{"id":2409,"date":"2009-05-18T19:27:01","date_gmt":"2009-05-18T09:27:01","guid":{"rendered":"https:\/\/billmitchell.org\/blog\/?p=2409"},"modified":"2009-05-18T19:27:01","modified_gmt":"2009-05-18T09:27:01","slug":"a-new-agenda-for-our-union-movement","status":"publish","type":"post","link":"https:\/\/billmitchell.org\/blog\/?p=2409","title":{"rendered":"A new agenda for our union movement"},"content":{"rendered":"

\t\t\t\tI was in Sydney today doing various things (see below). It was an interesting day but this morning’s activity gave me some hope that there are community leaders out there who want to fight back and jettison the neo-liberal garbage that is constraining their ability to deliver social equity and job security for their members. My input to the discussion was to tie this in to the macroeconomic debate. These macroeconomic matters – which I write hundreds of thousands of words every year about – really lie at the heart of the problems facing low wage workers and the unemployed. Unless we successfully counter the orthodoxy then tinkering around the edges will be all that we can do. I realise the macroeconomic concepts are difficult to talk about in an accessible way. I also realise that the neo-liberal orthodoxy has been incredibly successful in inculcating notions that the Federal budget is akin to a household budget. Readers of this blog will know it can never be that way. So the challenge for our community leaders is to develop a macro narrative which can permeate the public debate and slowly redefine how we see government; what goals we want the government to pursue (full employment) and how they do business with employers. That is an interesting challenge and I like things like that.
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\nFirst, a brief excursion into the daily press. I don’t normally agree with Ross Gittins but in his article Budget blues: Labor’s economic inferiority complex<\/a> which was in the Melbourne Age today he makes one correct observation.<\/p>\n

\nIN LAST week’s spin-laden federal budget we saw Labor parading its economic inferiority complex for all to see … Peter Costello and the Liberals have been so successful in reinforcing the public’s instinctive belief that Labor isn’t good at managing the economy that Labor itself has begun to suspect it’s true.\n<\/p><\/blockquote>\n

I agree with this. All the stupid denials leading up to the Budget day – the abhorrence with actually using the R-word. Then the T-word obsession and then the willingness to allow spurious structural budget deficit analysis to be launched onto the public and paraded as “authoritative knowledge” – see my blog Structural deficits – the great con job!<\/a> – were all signs to me that they are ashamed of being in this state.<\/p>\n

I am sure they would be happier parading a huge surplus as if it was a “big achievement”.<\/p>\n

While I also agree that their failure to mention the “size of the deficit” in the Budget speech is also an example of this inferiority I actually would not have mentioned it either if I had been writing the speech. As I have said there is no validity in creating a debate around the nominal size of the deficit as some sort of policy target.<\/p>\n

Is $58 billion a big deficit? Maybe it is small? What are we going to judge it against? The simple answer is that a $58 billion dollar deficit tells you very little other than accounting information relating to the relationship between the government and non-government sector in the period under scrutiny. And that is really just an accounting record. Since when has accounting been an interesting pursuit?<\/p>\n

The real policy target should be to underwrite high levels of employment and low unemployment (only frictional). Then the deficit will be whatever that takes and that will be determined by the desired levels of net saving in the non-government sector. How many times have you heard a discussion or debate about this in the media or public life lately. On this blog and about no-where else!<\/p>\n

That is something that leaders who wish to overthrow this destructive neo-liberal paradigm that attacks the basic lifestyles of the poor and low-waged workers need to start addressing. Stop worrying about conversations about the size of the deficit and continually hector the Government for a full employment commitment.<\/p>\n

It also is true that the Government cannot really target the size of the deficit anyway. The automatic stabilisers will always confound their ambitions to run budget balances which deviate from that net spending necessary to fill the spending gap. If they try to run surpluses when the private sector is saving then the spending gap will widen. Output and national income will fall and the budget will move into deficits as the unemployment rate rises.<\/p>\n

