship which picked them up? They trashed it. And this was supposed to get our our sympathy? With adolescent nancy boys like you it seems they succeeded.

    I bet you’re the kind who secretly admires the suicide bombers and the terrorists on the basis that they must be serious about their cause if they are prepared to such despicable things.

    As for your stupid “care in the community” idea, you better ask the British government how easy it s to keep tags on ‘asylum seekers’ and how many crimes they commit.

    I wonder if you can stop being a prat long enough to admit that since Howard’s policy came into effect the boat people have stopped coming. People have stopped dying on the open sea at the hands of people smugglers. Surely even you must be happy about that. If we had followed your suggestion, there would have been a stampede of people trying to get here in leaky boats. Many deaths would have occurred. But the left would rather indulge in an orgy of self-righteousness than worry about saving human life.

    Rococo Liberal

    October 27, 2006 at 4:12 pm

  43. “With adolescent nancy boys like you it seems they succeeded.
    I bet you’re the kind who secretly admires the suicide bombers and the terrorists on the basis that they must be serious about their cause if they are prepared to such despicable things.”

    You lose.

    I bet you’re a windbag tosspot who wouldn’t dare speak like that to my face.

    I win.

    Care for another round?

    FDB

    October 27, 2006 at 4:37 pm

  44. JC – Australia is an island. You can’t just walk here, so we can afford to explore policies that wouldn’t work so well elsewhere. I think that we have an obligation to protect displaced people, especially children [if that makes me a “prissy little girly man, RL, then guilty as charged]. I think that obligation (in our case) can be discharged without any significant risk to our sovereignty. If it gets a bunch of panting, ranting cock-sockets like Rococo upset, they should have a good fucking look at their moral compass.

    There is nothing about my desire to protect children from hardship and harm that obliges me to defend criminal thugs. If someone does the wrong thing, there should be serious consequences. If someone is hounded and tortured and leaves with their children on a shitty hell-ride to try and find a better life, then yes, I do admire them for it. And frankly, FUCK YOU if you don’t.

    Back OT: As I said before, the VAST majority of our illegal immigrants came here legally, then stayed. The VAST majority of our foreign workers come here legally too. The US experience teaches us next to nothing. The UK experience shows how when you’re fucked, you’re fucked. They had huge numbers to deal with, couldn’t possibly lock them up OR keep track of them, big fucking mess. Again, nothing like what is or was happening here.

    FDB

    October 27, 2006 at 4:54 pm

  45. Well, I was meaning to get back on topic.

    457 = booo
    Responsible employers who care about their community = yay

    FDB

    October 27, 2006 at 4:56 pm

  46. “If someone is hounded and tortured and leaves with their children on a shitty hell-ride to try and find a better life, then yes, I do admire them for it. And frankly, FUCK YOU if you don’t.”

    FDB
    I’ll remember that next time I’m down and out looking for a place to stay the night. I’ll just walk into your house and demand to remian there..

    Our country is our home AND WE WILL DECIDE who stays. If they’re legitimate and WE DECIDE they are a good fit with the rest of the Australian family I have no problem with them staying. If they’re line jumpers, out theygo. The burden of proof is not that high.

    Anyway I don’t see much difference between a political refugee and and economic refugee. personally i’d take an economic refugee anytime.

    Thanks for bringing up Britian’s experience. You may not want to admit it, but Political refugees also includes members of the Muslim brotherhood wanted for various crimes against the state. Would you distinguish between those political refugees leaving say Egypt who are wanted for acting as Islamic extremists? Would you allow access to the member of the brotherhood who had received electric shock treatment becasue he was a religious nutball. Ask Britian the same question now.

    Kids can stay in the camp or stay with foster parents. it’s up to the parents.

    jc

    October 27, 2006 at 5:21 pm

  47. Back to topic?

    What that you and Fred want a closed shop for the union movement? Is that your version of competition? That’s the trouble with you lefties. You have no idea what the hell you’re talking about and just hijack terms and defintions to suit the argument for the moment.

    jc

    October 27, 2006 at 5:24 pm


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