Are governments ready for the coming economic and social changes?


In 1930 John Maynard Keynes predicted widespread technological unemployment ‘due to our discovery of means of economising the use of labour outrunning the pace at which we can find new uses for labour’.

In the decades since there has been rapidly increasing technological change but employment has generally been increasing, matching population growth, although not without winners and losers. The creation of new jobs often lags behind the pace of loss of jobs (as Keynes predicted) and those who have lost jobs are not always the ones who take the new jobs — they are often taken by the new generation.

Since the GFC, governments around the world have felt constrained in responding to the changes in the workforce because they lack money — they are in debt — and are being told by mainstream economists that they must return to budget surpluses. People losing their jobs are not being provided the full range of assistance they need to re-enter the workforce nor, in some cases, even the support to sustain themselves and their families whilst unemployed.

That is a direct result of the dominant neoliberal economic approach adopted by so many Western governments. The neoliberal emphasis on debt also has political implications and the following, although written about the US, could readily apply in Australia:
Indebting government gives creditors a lever to pry away land, public infrastructure and other property in the public domain. Indebting companies enables creditors to seize employee pension savings. And indebting labor means that it no longer is necessary to hire strikebreakers to attack union organizers and strikers. Workers have become so deeply indebted on their home mortgages, credit card and other bank debt that they fear to strike or even to complain about working conditions.
While the neoliberal approach remains in place, governments will not be well-placed to respond to current and coming changes in the economy and workforce — selling public assets to reduce ‘debt’ will not help people. Modern Monetary Theory (MMT), on the other hand, offers an approach in which sovereign currency-issuing governments are not so constrained. It is possible for a government to both retain public assets and have the money to provide more programs and assistance to people in these times of economic change. Unless governments embrace a new economic approach like MMT, then the technological unemployment predicted by Keynes is likely to be a real outcome.

The spread of robotics and computerisation throughout the workforce is already happening without us being fully prepared. While there is talk of the need for improved education in things like STEM, computer coding and even innovative approaches, and of the need for a flexible, agile and innovative workforce, these are essentially economic issues and we seem to be ignoring some wider social implications.

A basic question in the rise of robotics is that of ethics. One writer raised an interesting ethical question in the scenario of driverless vehicles: if a driverless vehicle ‘perceives’ that it is about to be involved in an accident and the only pathway to avoid the collision may involve hitting a woman with a pram, which decision will it make? A human would likely make a moral judgment to face the accident and minimise the impact by braking, swerving slightly or whatever action is appropriate but will an automated vehicle see saving itself as the primary response? Whether driverless vehicles can ‘learn’ to place humans first in such situations is debatable. While theoretically driverless trucks seem to be one of the next major targets of computerisation, I think there are still issues to be resolved but I doubt they will be prior to their introduction as the economic imperative will over-rule the ethical.

Computerisation generally will displace many people from their current work, as discussed in more detail in ‘An economy without people’. New forms of work will emerge but how long will that take? Much of the new work will require higher level skills: will we have the capacity to retrain people for the new jobs or do they simply move to the ‘scrap heap’ to be replaced by the next, better educated, generation? As unemployment increases, how will governments respond? If our government is already complaining about welfare costs, it will find it difficult to provide for the new unemployed as computerisation pushes further into the workforce. With an ageing population, there should be a need to keep more people in the workforce but that may no longer be possible.

Some unemployed may voluntarily enter ‘the gig economy’ to help tide them over. But the gig economy may also be on the rise as companies decide it is more ‘efficient’ (cheaper) to hire workers only as they are needed for specific tasks or projects rather than maintain a larger full-time workforce, meaning many more people will be forced into the gig economy. While for people it is ‘the gig economy’, for economists and businesses it is the ‘on-demand’ economy: that difference in terminology also shows how people can be removed from consideration in the coming changes. Whatever it is called, it will have many implications.

