Re: NYT and pkt seminar ('Bill bags the free market')

[c.gaunt@xxxxxxxxxx (Clive Gaunt)]

Bill Mitchell says:

>I disagree that the wage breakout is in response to this or anything. the
>fact is that the real wage is continuing to fall even though inflation (due
>to the scorched earth monetary policy of the late 1980s and early 1990s and
>higher than high unemployment) is below 2 per cent per annum. Work it out.
>no nominal pay rises almost anywhere for ages.
>
>the government (labour g. meant to be the political arm of the trade union
>movement) playing this free market bullshit game thinking it wins the votes
>of the financial market moguls and makes them look like good economic
>managers (how anyone would think that with 10 per cent unemployment rates is
>beyond me) has decided to introduce what we call Enterprise Bargaining.
>remember we have been running centralised wage setting under the judicial
>arm of the Arbitration Commission for years.
>
>Enterprise bargaining has become an excuse for no pay rises b/c employers
>have just decided not to bargain. then when strike action is threatened they
>start talking about penal sanctions.
>
>currently, the unions (particularly the transport workers) are finally
>realising they are being dis-enfranchised and are organising and initiating
>strike action and are being put under threats of going to court for this.
>the govt. nor the employers have not seemed to realise that collective
>bargaining brings industrial action to condition contracts etc.
>
>it is a bloody mess. more free market nonsense. the wages system under the
>centralised control was much better.
>

Clearly, Bill is no fan of the free market. But I find his emotive arguments
('free market bullshit', 'free market nonsense') inadequate and
unconvincing. If we believe that the free market fails to provide
optimality, we should also be prepared to recognise that the costly,
information deficient and self interested regulators are also unlikely to
provide optimality (and maybe more distant from it).

I find it hard to conceive how the 'three wise men' at the Arbitration
Commission have the information, skill and motivation to arrive at an
efficient outcome.

It seems to me that the centralised wage fixing of which Bill appears so
fond, is likely the most significant contributor to the 10% unemployment
which we have in Australia. The Australian economy is over-burdened with
employees who are paid more than their worth and unduly protected by unions,
laws and awards. Many of the unemployed would gladly fill these people
shoes, at much less than employers are forced to pay. And, this is to say
nothing of the detrimental impact of these minimum wage and award systems on
our international competitiveness.




Clive Gaunt
School of Finance
Queensland University of Technology
PO Box 117 Kedron 4031
Qld Australia

email: C.Gaunt@xxxxxxxxxx
phone: (07) 864 4323
fax:   (07) 864 4495