Missing Link Daily

A digest of the best of the blogosphere published each weekday and compiled by Ken Parish, gilmae, Gummo Trotsky, Amanda Rose, Tim Sterne, Jen McCulloch and Stephen Hill

Politics

Australian

Phillip Toledanos new book Phone Sex (July 2008, Twin Palms) takes us into the boudoirs of nearly 30 phone-sex operators so we see their faces and also hear their storieseach operator gives his or her take on the business.

tigtog calls bullshit on allegations that Belinda Neal is a victim of double standards.  Tim Dunlop is unimpressed too.

Andrew Landeryou calls bullshit on Andrew Clennell and Brad Norrington’s reporting of the Neal story.11. GT: I’m willing to accept his expert professional opinion – Andy knows a thing or two about bullshit. []

Cam Riley, Tim Blair, Stephen Kirchner and Tim Dunlop join the almost universal cross-factional chorus of condemnation (at least in the blogosphere) of the Rudd government’s hybrid car subsidy decision.

And on another crap Rudd government decision, Peter Martin looks at the ABS’s imminent move to cease publishing 9 separate statistical reports series to meet the Rudd razor gang’s required spending cut targets:

The Rudd government came to office promising to make evidence-baseddecisions.

Its budget cuts will destroy much of the evidence.


International

Darryl Mason notes that France has jumped on the internet censorship bandwagon.

Dale looks at Andrew Sullivan’s agonising over whether US strong-arming of Iraq over bases and associated sovereignty  should be labelled imperial or colonial.22. KP: As if there’s any doubt. []


Law

Ilya Somin and Orin Kerr at Volokh Conspiracy, Marty Lederman at Balkinization (here and here) all post on today’s US Supreme court Boumedienne decision, which held (5-4) that the writ of habeas corpus is available to detainees at GITMO to test the legality of their detention.33. KP: In the equivalent Australian decision, Ruddock v Vadarlis, the Full Federal Court held that habeas corpus wasn’t available to asylum seekers in detention and the High Court refused special leave to appeal.  However, a factor in the Australian decision that doesn’t apply to the US one is that part of the reasoning was that the asylum seeker detainees were said not to be imprisoned as such because they were free to leave as long as they abandoned their claims for refugee protection and didn’t attempt to enter Australia. [] Meanwhile, amsiegel seeks to put the Boumedienne decision in its broader politco-legal context

Ted Frank suggests that the US judge busted for posting porn on the net seems to have been fingered by a disreputable attorney with a longtime grudge.

Jeff Lipshaw muses about lawyers and entrepreneurship.


Economics

Joshua Gans is skeptical (calls bullshit?) that the ACCC needs to get involved in eBay requiring Paypal for online payments.

Consumer confidence in Australia went down like a cheap curry. Peter Martin reports that consumer spending will likely follow, although the upcoming tax cuts may prevent a stall. On the other hand Geoff Robinson is thinking about supply side social democracy. With petrol prices being blamed for the drop, perhaps Ken Parish’s prediction regarding bike-riding looks a little less outlandish.


slide into the cracks

baby boats

you said something?

more oddness feeling at home …. did you see the big fat guy after Gordon Ramsay last night?

Issues analysis

Harry Clarke explores the Prisoner’s Dilemma as it applies to climate change and co-operation between countries.

Cameron Reilly is calling for opinions on the identities of Australia’s top thinkers

Jason Soon believes there are more important things to worry about than a few dole bludgers.  Helen “skepticlawyer” Dale agrees that mutual obligation is nonsense and adds a call for a negative income tax to Jason’s case for labour market deregulation/abolition of minimum wage.44. KP: And very persuasively too IMO. []

Robert Merkel wonders when, if ever, we’ll have a national system of computerised health records.

John Holbo thinks someone’s definition of American conservatism sounds more like liberalism.55. KP: Then again, the American definition of liberalism is just plain weird. []

Mercurius focuses on tweaking of the famous Political Compass quiz.

Rick Hills sees the American system of governance as fundamentally anti-statist (a proposition some may find surprising).


Arts

(from here via Gummo). Long exposure crowd shot – St Petersburg.  Maybe everything really IS smoke and mirrors …

Tony recommends Under the Eagle, historical fiction starring a first century Roman legionnaire. Also, features a picture of Elle McPherson wearing greaves.

Pavlov’s Cat wonders why we expect talented writers to be nice people.

Alison Croggon tastefully promotes her newly published book of poetry called Theatre, before fleeing to London for more promotional hardship.