Nick Wales at the UNSW Business School has raised one basic concern:
“It polarises people”, says Wales. “Is this creating communities of entrepreneurs who have been marginalised from the traditional economy, such as housewives, students, retirees and immigrants, offering them the flexibility of part-time working? Or is it an underhand way for businesses to get around labour laws and pay these contractors low wages?”
If more and more people are working in the gig economy and on short-term contracts, what rights will workers have? They will not have paid sick days or holidays, or protection from unfair dismissal. Even many occupational health and safety rules may not apply. They will also need to provide for their own superannuation but the extent to which they can may well depend on how much they are able to earn. And will unions find new ways to cover them or is this the final death of unions? (If the role of unions diminishes even further what impact will that have on the future structure of the ALP?) Will these gig workers be treated as, or choose to become, small businesses? We have already seen the problems created by the use of ‘contract workers’ and in the new economy that looks set to expand exponentially.

How do banks respond to people who do not have full-time work/regular income if they are working gigs? At the moment, loans to such people would either be out of the question or, at best, be classified at high risk of default. If, however, this form of work becomes normal for a large proportion of the workforce, banks simply cannot ignore such a significant customer base. There will need to be innovative products that cater to the needs of such customers.

Banks may become more important in another way. There is a possibility that people will become more reliant on debt (loans and credit cards) to carry them through between gigs. It may be in the interest of banks to move into areas of lending currently dominated by the so-called ‘payday lenders’ as there is likely to be a growing market for such short-term products. Banks will have much thinking to do about their role in the new economy.

The gig economy has implications for how government views employment and unemployment as the 37-hour week may no longer be the norm. The OECD is already working on new indicators for employment and unemployment. It is likely, however, that any new definition of ‘employment’ will reduce access to unemployment benefits as it is likely to involve shorter periods of work. Even paying unemployment and other welfare benefits in their current form may no longer be appropriate as they are tied to levels of income. The ‘paperwork’ (data entry) involved in making constant adjustments as people move in and out of short-term jobs (some very short-term) will become onerous as the number of gig workers increases. New forms of payment may be required.

Then there are issues of government regulation and taxation. Already the ATO has ruled that Uber drivers must register for and pay GST as they are providing a ‘taxi travel service’. Current taxi drivers believe Uber is not competing on a level playing field because it does not need to meet the same licence and safety regulations. Victorian cab drivers are protesting a Victorian government announcement that it intends to deregulate the industry. While that may create the level playing field the drivers are seeking, they are not happy that the Victorian government is offering to buy back current taxi licences at a price below what many paid.

On the other hand, if more ‘workers’ are operating as contractors and small businesses, what impact will that have on government revenue, particularly if the push continues to lower company tax rates? Governments may need to reconsider that approach as ‘company tax’ could conceivably become the biggest source of revenue as more people in the gig economy register as small businesses to reduce their taxation.

Deregulation and ‘contract work’ or operating as a small business do not provide the full answer — although it will be attractive to the neoliberal economists and, as such, support for those approaches may be the advice that governments receive. It would mean a large workforce not protected by any provisions for safety, holidays, superannuation nor even hours of work. As Wales suggested, it would allow companies to under-cut existing wage structures and make full-time employment even less attractive for other competing businesses, creating a feed-back mechanism encouraging further use of gig workers.

The Aspen Institute in the US, however, does not believe that governments should regulate but allow companies, workers and consumers to experiment with new models:
… that can begin to give shape to a social contract for a changing economy and new century. We need a better system that ensures workers have the stability and security they need, without stifling innovation or undermining the flexibility the on-demand economy offers.
While suggesting that ‘stability and security’ are required for workers it is basically leaving that to ‘the market’ to determine. Given the history of market solutions, I would have no faith in it reaching a suitable arrangement — because, as explained in the first article in this series, ‘the market’ after all is people manipulating trading for their own advantage and it is to their advantage to have an insecure workforce that is less likely to make demands regarding wages and conditions. Government, even if intending to allow such an approach, must hover at the edges and be prepared to regulate minimum conditions.

While a new economic approach like MMT will help governments understand that they do have the money to deal with problems, it is not the answer to all the issues I have raised (it is, after all, a macroeconomic theory). I am concerned whether its Job Guarantee can be used in the new economy or whether it, too, is based on a model of full-time employment.

