Regarding the recent whining from retailers about having to pay their staff: retail is driven by demand, which is driven by wages. Every business wants low-paid workers, but high-paid customers – as long as they’re paid by someone else. Every worker you pay less will buy less at someone else’s shop, every worker they pay less will buy less at yours. It’s a downward spiral you don’t want to start.
I share Kevin Rudd’s appreciation of what’s good about Western culture (“Don’t believe rumours of the West’s death”, The Australian, 1/8), but he can’t resist slipping a couple of his pet projects into the mix.
Democracy is a definitive Western ideal, but the “flexibility of free markets” is an economic implementation detail, just as likely to be found outside the West. Insofar as the people decide to regulate for social good, that is their will.
The power of the “inquiring mind” is undoubted, but why must it be “individually driven”? Western science has always been a collective enterprise, as is the open-source development model of very Western companies like Google and IBM.
Democracy, by definition, is collective decision-making. There is no guarantee it will favour individualist, free-market ideologies.
Tim Soutphommasane’s “True liberals are at liberty to disagree over what it means to be free” (The Australian, 25/6) is welcomed as an antidote to the simplistic polarities of much media politics and as a recognition that liberty is complex.
As Soutphommasane notes, few today outside of the extreme old Right actually oppose the ideal of liberty, although conservative liberals have trouble explaining how they otherwise intend to enforce tradition.
But in the real world, we must apply values to choose between conflicting liberties. Does the freedom to own a gun have a higher value than the freedom to walk the streets without fear? If not, we need gun control. Does the freedom of an entrepreneur to reap the benefit of their effort override that of a property owner to charge whatever rent the market will bear? If so, we need rent control. Does free trade imply the free movement of labour? If so, we must relax our borders.
Despite what naive market libertarians tell us, there is no stark choice between liberty and government control, but a considered weighing of liberties against eachother. If we don’t make such decisions, the market’s “invisible hand” shoots itself in the foot.
Matt Ridley’s advice that, as pessimistic predictions rarely eventuate, we should simply relax and let the free market automatically perfect the world (“Why rational optimism beats ephemeral happiness”, The Australian, 22/6) ignores the most plausible possibility: that some disasters never occur precisely because people are so worried about them, and thus take action to avert them. It’s a bit like saying, “I’ve never been broke, so why keep working?”.
The Australian opines that “It is not tenable that Australian retailers trading after 6pm should pay almost three times the hourly rate…in the US” (“Retailers put strong case for workplace reforms”, 20/6). As the U.S. minimum wage is currently $6.86 per hour, I would say it is not only tenable, but necessary.
Unions have offered to trade penalties for higher base rates, but employers decline because variable rates give them scope to control costs. It is thus clear that “flexibility” is simply code for lower wages.
In the absence of any attempt by News Ltd media to explain the straightforward market mechanism of the carbon price, allow me:
1) Businesses pay a price for the carbon they produce making carbon-intensive products more expensive. Consumers are compensated using the money collected.
2) Businesses now have an incentive to make low-carbon products, as these will be cheaper and thus chosen by consumers over more expensive high-carbon ones.
3) Eventually this market mechanism will minimise carbon production, the price paid and also the compensation paid.
Not so hard to understand, was it? Now, why did we need a GST again?
Why does Imre Salusinszky (“Public sector pay cuts are just the start”, The Australian, 3/6) think that NSW public sector wages growth of 21% since 1997 needs to be brought “under control”, when the CPI over same period rose double that amount? His point that this wages growth is “almost double” the private sector’s is only more evidence that Australian wage-earners are being robbed of their share of the nation’s prosperity – just a little less so in the public sector.
Tim Flannery’s mystical notion that the Earth is a self-regulating organism indeed has no place in scientific discussion of climate change (‘Earth mother has no answer’, The Australian, 4/1), and as you call for scientists to “ask the eccentrics and extremists to shut up”, I trust you will be applying the same policy to the equally-unscientific deniers and “invisible hand” market-worshippers among your own columnists.
Outside of North Korea, there are few who really suffer from “a lack of understanding of the role of profits in the functioning of the economy”, despite what Judith Sloane imagines (‘Profit is not a dirty word when it generates economic growth and raises living standards’, The Australian, 27/12).
But what does not follow from this is her contention that only unregulated profit-seeking is effective in “promoting efficient use of resources and ensuring resources are directed to their most productive ends”. This is wishful, naive 19th century economics, which has been thoroughly debunked by modern theory, and by the observable facts: while economic systems undeniably find their own equilibria, these may not be optimal for the participants, and for some may be disastrous. That is why regulation is necessary, why it is often called for by the electorate, and why laws which, say, restrict bank exit fees are not qualitatively different from laws against theft.
To mock, as Sloane does, the notion that “governments can decide on the social and economic outcomes they see as desirable…, and a combination of laws, regulations and jawboning will ensure these are achieved” is to mock democracy itself.
Peter van Onselen rightly points out the vacuousness of political parties touting obvious goals, like prosperity, as if they were policy (‘Self-interest proves strongest motivator’, The Australian, 18/12). However, in the process he incidentally exposes a moral conceit at the heart of market-liberalism.
That regulated labor markets are a barrier to prosperity is an article of faith among market-liberals, despite the many counter-examples around the world.
So, to a market-liberal, a party that doesn’t deregulate the labor market is not motivated by prosperity, but the greedy self-interest of the voters, who refuse to sacrifice themselves for the good of the market.
Although he doesn’t say so, it sounds as if van Onselen yearns for system where the purity of the market could unfold without the pesky self-interest of the population, expressed through the ballot-box, getting in the way.