Tim Train concludes that Melbourne public transport operator Connex’s efforts at poetry don’t stack up well against TS Eliot …


Sport

Despite some mysterious amnesia, Shaun compiles his predictions for Round 14 of the NRL.

Alessandro Nicolo reviews Euro 08 soccer results so far.


Snark, strangeness and charm

Possum proposes a platform for aspiring bloggers.

The blonde canadian wouldn’t go back to school if you paid her for it.

Has recent praise from Andrew Bolt and Tim Blair gone to J F Beck’s head?66. GT: A notoriously short journey with a dismally pokey destination [] You decide. Addendum – just for completeness we’d better add Tim Lambert’s latest return salvo in the DDT Wars as well.

Darryl Mason has found Kevin Rudd’s secret management manual.

Eszter agonises over whether blogging is a good idea for an aspirant academic.

TroppoSphere, in case Missing Link email subscribers haven’t noticed, is now available as a convenient gateway to a world of news and expert opinion and analysis for those with feed reader phobia. It contains feeds to most of the blogs and other sources whose best/selected content we most regularly feature in Missing Link, as well as general news feeds and those from selected online magazines like openDemocracy, Reason, Slate, Spiked, New Matilda, Australian Opinion Online and Online Opinion.

About Ken Parish

Ken Parish is a legal academic at Charles Darwin University, with research areas in public law (constitutional and administrative law) and teaching & learning theory and practice. He has been a legal academic for almost 12 years. Before that he ran a legal practice in Darwin for 15 years and was a Member of the NT Legislative Assembly for almost 4 years in he early 1990s.
This entry was posted in Missing Link, Uncategorised. Bookmark the permalink.

51 Responses to Missing Link Daily

  1. Alastair says:

    Good article by Peter Martin on the cuts to the ABS.

    What possible good can come out of such a decision? Are the cuts going to reduce inflation? Of course not! What they will do is reduce the amount of information that can be collected for public record. How disgraceful!

    Where is the opposition on this? They should be jumping all over them on this outrageous policy decision!

  2. Patrick says:

    and adds a call for a negative income tax to Jasons case for labour market deregulation/abolition of minimum wage

    If progressive fusionism is ever going to mean more than ‘Clubtroppo + Andrew Leigh‘, then this has to get ‘lefty’ backing. If ‘lefties’ (whoever they are) can get behind this then I may have been wrong about progressive fusionism and will happily admit it.

  3. The bullshit edition of ML. Used thrice.

  4. Tim Quilty says:

    The NIT coupled with a reduction or elimination of minimum wages is possibly the best thing that could be done for the unslilled and unemployed. It isn’t a strong libertarian policy – it is universal welfare for gods sake – and I fail to see why the left don’t leap on it if they are really interested in improving the lot of the poor. It doesn’t have to be the LDP 30% flat tax and $9000 a year, they could structure it with their preferred tax brackets and payments. And the LDP would be happy to hand it over and come up with a more radical tax policy.

    Seriously, the government that pulls this off is going to for all intents and purposes abolish unemployment. Whats not to like?

  5. NPOV says:

    I’m reasonably sold on the concept, though I did have a slight concern that it rather too cleanly divides the “givers” and “takers”. There is something to be said for a system where everybody gives a bit and takes a bit, with obviously some taking more than they give and others giving more than they take.
    However, GST and other various taxes and duties generally means that everyone gives anyway, and there will always be services funded by or provided by government – healthcare, urban and transport infrastructure that are available to all, so everybody “takes” too, even if very few take cash benefits.

    On the other hand, I can definitely see that income taxes may well slowly give way to “externality”/Pigouvian-type taxes, which will definitely lead to a need for substantial welfare reform.

  6. I’m still of the view that much of the opposition to abolishing the minimum wage (and to WorkChoices in general, to be fair) came from the idea of (a) people being paid bugger-all and then (b) getting taxed on that bugger all. The problem with minimum wage laws is that they lock low-skill and disabled people out of the workforce; the problem with high EMTRs (and income tax generally) is that they fall disproportionately on the poor. I’ve long said I joined the LDP for its 30/30 policy, and I’m happy to say it again.

    And yes, like Patrick I think this is one where classical liberals and social democrats could line up, much as they did in Sweden when education vouchers were introduced.

  7. NPOV says:

    Income tax falls disproportionately on the poor? What exactly do you mean by that?