At Davros earlier this year, a report to World Economic Forum stated:
During previous industrial revolutions, it often took decades to build the training systems and labour market institutions needed to develop major new skill sets on a large scale. Given the upcoming pace and scale of disruption brought about by the Fourth Industrial Revolution, however, this is simply not an option. Without targeted action today to manage the near-term transition and build a workforce with future proof skills, governments will have to cope with ever growing unemployment and inequality, and businesses with a shrinking consumer base.
So the final issue is that it is not just workers who will suffer. Robotics, computerisation and an increasing number of gig workers will each contribute to ‘a shrinking consumer base’ and that has implications for business survival — in essence, their rush to reduce costs could be creating the conditions for their own demise. That in turn will impact government revenue in lower company and individual tax revenue — but only if they continue to cling to the neoliberal economic approach. If there is a silver lining to this ‘cloud’, it may be that the neoliberal economic approach will be shown to provide an inadequate response to the new situation.

With the possibility of declining consumption and problems redefining employment and unemployment, the concept of a ‘universal basic income’ may gain more traction. Although a proposal to introduce such a payment was recently voted down in Switzerland, it is being considered in Finland and the Labour Party in the UK has begun discussing the concept. In simple terms it is an income payment made to every man, woman and child. It has the potential to replace virtually all welfare payments including pensions, unemployment benefits and family support payments for children: in the case of unemployment, it would remove the need to redefine ‘employment’ to meet the circumstances of the new economy. As it would be paid to everyone, it means those who are working would also receive the payment and it becomes necessary to apply tax to the payment so that those who are in work return a much greater proportion of it in the form of tax. Even the MMT approach would require taxation of such a payment to ensure that it did not create demand beyond the productive capacity of the economy. For businesses it would help maintain the consumer base and so be of benefit to them. With fewer workers, the productivity benefits of robotics and computerisation will not be spread throughout society but further concentrated in the hands of the company owners and shareholders, unless something like a universal basic income is adopted. As robotics and computerisation spread and replace major portions of the workforce, such an approach may become the only viable option.

It appears we have a rocky road ahead. Governments will not be able to respond effectively if they cling to neoliberal economic approaches. Avoiding regulation and spending, and leaving resolution to ‘the market’ will be a recipe for disaster and even businesses will suffer. Without new approaches we will continue to have an economy in which people are placed last and well-being is barely a consideration.

It is time this conversation began because if we leave it until the impact is being felt, it may be too late to avoid a major economic downturn, ironically created by the very process businesses thought would boost their profits.

What do you think?
Are businesses blindly pursuing robotics and computerisation without fully understanding the wider implications?

Can ‘the market’ be trusted to reach new solutions or must governments first find new approaches (including MMT) to protect the people?

Let us know in comments below.


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Who is the culprit?
Ad astra, 25 September 2016
When you reflect on the dilapidated state of federal politics; when you question how on earth we have become encumbered with so many appalling policies, do you ever ask: 'Why is it so?'

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Who is the culprit?

When you reflect on the dilapidated state of federal politics; when you question how on earth we have become encumbered with so many appalling policies, do you ever ask: 'Why is it so?'

I do often. And when I do, one culprit emerges over and again. Who is it?



Who in this motley collection is the culprit? Who is responsible for these policy calamities?

You be the judge. It's not a big challenge for the politically astute, but it might be revealing for the casual political observer.

Let's look at just a handful of policy catastrophes that afflict us still.

Consider global warming
Leaving aside the uninformed utterances of our new One Nation senator Malcolm Roberts and all the other climate deniers, there is strong consensus among thousands of climate scientists that the planet is warming inexorably towards levels dangerous to life on earth, which if not curtailed will become irreversible. A majority of ordinary people believe this to be true, and want something purposeful and effective to be done about it. So what is being done?

All our government is doing is implementing its so-called 'Direct Action Plan'. No environmental scientist or economist worth their salt can demonstrate that it is working, or even can work. It's a dud. Since Labor's 'carbon tax' was repealed and the DAP began, carbon emissions, which had begun to fall, are now rising again. Forget all Greg Hunt's talk about Australia 'meeting and beating' its emission targets, and Josh Frydenberg's reiteration of it. Emissions are increasing. We are not pulling our weight as global citizens. We are frauds in the climate change world.

Why is it so?

Who was it who thwarted the move towards an Emissions Trading Scheme that PM Kevin Rudd and Opposition Leader Malcolm Turnbull had agreed upon? Who used this nascent agreement to upend Turnbull and take his position? You know. Who used the repeal of the 'toxic carbon tax' as a powerful weapon in gaining power. You know.

