Monthly Archives: December 2016

MYEFO mutterings: casual workers have heard it all before

This week I had the very familiar experience of listening to a neoliberal ideologue treat his audience as economic dunces.

It is symptomatic of neoliberalism that its public faces are well-remunerated to take economic claims at face value. Their task is to reproduce these messages to an audience of staff or readers or students or voters. The audience members are in turn expected to meekly be co-opted into the neoliberal project, just like the boss.

The boss prosecutes the case for increasingly precarious employment (for others, not for himself), for abolition of penalty rates. He may or may not understand that his claims rest entirely on ideological grounds, rather than actual economic efficiency measures.

The exorbitant cost of executive salaries – staff cars and subsidised fuel, business class travel, sabbaticals, superannuation – are invisible in these speeches. Yet the cost of paying casuals by the hour for work completed is framed as an expense to be economised. Meanwhile, high staff morale, reduced inequality, and the creativity and innovation that comes with a diverse workforce and social cohesion, lead to higher productivity. This is in contradistinction to neoliberal messages delivered by the boss to causal staff.

The causal work force

Neoliberal messaging is founded in a specific value system; and based on criteria developed by people who are very expensive to retain. For instance, an unspoken assumption is that paying an executive to travel to a conference is of value to the organisation; while penalty rates are a cost. No evidence is demanded for this kind of calculation.

It is not impact-neutral for the causalised worker to listen to this at our Christmas drinks event. The executive may benefit from delivering the message, but the worker does not. To be treated as expendable, to see our pay packets shrink, to be told our rates are unaffordable by people on hefty 6-figure salaries: such experiences are dissonant, and unpleasant, and take a long-term toll.

The causal worker can not ask whether another overseas trip for the boss is really better value for money than properly remunerating those who do the frontline work. The casual worker can not point to the efficiencies, the productivity gains, the savings in staff turnover that would stem from income security and basic conditions for the frontline workforce. It is much easier for senior management to denigrate young people as flighty or fickle than to recognise the unproductive privilege to which executives are accustomed.

And because it is easier, which is the opposite of hard work, that is what the executive does. This dynamic can be seen across the private sector; and its equivalent in public life.

The public sphere

People like Treasurer Scott Morrison and Finance Minister Matthias Cormann – and Barnaby Joyce and Joe Hockey and Tony Abbott – give every impression of being economically illiterate. They are a huge cost on the public purse. Yet these men have no hesitation in telling, say, welfare recipients how to live on a tiny budget in deeply unnecessary poverty.

A neoliberal government will characterise welfare recipients as a social problem lacking money management skills. In reality, people who rely on welfare to feed and clothe themselves and others – sole parents, carers, unemployed people, aged pensioners – are very adept economic managers. There is nothing unskilled, or lazy, or immoral, about maintaining a household on a pittance while the government of the day continuously attacks your very existence.

That government of the day, by contrast, is comprised of highly remunerated members who enjoy every social and financial structural advantage of a wealthy western nation. Many have been paid from Treasury coffers their entire lives. I have no personal knowledge of how ex-police officer and current Minister for Immigration and Border Protection Peter Dutton has amassed a $20 million property portfolio. But we can be sure Mr Dutton would claim this wealth is a product of hard work, or savvy investment or risk management.

Whatever risks Dutton has taken on behalf of himself and his family, it is only with money, and only while his base salary is paid – and thus the risk underwritten – by the state. The risks taken by Dutton on behalf of asylum-seekers, by contrast, are life-and-death matters: his decisions have directly resulted in mass human anguish, provided access for rapists to rape women and children, have triggered self-immolation, overseen forced child birth. We have paid upwards of $10 billion to see these lives destroyed on our watch.

Misallocation of resources

Organisations which propagate falsehoods such as an individual’s financial reward is commensurate with their hard work are really terrible economic managers, because the propagation of such messages requires resources. Every resource – time, money, labour, raw materials – allocated to the lies of liberalism could be spent on some other project, with some other return on investment.

It is a simple concept. Economists call it opportunity cost. Every dollar spent on one consumer choice is not available for every other possible spending decision.

The return on investment might be concentrated in the hands of the few, or it might produce long-term social good. Or harm. The $10 billion spent on Wilson Security and other interests to destroy the lives of asylum seekers has the return of electoral victory for a Coalition government.