    The 30/30 policy is OK as a starting point, but I really can’t see just $9000 a year for the unemployed being workable, unless you are going to provide free public housing for everyone in that situation (which the LDP is against!).
    And people earning $100K can surely afford to be paying a lot more than 21% in tax – indeed this is surely necessary without slashing government spending way below what would ever be politically feasible in Australia.

    As far the minimum wage goes – I’d be more worried about how too low a minimum wage would lock low-skilled people into such jobs, as at least having a higher minimum wage forces them to obtain skills and training capable of making them productive enough that employers can be justified paying it. For the surely tiny percentage of the population that will never be able to work at $13/hour productivity, then some sort of wage subsidy system could be put in place.

  8. Tim Quilty says:

    The $9000 isn’t supposed to be all, though. It is deliberately pitched low to encourage people to look for some suplementry work. Instead of losing their benefits, as currently, the NIT system thinks a bit of work on the side is a good thing. With the idea that people will gradually move into the workforce full time, as they aquire skills and at a pace that suits them.

    What it probably needs is an additonal suplement for those truely unable to work due to mental or physical disability. Though even many of these should be able to find some sort of work at a reduced wage.

    Personally I don’t think there is anything particularly enobling about work, but I do think that ultimately the lack of something useful to do every day destroys the spirit. Or something like that. And having money is nice.

  9. NPOV says:

    There are lots of reasons it might take someone 12 months to find work, and $9000 isn’t enough just for accommodation and sufficient food in most of Australia, let alone to be able afford transport necessary to get to job interviews etc. What else would you envisage people in such circumstances receiving?

  10. David Rubie says:

    The whole negative income tax idea is basically silly – as soon as it would be introduced every low income earner would suddenly find themselves receiving $9000 less from their employer and getting $9000 from the government.

    As an employer, it sounds wonderful but shifting the first $9000 onto government is going to cost far more than the current welfare system as it effectively puts everybody on low wages straight onto welfare, rather than just those who need it. It’s a trivial maths problem to demonstrate the massive blowout of costs that would follow the self interest of employers as they chop that $9000 off every low wage employee.

    As for the argument that minimum wages exclude the disabled and low skilled, that’s so simplistic as to be laughable. Our minimum wage is higher than the US yet our unemployment rate is currently lower. The disabled aren’t necessarily excluded from work by the paltry minimum wage, they are excluded because they lack the physical ability to do most work or travel to work on ineffective public transport.

    The fundamental problem seems to be those old RWDB shibbeloths of OH NOES WELFARE and OH NOES MINIMUM WAGE. Neither holds up to argument.

  11. JC says:

    The whole negative income tax idea is basically silly – as soon as it would be introduced every low income earner would suddenly find themselves receiving $9000 less from their employer and getting $9000 from the government.

    Dave, you’re assuming that the marginal propensity of extra money earned through work will not be enough of an incentive. You’re not going to buy Martin Place with 9G. If not 9G where would you set it?

  12. Tim Quilty says:

    There would probably be a downward shift in wages for those in minimum wage jobs, but almost certainly they would not drop by the full $9000. Even with this new system, wages are too sticky, especially at the bottom end. Probably there would be a slowdown in wage increases at all income levels as the subsidy and the reduced tax rate increase take home earnings.

    But even taking your unlikely scenario, the result of dropping wages by that much will be to boost business profitability and increase the demand for workers. All your unemployed are brought into the workforce, and the businesses are still short. What follows – hiking wages to attract workers, and the defensive wage hikes to keep them. Before you know it, you’re back at a new equilibrium, where the low income earners are probably earning a little less via wages then they were before but the suplement more then makes up for it, and the unemployed are no longer.

    Tax cuts that stimulate the economy boost tax take over the medium term. And all those newly employed workers are paying tax as well, so the net cost to the government isn’t $9000 at all. At an effective tax free threshold of $30,000 most people will be tax positive. If anything, the 30/30 isn’t really a radical enough tax cut. Added to the removal of all the middle class welfare and business subsidies, and there really won’t be a signifigant impact on government take over a few years. It probably needs another signifigant tax cut 3 years down the track.

    If anything, the minimum wage is a left wing shibboleth, something they must declare alleigance to or be cut down at the ford. But actually minimum wage is really an irrational love of the left, that hurts the worst off in society. NIT takes it away without leaving them worse off. In any case, Libertarians really not RWDBs…

  13. Tim Quilty says:

    “There are lots of reasons it might take someone 12 months to find work, and $9000 isnt enough just for accommodation and sufficient food in most of Australia, let alone to be able afford transport necessary to get to job interviews etc. What else would you envisage people in such circumstances receiving?”