Have you reflected upon how destructive a move this was, one that left this nation far behind comparable countries, one that made us a pariah? We have never recovered from that, and never will while we have no ETS.

Turnbull lost his leadership over this, and even today clings to it by a thread, obliged as he is by his deal with the conservative clique in his party to make no change to climate change policy. But he was not the culprit. He did not dream up the DAP; he supports it now only to save his skin. It was he who boldly said he would not lead a government that did not take effective action to combat global warming. His support for the DAP is insincere. It puts the lie to his previous pro-ETS utterances. It belittles him. You know who the culprit is in this sorry tale of missed opportunities and ineffective action.

Of all the misdemeanours of our prime culprit, this is the most egregious. It is quite the most dangerous. It is shameful. You know who the culprit is.

Consider the National Broadband Network

It is a strange coincidence that our prime culprit and our current PM were also the players in this sorry saga. Labor proposed a fibre-to-the-premises NBN that experts around the world acknowledge is the ideal model, one that would give the best results and provide this nation with an enduring position in the communications world, and a competitive advantage over those nations with inferior models.

You will have no difficulty recalling who instructed the then Communications Minister, Malcolm Turnbull, to 'demolish the NBN'. Demolition was his modus operandi. Anything Labor did must be demolished irrespective of whether it was in our national interest to keep it. Turnbull must have been horrified. His reaction was to create a hybrid, multi-technology model with a substandard compromise of fibre-to-the-node on the street corner with ageing copper wire to the premises. Turnbull knew this was an inferior model, but at least it was better than demolition. So we are now stuck with a model that will leave this nation well behind in the world of communications and uncompetitive, just when our PM tells us that we must be innovative so that we can be globally competitive.

It is shameful that this has occurred for no other reason than our prime culprit regarded anything Labor created was anathema, and therefore must be destroyed. It is shameful too that tech-head Turnbull now vigorously but unconvincingly defends the Coalition's NBN. He knows it will be inferior, probably will cost the same as Labor's, and might be no faster in rollout. Turnbull has sold us another pup with his FTTN NBN. But there is no gainsaying who is the prime culprit in this lamentable saga. But for him we could have had the best, but now we are stuck with second-best or worse. All the talk about the excessive costs and slow rollout of Labor's model has turned out to be bunk. Now Turnbull is trying to convince us that users don't want the fast speeds Labor's FTTP guaranteed. Has he checked whether businessmen want and need very fast speeds to be competitive?

Our prime culprit has inflicted on our nation yet another destructive decision born of adversarial hatred of anything his opponents proposed to do. You know who he is.

Consider marriage equality

We all know our prime culprit does not support same sex marriage, no matter what he says. So, knowing there was clamour from the community to introduce marriage equality to reverse the Howard government's 2004 insertion of 'between a man and a woman' into the Marriage Act, done so subtly by a simple parliamentary vote, our prime culprit sought to thwart attempts to change the Act by insisting it be put to a plebiscite after the recent election.

He knew a plebiscite would delay a decision; he knew that he could obscure the matter by allowing lots of time for debate and argument 'from both sides'. He is ideologically opposed; same sex marriage is contrary to his religious beliefs. He does not want it, although the community does. He hopes that by fostering debate religious groups can cast doubts in the minds of voters. He knows that doubt is a potent element in any public vote, be it referendum or plebiscite.

He knows that if his allies in opposing marriage equality, prominent among whom is the so-called but unrepresentative Australian Christian Lobby with its persuasive spokesman Lyle Shelton, are given a chance to spread misinformation, fear and doubt, even bigoted views, it might engender a 'No' vote in the plebiscite. He is devious, cunning and ruthless. His conservative supporters have locked PM Turnbull into supporting the plebiscite, although Turnbull himself supports marriage equality.

If the plebiscite fails to reach a majority in favour of marriage equality, just one prime culprit will be responsible.