With the drop in income, total saving falls (it is a direct function of GDP) and eventually the net government spending (deficit) will equal the private net saving in the currency of issue. By hook or by crook you end up with a deficit. In this case however, the economic situation is dire – stagnant growth, lost incomes, and high unemployment.<\/p>\n

Where is the leadership in that outcome?<\/p>\n

Our community leaders have to step up and address this agenda and start demanding answers to those questions. The first questions I would ask Wayne “Unemployment is the very core of why I’m in politics” Swan are these:<\/p>\n

1. What do you think will sustain your surpluses if you manage to choke the hell out of government spending and increase tax revenue?<\/p>\n

2. What do you think this will do to private saving?<\/p>\n

3. How can an economy grow when the government is running surpluses and the private sector is saving?<\/p>\n

These questions go to the basic heart of their misunderstanding of the way the monetary macroeconomy works. The only way the surpluses could be sustained for a time<\/strong> would be if the private sector dissaved (unless we get a huge external boost like Norway’ oil revenues). We won’t achieve that so growth would only be possible if the private sector became increasingly indebted.<\/p>\n

That is unsustainable as we have seen. So the economy cannot grow<\/strong> if the government runs surpluses and the domestic private sector saves unless we get bankrolled by a huge net export boom. Not foreseeable in the future. Nor has it happened in the past.<\/p>\n

Community leaders who meet the Treasurer should just keep demanding answers to those questions realising that he is incapable of answering them in any other way than I have answered above. This is not my theory or my opinion – it is the way the system we live in operates. Sorry that is it!<\/p>\n

For the rest of Gittins article we read the usual stuff. He asks:<\/p>\n

\nThe other was: what’s the Government doing to halt the appalling growth in the budget deficit and the debt we’ll be leaving for our grandchildren?\n<\/p><\/blockquote>\n

Our grandchildren will congratulate us on creating high employment levels. They will not feel one cent of burden. Apart from the fact, though, that I would not be issuing the debt in the first place. Why would a government that is not revenue-constrained do that? I have explained often it is for monetary policy reasons – to defend a given positive short-term interest rate. Well I would let that go to zero and let the investments rates price at risk of that base. No debt is needed then. There would be no constraint on the net spending though.<\/p>\n

Anyway, Gittins then says:<\/p>\n

\n… Only once the recession is behind us will it be sensible to look at the size of the deficit we’re left with and work out what it will take to get the budget back into surplus.\n<\/p><\/blockquote>\n

Please see my argument above to see why this sort of journalism is just meaningless pap. They will be idiots if they plot a course back to surplus while the private sector remains debt shy and desiring net saving. I doubt we will see a return to the debt binge days for many years to come. I think households will adopt a more cautious approach to debt in the future especially as unemployment rises over the next 18 months to 2 years. This will effectively stop the Government realising any surpluses and if it does attempt to realise them the economy will deteriorate further.<\/p>\n

I was thinking about these matters today – again – when do I not! – because I have been in Sydney (for foreign readers I live in Newcastle – 140 kms north on the coast with the beautiful rolling waves!).<\/p>\n

I went there for two purposes: (a) to provide some input into a discussion that a major trade union is having about how to defend the interests of low pay workers. I have done quite a bit of work on low pay over the years and regularly did modelling etc for the ACTU and other unions in various wage determination cases; and (b) to present a paper at Sydney University on the Causes of the Global Financial Crisis. Both interactions were productive and interesting for me.<\/p>\n

The first discussion this morning was very illuminating. Without going into too much detail or disclosing any particular union matters what the discussion revealed to me is that the union movement is in crisis at this point in time. The successive anti-union laws and regulations coupled with the shifting macroeconomic dialogue – the embrace of neo-liberalism – has strait-jacketed them almost to the point of extinction. Their coverage has dropped across the board and in low wage industries the dominance of casualised job creation has made their task even more difficult.<\/p>\n