    Yeah, there are always edges to be worked out. I believe John Humphries original proposal called for these things to be met via charity and the creation of a signifigant fund of government money (some billions) to be distributed via said charities along with donations from a newly well off populace. And said donations coming to replace the government funding over time as people picked up the ball on private charity. As they have in the past, before government run welfare systems crowded them out. And while I think this might work, I suspect that it will not be saleable, even if the NIT ever is.

    And these people out of work for 12 months could always take some temp work or a short term contract while they look for something else. And it is not as if plenty of people aren’t falling through the cracks now. If nothing else, the NIT replaces a bad, bloated, bureaucratic system with something efficient and cheap to administer, and sends the “mutual obligation” rubbish to the scrapheap it belongs on.

  14. It seems to me (having noted the caseload coming through the courts) that mental illness is a biggie when it comes to government failure. Our gaols are now de facto insane asylums, especially when it comes to petty crime. The other gaol-stuffer is people inside for relatively minor drug offenses. People complain about prison overcrowding, forgetting that much of it is due to (expensive and failed) criminalization of drug use.

    Tim: John Humphreys has done some research on rates of charitable giving when income tax is low – it’s much higher, and much more effectively targeted. I also suspect (having watched lawyers navigate around the tax system for both themselves and their clients) that under a 30/30 regime the state’s tax take would probably stay the same. It may even increase slightly. The entire system is currently structured to reward cheats – there’s so many loopholes. Australia also has a much larger black economy than is commonly realised, thanks to high EMTRs.

  15. NPOV says:

    “All your unemployed are brought into the workforce”

    The idea that unemployment via the private market can ever be abolished completely is pretty silly. I might accept that unemployment could be eliminated on paper by using the government as an “employer of last resort”, but I don’t see much indication the LDP is likely to think much of that idea.

    If we wanted to look to a low, but realistic unemployment rates, we could do worse than the following countries, all of which have consistently done better than Australia in recent years: Switzerland (~3.3%), Norway (~3.0%), UK (~2.9%), Iceland (~1.3%). All of them “big government” type states* with generous welfare programs. So it’s not clear to me how unemployment can be blamed on excessive welfare. It may be fair to note that none of them have a government-determined minimum wage either, but strong unionisation of the low-paid work-force has filled the same effective role.

    * I was a bit surprised to find that according to the latest (2008) heritage.org freedom index figures, government spending in the UK is nearly 45% of GDP – higher even than Norway and Iceland (both 42%), and much much higher than the Australia’s level of 35%. Switzerland is apparently now only marginally higher than Australia, which seems to be different from previous years. It is pretty weird that Heritage Foundation classifies spending at 35% of GDP as “high”, given that the only first world economies with lower rates of spending are Singapore and Hong Kong, which are outliers for various reasons.

    Of course, we could aim to cut spending to under 20% of GDP as has Chile – and perhaps enjoy their unemployment rate of 7.7%. And having been to Santiago, and spent some time in the neighbourhoods that suffered the worse from the Friedman “shock treatment”*, I can’t see any evidence that lower government spending is not something Australia is likely to benefit from.

    * Pilger’s “War on Democracy” has a powerful section about this. While there’s plenty of silly things about the movie, the Chilean scenes in particular made me grateful that we do live in country where it’s simply not acceptable to leave families forced to search scrap heaps to find food for their babies.

  16. NPOV says:

    And no, I can’t believe I just used a footnote on a footnote in the above post either.

  17. NPOV says:

    Oops, sorry, of course the UK does have a UK-imposed minimum wage. There doesn’t seem to be much correlation that I can see between minimum wages and employment levels though.

  18. Tim Quilty says:

    There will always be frictional unemployment – people changing jobs, making lifestyle shifts, that sort of thing. But we’re talking about structural unemployment – people who want, (at least theoretically) to work but can’t find a job. I’m pretty sure there is no reason for this to exist in a free market. You could enlighten me.

    I’ve never been to Chile, (or watched anything by Pilger, for that matter), but one big difference between Pinochet and Australia would have to be democracy, which will limit reforms to a slow and steady pace. People can argue the merits of Chile’s reforms and whether in the long run it lead to the greatest good for the greatest number – the claims of which seem to justify any amount of misery and murder when performed by good marxist governments – but it only has limited if any relevance to what we could or would do in Aus. (And I’m guessing Chile didn’t have a NIT to ease the transition?)

    I always understood Iceland had high unemployment, (and high levels of temporary migrant workers to fill jobs the Icelanders would rather not do). Things may have changed recently, or perhaps it’s all in the way you measure your statistics?