Now think about income and wealth inequality

You don't hear Liberals talking about inequality - they accept it as the normal state of affairs. There have always been the Lords and the Ladies and the Serfs to bow before them. Driven by their entrenched neoliberal belief in the power and wisdom of markets, they cling tenaciously to the long-discredited theory of supply-side economics, colloquially known as 'trickle down' economics, which posits that tax cuts given to the top end of town trickle down as benefits to the workers in the form of more jobs and better pay. It's bunk, but advocates recite this belief like a catechism mindlessly repeated during worship.

All the evidence is that inequality is increasing in this country. It has been for years. It shows no sign of lessening. The construction of the 2014 Budget made inequality even worse. Neo-liberals don't acknowledge this; neither do they care about it.

Who is the culprit?

Some may identify Joe Hockey, or his successor, Scott Morrison, but think about who put them up to their budgetary strategy. The 2014 Budget was not Hockey's; the punitive attack on the less well off was authorised and endorsed by our prime culprit. He was the one who was prepared to punish the poor. Even his supporters acknowledged that the Budget was unfair, the most unfair in many years, and that those who had the least were targeted for the most punishment. Why is our prime culprit so mean?

To add insult to injury, the Coalition now proposes to give generous tax cuts to businesses. This includes the banks and wealthy international companies, many of whom pay little or no tax anyway.

The budgetary assault on the less well off and the attack on Hockey's 'leaners' are shameful, and equally the handouts to the well off are obscene.

So who is the culprit?

We know that there are a few good politicians, many mediocre ones, several poor ones, and an occasional lamentable one. This piece argues that there is one person, just one, who has inflicted on the Australian public a succession of appalling policies, just four of which I have outlined. His egregious actions have diminished us as a nation.

He has made us a pariah in the world of climate change action. He has thrust upon us an inferior broadband network that will curtail our competitiveness. He has manipulated the debate about marriage equality to diminish its chances of becoming law despite the public's wish that it be so. He has accepted inequality as the norm in our society and has sought to make it worse.

Can you think of a single politician who has inflicted so much destruction, so much damage on our society? Can you identify a meaner person whose adversarial nature has caused so much harm?

Yet he still hovers in the background like a ghost of things past, quietly, subtly eroding confidence in his successor, hoping for another opportunity to wreak havoc once more upon our lucky country.

You know who the culprit is.

If you are still scratching your head, click here!

What do you think?
Let us know in comments below.

Did you identity the prime culprit?

Do you agree with my assessment of who fits this description?

What is your assessment of this person?
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What is Modern Monetary Theory and will it help?


Modern Monetary Theory (MMT) is a macroeconomic theory for the current age in which governments have abandoned the gold standard and also floated their currencies. It is ‘macroeconomic’ and ‘monetary’ because many of its conclusions relate to the money supply in an economy. Does it offer scope for a new economic approach recognising people? Can it better assist responses to robotics and computerisation than current economic approaches?

Historically, gold was important because coins were minted from it (and silver). Even when coins were no longer minted in gold, the currency issued by governments was convertible to gold and governments needed to hold sufficient gold reserves to satisfy a potential demand from all holders of their currency — that was the gold standard. In that situation governments could not spend without first taking money from the economy (taxation) because the money supply was limited to match the quantity of gold. Following WW2, fixed exchange rates also meant that governments, through their central banks, had to defend the rate they had fixed by buying or selling their own currency in international money markets: that also affected the money supply in their home economy and also placed limitations on government spending. Floating currencies now allow central banks and governments to target domestic economic policy goals knowing that the floating exchange rate will resolve the currency imbalances arising from trade deficits or surpluses.

MMT points out that much economic thinking since the 1980s operates as though the gold standard is still in place — namely, that governments can only fund their spending by taxation and therefore deficits are bad — but some MMT proponents and supporters argue that this has ideological (neoliberal) rather than genuine economic underpinnings.

Since the abandonment of the gold standard, most countries, including Australia, now have a fiat currency — that is, it is created by government fiat (decree) — and it has no intrinsic value. My $50 note is not matched by $50 worth of gold any longer, nor is my plastic note worth $50 itself (in 2012 Australia’s polymer notes cost 34c each on average to produce irrespective of their face value). My note has value only because the government decrees it has and the government is the monopoly provider of currency: therefore it is the currency I need to participate in the economy and to pay taxes.

