Re: PKT debate

[ECWFM@xxxxxxxxxxxxxxxxxxx]

Paul: your query is somewhat difficult to reply to in this forum. for a start
the complexity of wage setting arrangements which define our system in OZ
requires some pre-education on the part of those not familiar with our award
system and judicial determination and the concept of national wage cases.

the accord (1983 on in various forms) needs to be understood in that context.
readers might like to briefly read a paper i published (With M. Watts) in the
Manchester School (1990) which in part describes some of the arrangements and
also details up to that date the various versions (Marks !) of the accord.

i will come back to answer you more fully after i play sport today. but i just
noticed steve had offered some starting info. the data he quotes is a little
astray although he did say it was from memory (june 1983 national ur = 10.2 sa
inflation rate (annualised) = 10.4 per cent, peaking in sept 82 at 11.3 per
cent. it had been around 17 per cent in mid 1970s after first opec shock).

steve concluded with the following. it deserves more discussion but i offer the
following to assist further thought.

>So social compacts a la Accord (and a la Weintraub) can work; but, a
>bit like the neoclassicals' own message on "theory of the second best",
>if these are not allied to complementary policies, the overall outcome
>can be quite different to what was desired. For us, we went from
>possibly a shallow recovery to a steep one, followed by an even steeper
>slump.

previous national wage guidelines had shorter lives than the accord. the accord
has "worked" IMHO because it has consistently redistributed income from wages
to profits. the real wage has continuously fell over this period. the ACTU
(peak union council) has allowed this to happen. it was meant to be accompanied
by heavy investment from the private sector but the redistributed porfits went
mainly into excessive speculation on asset values in the second half of the
1980s. that is why we have such high un again  as a result of excessively tigth
monetary policy to control the damage of the excesses.

so would it have worked if the deal set out in 1983 been kept. no way

must go more later

kind regards bill

 William F. Mitchell            Telephone: +61-49-215027      .-_|\
 Department of Economics                   +61-49-705133     /     \*<--
 The University of Newcastle    Fax:       +61-49-216919     \.--._/
 Callaghan   NSW  2308                                            v
 Australia                      Email : ecwfm@xxxxxxxxxxxxxxxxxxx




The Accord as formulated was influenced by many (so