But the smart union leaders and their staff are thinking ahead and trying to work on strategic approaches to restructure the overall public debate as well as attend to the “micro” concerns of their members on a daily basis. I think there is a great leadership role the smart unions can play in the future to build collaborations with true progressive thinkers – not those who say they are progressive but then talk about budget blowouts or “taxpayer funded spending” or “debt burdens” or all that neo-liberal macro that has caused most of the problems we are in now.<\/p>\n

I mentioned in my input to them that if they could re-establish a community debate about “collective will” and the virtues of full employment – that is, true full employment – repeat – 2 per cent official unemployment – no underemployment – no hidden unemployment.<\/p>\n

There is plenty of scope to also challenge the neo-liberal budget mantra that government surpluses are good and deficits are evil. Leaders who want to organise the community debate around social equity agendas which do not mean<\/strong> social inclusion agendas will have to develop a narrative to challenge the macro orthodoxy.<\/p>\n

It is this orthodoxy that places the constraints on the entire economy and stops progressive social policy from being initiated.<\/p>\n

I also think we have to have a dialogue on what we mean by work and what we mean by productive employment. I have covered these topics several times in earlier blogs. A productive contribution has to be seen in terms of how well “society” benefits not how well the private profit line is enhanced. In general, the two aims won’t be counter to each other but sometimes they will.<\/p>\n

For example, in determining what a minimum wage should be I noted that capacity to pay considerations are irrelevant in my opinion. We have to calibrate the wage structure by setting a floor that means something in terms of our aspirations for a decent life. If the capitalist cannot profitably organise production at that wage then we don’t want them operating in this country.<\/p>\n

Finally, (although I could go on for hours on this topic) I think the dynamics of the debates would change if a Job Guarantee was in place. This sets the wage floor and provides income security for low wage and otherwise disadvantaged workers. They all would know they could get meaningful and useful work in the Job Guarantee without the threats that arise from low pay and precarious risky work.<\/p>\n

Private employers would then have to restructure their own workplaces to ensure they provided superior conditions to the Job Guarantee if they wanted to attract work. The dialogue that the union would then have with those employers would be conditioned by this new reality and would lead to new dynamic efficiencies which would benefit the low paid workers but also the economy in general.<\/p>\n

And if some workers preferred to remain in the Job Guarantee workforce then we should be happy that they have income security and a sense of social value and purpose.<\/p>\n

How can that not be better than casting them off onto the scrapheap of unemployment and then using the same excess supply of labour to invoke fear into the daily lives of the remaining marginal workers who might from time to time (via their union reps) bob their heads up asking for some pay equity or better conditions? It is a no-brainer.<\/p>\n

I hope this dialogue with the unions continues. Today was very productive and some key thoughts were generated by the people that attended the meeting. They are thoughts that a new paradigm can be built on. One that places social equity and full employment at the centre of the debate and lets the budget deficit be whatever it takes to get there.\t\t<\/p>\n","protected":false},"excerpt":{"rendered":"

I was in Sydney today doing various things (see below). It was an interesting day but this morning’s activity gave me some hope that there are community leaders out there who want to fight back and jettison the neo-liberal garbage that is constraining their ability to deliver social equity and job security for their members.…<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[18],"tags":[],"class_list":["post-2409","post","type-post","status-publish","format-standard","hentry","category-economics","entry","no-media"],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/billmitchell.org\/blog\/index.php?rest_route=\/wp\/v2\/posts\/2409","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/billmitchell.org\/blog\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/billmitchell.org\/blog\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/billmitchell.org\/blog\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/billmitchell.org\/blog\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=2409"}],"version-history":[{"count":0,"href":"https:\/\/billmitchell.org\/blog\/index.php?rest_route=\/wp\/v2\/posts\/2409\/revisions"}],"wp:attachment":[{"href":"https:\/\/billmitchell.org\/blog\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=2409"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/billmitchell.org\/blog\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=2409"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/billmitchell.org\/blog\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=2409"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}