MMT places this new reality at the centre of its approach. A sovereign government issuing its own currency can never run out of money, never go bankrupt or default on its ‘debt’. That in a sense was Greece’s problem: as part of the Eurozone it was no longer an issuer of its own currency. In that circumstance, as for the states within a sovereign nation, the oft-used analogy of a household budget still applies but it does not apply to the sovereign issuer of a currency.

The ‘sovereign issuer of currency’ argument leads to probably the most well-known and sometimes controversial aspect of MMT, that a government can always ‘create’ money. The critics argue such printing of money — although these days it actually requires only a few keystrokes on a computer to create deposits in the private banking system — will lead to hyperinflation as in Zimbabwe or the Weimar Republic in post-WW1 Germany. MMT accepts that inflation is one factor that imposes a limit on government spending but that limit is not reached until all the ‘real’ resources of the economy are fully utilised — all human resources (full employment) using all available physical resources. If a government continues to spend after that, then dangerous inflation may result but, prior to that point, MMT argues that government spending to assist utilisation of available resources will not lead to uncontrolled inflation. For MMT, the issue is not just money but the real human and physical resources that are available to the economy and not currently being used:
If there are slack resources available to purchase then a fiscal stimulus has the capacity to ensure they are fully employed.
As a means to help control inflation, current mainstream economic thinking accepts the Non-Accelerating Inflation Rate of Unemployment (more commonly known by its acronym, NAIRU). The Australian Treasury uses NAIRU in its modelling as the basic foundation of longer-term stable inflation — currently the NAIRU in Australia is 5% unemployment. Before NAIRU, full employment was taken to mean there would be about 2% unemployment, allowing for people moving between jobs or unemployed short term for various reasons. In practice, NAIRU provides a ‘buffer stock’ of unemployed which basically means that having those extra unemployed, above the previously accepted 2%, provides downward pressure on wages growth because the unemployed are more willing to accept lower wages simply to have a job. The argument goes that if unemployment falls below the NAIRU level the competition for workers will mean employers accept demands for higher wages thus leading to higher inflation. (Despite the whole capitalist free market system being based on competition, whenever workers appear to have a competitive advantage it is decried as a threat to the economy!)

MMT rejects the NAIRU and instead proposes a Job Guarantee for the ‘unemployed’, sometimes referred to as ‘transitional employment’ which probably describes it better. As opposed to the NAIRU ‘buffer stock of unemployed’, MMT offers a ‘buffer stock of employed’ but this is done at a ‘fixed price’ — in Australia this would be the minimum wage, inclusive of standard employment conditions. It means the government supports employment until such time as a person obtains higher paying mainstream work and it will be in productive work using under-utilised resources:
What matters … is whether there are enough real resources available to produce goods and services that are equal in value to the government’s job-guarantee spending. If these resources are available — if they are not already being used to produce something else — then the increased demand that results from the payment of job-guarantee wages will not be inflationary, regardless of what they go to produce.
On broader monetary issues, MMT says that there can only be saving in the private sector, inclusive of banks, businesses and households, if the government spends more than it collects in taxes: that is, only when the government adds money into the economy can there be private sector saving as well as investment.

A good, simplified explanation of this was provided by John Carney at CNBC in 2012:
The MMT people aren’t actually referring to you and I saving. They aren’t even talking about the entire household sector saving financial assets. They are talking about the entire private sector spending less money than it earns.

You can easily see why this would be impossible without the government spending more than it collects. Every dollar someone is paid is a dollar someone else has spent. If we all — every single person and company — spend less than we are paid, very quickly we will find we have to be paid less. The aggregate effect of savings is to reduce the total amount people are being paid for things.

So this is what MMT people are talking about when they refer to a “private sector desire to net save.” They mean that if you add up all the earning, spending and savings of every person and company in the economy outside of the government, sometimes you find that the private sector is trying — nearly impossibly — to earn more than it spends.

The only thing that can make private-sector net savings possible is government spending. If the government spends more than it takes in taxes, the private sector can earn more than it spends. Remember, if everyone pays less than they earn, some outsider must be paying more than he earns.
The MMT equation for this is:

(G – T) = (S – I)

Or in words, government spending (G) minus taxes (T) equals private saving (S) minus gross private investment (I). This is so because in macroeconomic terms the two represent the entire amount of money in the economy. And the other key of this equation is that it shows that money does not come into being in the private sector unless the government has first spent it (over many years now).