  19. Patrick says:

    The whole negative income tax idea is basically silly – as soon as it would be introduced every low income earner would suddenly find themselves receiving $9000 less from their employer and getting $9000 from the government.

    Anyone who genuinely believes that the market for low-income employment is that responsive and efficient surely has to accept that the NIT would massively reduce unemployment!!

    I cant see any evidence that lower government spending is not something Australia is likely to benefit from.

    Nor I. Glad we agree.

    And people earning $100K can surely afford to be paying a lot more than 21% in tax – indeed this is surely necessary without slashing government spending way below what would ever be politically feasible in Australia.

    At present, if they earn $100k super inclusive, have no deductions and make no additional super payments, they would pay less than 25 per cent. Next year they will pay about 23.5 per cent, I think. So I would suggest that we could afford it.

    If we wanted to look to a low, but realistic unemployment rates, we could do worse than the following countries, all of which have consistently done better than Australia in recent years: Switzerland (~3.3%), Norway (~3.0%), UK (~2.9%) [which UK? – wtf?], Iceland (~1.3%). All of them big government type states*

    I am sure, btw, that you don’t realistically think we can learn much from Iceland, population <1,000,000, in the midst of a banking crisis with interest rates around 17 per cent??

    I am equally sure that you would hate Switzerland’s xenophobia. Since I don’t believe the UK figure, that leaves us Norway as a model, and all our public policy dilemmas are solved – we just need a bit more oil.

  20. Denmark is a state with no minimum wage and very free labour markets (much freer than anything mooted under the WorkChoices regime), but something akin to an NIT when it comes to welfare. This makes it easy for people to leave jobs they hate. It doesn’t pay to be doctrinaire about this stuff – Sweden has an entirely voucherised education system, for example, but is welfarist in other respects.

    The UK welfare state is both large and riddled with loopholes. There’s also a strong ‘surveillance culture’ that’s emerged in politics since Blair came to power in 1997 – thousands of new criminal offenses, ASBOs, mutual obligation, long periods of pre-trial detention without charge. All of this was built on the utterly gimcrack and inefficient bureaucracy created in the wake of the Beveridge Report. The UK is most definitely not a good model.

  21. David Rubie says:

    JC wrote:

    Youre not going to buy Martin Place with 9G.

    Wait until next week when the markets are finished with Babcock & Brown, Macbank will be the next highly leveraged institution getting hit.

    Tim Quilty wrote:

    Even with this new system, wages are too sticky, especially at the bottom end.

    Are you kidding? Every enterprise in Australia adjusts their tax tables in a matter of moments after notification from the ATO – why would this be any different, especially if it shaved that much off your wages bill?

  22. JC says:

    JC wrote:

    Youre not going to buy Martin Place with 9G.

    Wait until next week when the markets are finished with Babcock & Brown, Macbank will be the next highly leveraged institution getting hit.

    Zero isn’t that far from 5 bucks, Dave. Anyways the RBA’s there.

  23. Tim Quilty says:

    Are you kidding? Employers cut wages without agreement of their staff? I don’t believe it for a second. You think the staff aren’t going to notice there is 200 dollars missing out of their pay packs each week? Get real.

  24. Tim Quilty says:

    Why it would be different – one is the government adjusting tax rates, the other the employer arbitarily changing what they pay you. I know what I get paid each week, and I’d bloody well notice if my employer decided to keep a bit of it back. And be looking for a new job the next day…

  25. David Rubie says:

    Why wouldn’t it be different Tim? Your paymaster simply says “yes, overall, you’re getting exactly the same money you did last month, only some of it comes once a fortnight from Prime Minister Humphries, the other comes once a month like it used to from us”. The only way it’s going to save money is if (a) it involves less work to manage or (b) less money comes out. Now, the original Humphries paper suggested that (b) was a far more important mechanism, which makes that a polemic rather than a serious piece of economics.

    In a heavily computerised age, financial calculations come very, very cheaply so it matters little how complicated or simple your schemes are, it disappears as soon as the programmers are finished with it. The costs are all in the movement of money, not calculating the benefits like it used to be when we had roomfulls of bean counters with adding machines.

    The whole family tax benefits boondoggle is basically a negative income tax when you think about it, aimed at holding wages steady by shifting the burden of wages to government. It’s a waste of money and expensive to manage for all the wrong reasons: overpayment recovery. Just like an NIT you have to know a year in advance what your income is supposed to be. For a tradesman or someone in a service industry, that is incredibly difficult. Getting those overpayments back is very, very expensive and time consuming.