Free market principle says that if people can amass vast private wealth through innovation and hard work – JK Rowling, say, or Bill Gates – they can do this without being subsidised or underwritten by the state. Similarly, public investment is for the long-term social good, or at least it is under principles of social democracy.

In contrast, principles of neoliberalism… just kidding. Neoliberalism has no principles, unless it is power (and wealth) for power’s sake.

The NBN is an example of the difference between social democratic principles and neoliberalism. The NBN is a national infrastructure project, conceived with a strong social justice component. High speed affordable internet for all would see delivery of knowledge and expertise to rural and remote areas, producing direct dividends in health and education; and indirect dividends in equality and social cohesion.

The NBN has since been transmogrified into a hotch-potch of inferior technology, private interests, and badly-managed compromises. It is costing more, for less social good – and more returns on investment concentrated in private interests (such as highly paid executives). Malcolm Turnbull has overseen this reallocation of resources from social good to private interests. While many insist he is innovative, is tech-savvy, those commentators ignore the fact that a man who amassed huge wealth from business decisions (and joined the Liberal party) is unlikely to be committed to, let alone skilled at, public-sector economic management.

Despite the dividends to rural, regional and remote areas, Turnbull’s deputy Barnaby Joyce is no more committed to the public good. Joyce was famously demoted by Tony Abbott for conflating household budgets with national fiscal policy. But while Barnaby was expendable on the point back in 2010, the current Treasurer has a tendency to do the same thing.

On top of his salary, Joyce claimed over $1 million in entitlements for the first half of 2015. Politicians together claimed $48 million for the same period. While welfare recipients must report any income within a fortnight, or suffer severe exacerbation of their existing poverty in the form of payment suspension and cancellation, the delay in expenditure reporting means we do not know yet the cost of politicians for 2016.

This year the costs will include most of that horrendously long election campaign. The one where Malcolm Turnbull gave himself 8 weeks, most of it on our coin, to secure the approval of the electorate to stare down his conservative back bench but instead lost 14 seats. It is unlikely the 2016 politician expenditure bill will come in under $100 million.

Again, that is on top of their $200-500Kpa salaries. Those 226 federal government MPs do not come cheap. But like the senior executive railing against the causal workforce payroll bill, this cost is all-but-invisibilised while a man with the morals and judgement of Scott Morrison is sent out demonise the unemployed, the carers, the sick and the aged.

It really is the most disgusting spectacle.

If the Coalition in government has grossly mismanaged the economy and can not maintain a triple-A credit rating, it should set out the causes, and the solutions. That is what agile innovative thinkers would do.

Warning: MYEFO ahead

Instead, Scott Morrison will come out tomorrow and tell lies about the state of the Australian economy. He will pretend all is almost well or sort of okay but what is wrong has nothing to do with him, the Treasurer, and his complete lack of any credentials for the job. He will resort to mumbo-jumbo on seasonal adjustment and commodities prices. He will claim there are international factors. He will say economic head winds are inevitable. He will put on his serious voice to say these are serious matters. Over which, alas! he has no control.

Morrison might mention globalisation as though it occurred recently – which it did, in conservative years. Conservative years are like dog years (with apologies to dogs) – one human year to seven conservative years. When you hear a mainstream commentator blathering about the problem of social media as space where people can comment? When facebook has been mainstream since at least 2009 and it is 2016? He is conservative.

Anyway. Morrison will lie about the dismal results of four years of Liberal economic management and wash his hands of his own gross ineptitude before turning to his favourite pastime: blaming Labor and demonising welfare recipients.

Australia avoided recession during the GFC under Labor, but looks unlikely to do so under the current Coalition government. Australia retained a triple-A credit rating under Labor, but seems less likely than ever to do so under the Coalition. No matter how nonsensical or the overwhelming evidence, Morrison will spend the time and expertise made available to him on the MYEFO to blame his political opponents and hate on the poor.

This is what economists call misallocation of resources. Morrison could be seeking and implementing solutions but instead, with the backing of the Coalition leadership, will decide that Labor-blaming and poor-hating is a viable option. There is no positive return on this to anyone but – surprise – the Coalition leadership team. Our polity is diminished by it. Welfare recipients are further disempowered.

Time and expertise, ever more so in the digital age, are subject to the same economic realities as any other resource. These public goods – Treasury officials, infrastructure investment, air time on the national broadcaster – continue to be misallocated by our government. To an economist, misallocation of resources is evidence of poor economic management.

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