MMT points out that when governments run surpluses it leads to an increase in private sector debt because, in that circumstance, if the private sector wishes to save and invest, it has to borrow from the existing pool of money (and the government surpluses are actually reducing the money supply). This is explained by the concept that transactions between banks, businesses and households are ‘horizontal’ transactions and cannot change the amount of money in the economy (liquidity). Only a ‘vertical’ transaction between the government and the private sector can change liquidity (MMT includes both the treasury and central bank when it talks of ‘government’).

In the USA, on all occasions when the government has run surpluses, and reduced debt for a few years, it has been followed by recessions or depressions. Arising from the indebtedness forced on the private sector by the government surpluses, there comes a point when the private sector reduces spending because it cannot afford to take on more debt, thus creating an economic slow-down. In such circumstances, only government spending can relieve the situation. (It is also of interest that since 1776 the US government has been in debt in every year except for the years 1835 to 1837.)

In a globalised world, however, national economies do not operate in isolation so one more aspect needs to be added to the equation: exports (X) and imports (M).

(G – T) = (S – I) ‒ (X – M) or

(G – T) + (X – M) = (S – I)

If a country has a trade surplus that adds to private savings. Many countries, however, as Australia, operate a trade deficit which means that private sector saving is reduced and more reliant on government spending. And at a global level the nett outcome of all countries’ trade must sum to zero, so it is impossible for every country to run a trade surplus — a surplus in one country necessarily requires a deficit in other countries. So a trade deficit or surplus is not bad in itself but does affect private sector saving and creates more need for government to adjust its spending appropriately.

Although even MMT still talks about deficits and surpluses, my reading is that those words are less relevant in MMT. If a government can create money it can never really be in deficit (except perhaps in a point-in-time accounting sense). Even claiming that the deficit represents spending more than collected as taxes is not relevant. MMT says that the government does not need taxes in order to spend — it can always create whatever money it needs. The real purpose of taxes is to take money from the economy or, in economic terms, to reduce liquidity, meaning there is less money to spend and thereby total demand across the economy is also reduced. What taxes can achieve is to create ‘space’ for government spending. If an economy is already running at capacity and the government continues to spend, that is increases liquidity and demand without first making space for that spending, then high levels of inflation may result because there is more money in the economy to buy the same amount of goods and services, meaning people competing for those goods and services are willing and able to pay higher prices to obtain them. So taxes can be important in allowing government spending without dangerous inflation but are not necessary in themselves for that spending.

Similarly MMT argues that the sale of government bonds is not necessary to fund government ‘debt’. So-called ‘debt’ can actually be met at any time because the government can ‘create’ the money to do so. But as always the limiting factor is controlling demand in relation to the capacity of the economy so as not to allow dangerous levels of inflation.

MMT’s explanation is that the sale of government bonds is primarily a means of controlling interest rates: this relates to the overnight commercial bank reserves placed with the central bank but I won’t attempt to explain how that works. (This interview with Bill Mitchell for the Harvard International Review provides an explanation and also a good summary of MMT.) A secondary reason is that banks, financial markets and the private sector generally, desire government bonds as a safe haven to park money. Here in Australia, that became obvious during the Howard/Costello years when the government paid down its debt and saw little need to make new bond issues but the private sector complained and the government had to issue more ‘debt’ even though it had no debt: that fact alone gives credence to the MMT argument.

Although the approach is called Modern Monetary Theory, it places more emphasis on fiscal policy. Bill Mitchell writing on the current economic problems said, ‘until we stop relying on monetary policy and restore fiscal policy to the top of the macroeconomic policy hierarchy, nothing much is going to change’. Mitchell argues that governments have been using the wrong approach to overcome the current economic stagnation affecting many countries:
It is not that they have run out of ammunition. They have been using the wrong ‘ammunition’. For example, trying to drive growth with low or negative interest rates failed to work because the lack of bank lending had nothing to do with the ‘cost’ of loans.

It had all to do with the dearth of borrowers. Households, carrying record levels of debt and facing the daily prospect of losing their jobs, were not going to [start] suddenly bingeing on credit again.