    I don’t doubt the NIT idea has been put forward in good faith, but in practical terms it doesn’t offer anywhere near as many benefits as merely simplifying the existing system to remove all the special interest tax dodges/family stuff/medicare levy/garbage that makes up two thirds of an aussie tax return.

    In fact, given that family tax benefits are such a dog, taking the same model and applying it to everybody seems like a backwards step.

  26. Pingback: John Humphreys & the 30/30 « Thoughts on Freedom

  27. NPOV says:

    Patrick obviously you knew I’d included an extra ‘not’ – but please, enlighten me, give me one obvious benefit to the nation that would arise from significantly lower government spending in Australia?

    As for the list of countries with low unemployment, they were from
    http://indexmundi.com/g/r.aspx?c=no&v=74, and it appears that the figure for the UK is wrong, as when you follow the link to the detail it lists it as 5.4%, not 2.9% as stated on the front list. So I’m prefectly happy to scrap the UK from that list.
    On the other hand Norway’s unemployment is now somewhat lower than the listed figure. And why is oil (a resource that Norway is significantly exporting less and less of every year) such a special resource that Norway is able to use it sustain super high employment, but Australia can’t do the same with coal, uranium, iron ore, bauxite, wheat, wool, etc. etc.?

    At any rate, the fact is that employment rates are affected by all manner of things. But from what I can see, the size of the welfare state doesn’t really seem to be one of them.

  28. NPOV says:

    (BTW I would suggest that Australia’s biggest disadvantage over Norway is probably geography. If we could move Western Australia about 3000km closer to the east coast, I don’t doubt we’d see much lower unemployment).

  29. Tim Quilty says:

    David, I suppose it is possible that some workers will have their wages reduced by the full $9000. Or more, if the employer has that much market power over the employee. But I don’t think it very likely, especially in a currently tight labour market. I suspect the bargaining power will be with the employees. “Cut my wages? See you later….”

    While there will be wage cuts at the bottom end, I suggest not the full $9000. But you ignore my previous comment. Even if initially it was the case across the board, the resulting surge in demand for labour would push the wage rates back up again. Ken argued this might be good policy if we had high unemployment. I reckon it is good policy to implement at a time of near full employment, because the workers are at much less risk of getting screwed over.

    The NIT replaces the expensive admin of FTB and everything else, because it is universal and there is no need to claw any of it back from anyone. It gives everyone $9000, and then taxes everyone 30% on every dollar they earn. No admin. No muss, no fuss. (The additional payments of $6000 per child do muck that a little, but then you probably know whether you have children or not at the start of the financial year. And if for some reason not you can claim it as a lump sum at the end I suppose).

  30. NPOV says:

    And Tim, exactly what do you expect to happen when economic conditions turn sour and unemployment inevitably rises again? Inevitably some people are going to figure out that being paid $6/hour is no better than turning to, oh I dunno, crime perhaps?

  31. Tim Quilty says:

    Given that they are currently paid roughly $6 an hour on the dole, why is this an argument against NIT? I’d suggest that with a flexible labour market, the downtun is more likely to see a fall in wage rates and hours worked then outright sackings. Which while not good, is better then the current outcomes.

  32. NPOV says:

    It’s not an argument against NIT, just against scrapping minimum wages.

    Now it if were true that a minimum wage of $13.74/hour basically causes every employer who think their employees are only worth $10/hour to fire them and force them on to the dole, then I’d agree that such an arrangement is pointless. But it seems pretty clear to me that this isn’t the case – rather, employers decide that they’ll just have pay such employees the minimum wage anyway, and work out various means to either increase their employee’s productivity so as to ensure a reasonable return, or perhaps even temper the wages paid to high-level workers – including themselves of course. If you’re an employer paying yourself $60 an hour, with 10 employees that you’re each paying the minimum wage, then next year the minimum wage is increased to, say, $15/hour, you have a whole bunch of choices:

    a) Invest in training/more equipment to increase the productivity of your employees
    b) Reduce your profit margin by a few percentage points
    c) Reduce your own salary by ~$0 a hour
    d) Let one of your workers go

    Now, I don’t know about you, but I can’t imagine too many employers would jump at d) as a preferable option.

  33. NPOV says:

    Oops, $0 was supposed to be $10!

  34. Tim Quilty says:

    What the employer will do is dependant on the situation. Perhaps they will buy a new machine and sack four of the six workers while retraining the other two to operate the new machine? This outcome is most consistant with what has been happening in Labour markets in Aus.

    The employer may decide that they can make more then $60 an hour as a consultant for large companies without the hassle, shut the business and be done with it.

    But of course, what we are trying to do with NIT is bring another worker into the business. Everone’s wage may drop a bit and two new unskilled worker be brought in at $6 an hour. Or something. I don’t see a lot of value in this kind of hypothetical.

  35. NPOV says:

    And indeed, buying a new machine that boosts productivity that much is surely the best economic result. Ultimately increasing average productivity is the only thing that increases the size of the economic pie, and consequentely living standards.

    Now, as it is, I simply don’t believe there are even as many as 1% of Australians who a) want to work and b) are not capable of generating wealth at a rate of at least $13.74 an hour. So at best I would accept that lowering (or scrapping) the minimum wage would help out a very small fraction of people who simply are physically or mentally incapable of being any more productive, but there’s no way it’s going to cut unemployment by from 4% to 0%.

  36. Tim Quilty says:

    If we take current official unemplyment rates as Australians who want to find work but can’t (which is what they are supposed to be) then there are 4% of the workforce in this boat. We know the real figures will differ substantially. But NIT set a bit lower then current unemployment benefts coupled with removing the minimum wage will 1) get many of those currently content to live on the dole into at least a little paid work and 2) lift the participation rate as those who have given up on being in the labour force rejoin for some fraction of a working week.

  37. Tim Quilty says:

    I put it to you that forcing people to exist on the crumbs of the current welfare system is bad. This welfare life sucks. It sucks for the people living it and twice for the children born into it. I don’t think it is good enough to say it is only 4% of the workforce, so lets throw then the scraps while we live our more comfortable lives. Generally these people will be employable if wages for them are low enough. And with time in the workforce skills and wages should rise.

    One idea I was thinking about was simply implementing NIT and no minimum wage (NMW) for the long term unemployed and see where that takes us. But that still involves lots of government oversight and administration.

    Ultimately the worlds a big enough place that these ideas are worth experimenting with in some jurisdictions. It’s not like the current system is perfect, or even good. If it doesn’t work after a few years it can always be rolled back.

  38. NPOV says:

    Well a) I’m not particularly concerned about people genuinely “content” to live on the dole. Most likely the choice they’d make if living off the dole wasn’t an option would be far less palatable.
    b) “These people will be employable if wages for them are low enough” – perhaps, but what’s better – getting stuck in a $5/hour job for the rest of your life, or deciding that if you want a job, you’re going to have to train yourself up and make yourself worth $13 an hour?

    As for trialling an NIT – absolutely, I’d like to see it tried. Ultimately if it doesn’t work, democratic pressure will lead to modifications and adaptions.

  39. Jacques Chester says:

    government spending in the UK is nearly 45% of GDP – higher even than Norway and Iceland (both 42%), and much much higher than the Australias level of 35%.

    You’ll find Australia’s public sector is closer to 40-something percent when you include the other levels of government. The UK, Iceland and Norway have unitary systems which makes the figure appear higher because it gets aggregated to the central government’s count.

    It’s actually hard to figure out the total for Australia because of the complexities of transfers between governments, especially due to odd incompatibilities of accounting. I set some DPL experts on this topic for Dave Tollner once, and even they had trouble working it out.

  40. Tim Quilty says:

    I am concerned about it. I am concerned about a gradually growing underclass who haven’t worked in generations, live in commission housing and think baby bonuses are a good income top-up. I guess it’s a perspective thing.

    I find a lot of the liberal left grew up in middle and upper class city suburbs, went to school with peers from the same income groups, maybe met a few poorer but bright driven kids at uni, then settled into a comfortable middle class job with the same people. Provided the housing commission suburbs are stuck out to the west they will never have to come across podSydney, as my Russian born wife refers to it.

    Whereas, coming from a little country town, we had the entire socio-economic group tumbled into one little primary school. The farm kids who were off to the most expensive boarding high school their parents could afford, followed by Uni, local working families who would be generally only finishing high school and looking for blue collar jobs and those from homes where nobody worked, who were sticking school out till they turned 15 and could get away and start getting welfare and having kids. One kid in particular turned 15 and left before finishing primary school. I don’t remember him as retarded, just uninterested. I think he repeated every class all the way through.

    Anyway, point being that I care most of all for the kids born in those families, and I’d like to break that generational poverty link. And I think socialist welfare created the problems and free markets are the only way to fix them.

  41. Jacques Chester says:

    In a heavily computerised age, financial calculations come very, very cheaply so it matters little how complicated or simple your schemes are, it disappears as soon as the programmers are finished with it.

    The rate of bugs-per-line is pretty constant over large bodies of code. More complicated tax codes mean more code, ergo, more bugs.

    There’s also the problem of verifiability. Small programs can be proved correct, in a mathematical sense. More to the point, you can have personal confidence in them because they’re small enough to fit in your head. This is less so for large programs.

    Lastly, tax regulations are in computer terms pretty close to ‘spaghetti code’, which increases the risk of errors and loopholes.

  42. Jacques Chester says:

    BTW I would suggest that Australias biggest disadvantage over Norway is probably geography.

    Not at the moment. Australia’s proximity to China, India and Japan is a substantial competitive advantage in several export categories. Especially iron ore, where the other big supplier is Brazil, who are on the wrong side of a continent and an ocean.

  43. Patrick says:

    Especially iron ore, where the other big supplier is Brazil, who are on the wrong side of a continent and an ocean.

    This would be important if most sales weren’t free-on-board.

    NPOV.

    Yes I realised that you had made a mistake. I was just making fun.

    I would happily retain the minimum wage if we could streamline employment regulation, down to about zero. As noted Denmark does this so why can’t we?

    Can we fuse progressively on that point?

  44. Jacques Chester says:

    This would be important if most sales werent free-on-board.

    You’ve got me there, but my understanding is that right now BHP and Rio are preparing to work this into the next round of contracts.

  45. NPOV says:

    Patrick, I’ve read reasonably promising things about Denmark’s flexicurity system. I’d hardly say it was “zero employment regulation”. And as I understand it, the lower-paid workforce there is more heavily unionised, so while there might not be a lot in the way of government-dictated regulations, union-determined conditions are probably not essentially different to those in Australia.

    But that has nothing to do with my question of exactly what sort of benefit you would expect to see to Australia as nation were governments to slash spending to, say, 20% of GDP?

    Jacques, regarding geography, what I meant is that Australia’s geography relative to Norway is a problem for employment, not for earning income through resource extraction.

  46. Jacques Chester says:

    I don’t know if I follow your argument, NPOV. Can you put it a different way?

  47. NPOV says:

    Tim, how much evidence is there that Australia has a “gradually growing underclass who havent worked in generations”?

    I fully agree about the need to break inter-generational poverty links, but I’m far from convinced that it can be done via an NIT and abolishing the minimum wage.

  48. NPOV says:

    Jacques, for start I presume Norway doesn’t have a big problem with the oil industry struggling to attract workers because they live 3000km away. But in general, labor mobility and flexibility is surely easier in a smaller more densely populated country (Norway as a whole isn’t very densely populated, but almost everyone lives in the southern half, where the average densely is significantly greater than in Australia).

  49. Tim Quilty says:

    “Tim, how much evidence is there that Australia has a gradually growing underclass who havent worked in generations?”

    Dunno. Mostly my impressions of it are ancedotal. I’m certainly not any sort of social scientist. And the stats are probably blurred. I’m sure we’ve had large numbers of immigrant groups moving into and then out of the bottom end of the income distribution. While a smaller core of intergenerational unemployed have been quietly ticking over. But don’t ask me to back it up. I’ll leave it to someone else to put in the hard yards and disprove me.

    I’m sure I had this very discussion here a few months ago. It seems very familiar…

  50. Nabakov says:

    gradually growing underclass who havent worked in generations?

    That sorta depends on how you define work doesn’t it? There’s a big vibrant black economy out there which doesn’t show up in any official, formal or punditable figures.

    From the little I’ve seen of those involved in twilight to black economy operations such as chop shops, drug cultivation and distribution and undocumented construction materials supply and service chains, the ones doing well are probably working harder in their own way than many cubicle farm drones employed by large legitimate organisations. Certainly taking more risks with their capital and labour.

  51. Yobbo says:

    There are lots of reasons it might take someone 12 months to find work, and $9000 isnt enough just for accommodation and sufficient food in most of Australia, let alone to be able afford transport necessary to get to job interviews etc. What else would you envisage people in such circumstances receiving?

    If a 10 year old child can make $40 an hour washing car windscreens in a public carpark on a saturday morning, im sure there’s something grown adults can do too.

    The problem is that under the current system there’s no point, because you don’t get to keep any of the money if you did.

    That’s the whole point of the NIT.

Leave a Reply

Your email address will not be published. Required fields are marked *

Notify me of followup comments via e-mail. You can also subscribe without commenting.