Business firms, facing slack sales and a very uncertain future, could satisfy all the current (low) levels of aggregate spending in their economies with the existing capital stock they had in place and therefore had no reason to risk adding to that capital stock.
In the MMT model, the remedy to many economic problems is fiscal stimulus not austerity which only exacerbates the problems. And as a sovereign issuer of currency the government always has the capacity to provide such a stimulus when there are under-utilised resources in the economy.

Using fiscal policy, and the knowledge that governments can spend as much as they wish, limited only by available real economic resources and inflationary impacts, MMT suggests that the real issues are social policy issues. The debate should not be about ‘debt and deficit’ but what we as a society wish to achieve, wish to become, and, within the limits mentioned, governments do have the capacity to meet those goals. For me that is an important outcome from MMT, not just that it offers a new economic approach but that it offers scope for a new policy and political approach. To that extent, it does allow space for people by creating an economic approach that recognises social policy goals are of critical importance and the ability to achieve them is not so limited or proscribed as it is by existing neoliberal economic theory. For that reason alone MMT deserves more attention.

Next week, in the last of this four-part series, I will consider whether governments are ready for the coming economic and social changes.

What do you think?
Can MMT really change government thinking and overcome current neo-liberal approaches, not just in government but in Treasury?

Will it take a new generation of economists before MMT is accepted? Will that be too late to help the people?

Let us know in comments below.


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2353NM, 11 September 2016
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It’s all about me
2353NM, 18 September 2016
At the risk of earning a Godwin Award in the first sentence, according to those who staffed his office, Hitler was a kind and paternal man. Apparently Goebbels was kind to his family as are no doubt most of the world’s leaders today.

However, the same people who make sure they …
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It’s all about me


At the risk of earning a Godwin Award in the first sentence, according to those who staffed his office, Hitler was a kind and paternal man. Apparently Goebbels was kind to his family as are no doubt most of the world’s leaders today.

However, the same people who make sure they are kind to their staff, helpful for their friends and make sure they have a positive influence in their children’s lives can make the lives of people more distant from their immediate family absolutely horrific. It is history that Hitler and Goebbels were two of the leaders of a regime that murdered millions of people based on racial stereotypes, plunged the world into the second World War and left their country far worse off than when they came to power. It could be argued that there are leaders of a number of countries who are committing similar atrocities today. It is always good, however, to remember that one person’s ‘freedom fighter’ is another person’s ‘terrorist’.

A few months ago, SBS screened a documentary from the UK titled Troll Hunters. The narrator of the documentary is a young woman (Em Ford) who owns an internet beauty blog, giving other young women tips on how to dress according to the current trends and apply makeup. Like a lot of young people, Ford at times suffers from acne and part of the make-up tips she shares on the internet are methods to hide acne. Em Ford’s blog is located here. Unfortunately, and probably unsurprisingly, some of the comments Ford receives on her blog, YouTube videos and so on are less than complementary on her appearance, personality and taste in clothes and fashion. Some of those who comment are persistent, insulting and use copious amounts of foul language. So she sets out in this documentary to find her ‘nemesis’ and call that person to account.

So the search begins. Trolling is basically illegal, as it is using a ‘carriage service’ to harass and cause harm. As you would expect, most ‘professional’ trolls don’t leave much information behind to identify them, however there are people who can sometimes discover the identity of the ‘troller’.

Here’s the spoiler alert as the end of the documentary is the relevant section for the purposes of this article.

While Ford doesn’t find ‘her troll’, with help she locates a troll who was uploading pornography to the social media feeds of a woman who was a former British Conservative Party MP. Ford and the former MP confront the man outside his house and as you would expect the former MP has some interesting observations on the man’s behaviour and can express those views with an interesting variety of language. By arrangement, Ford interviews the ‘troller’ who is not sorry for what he’s done and, despite meeting his victim, doesn’t believe she is real. It appears there is a disconnect with the reality that every ‘cyber person’ with a social media account is somehow related to a real person with a right to be treated with courtesy and respect. He admits he uploads pornography to people’s social media accounts for the fun of it! He also gets a (perverse) victory out of being blocked from someone’s social media accounts.

Let’s put that into perspective. The ‘troller’ enjoys that he can apply increasing pressure to selected victims by use of words, pictures and so on which invokes potentially a police complaint (for which there is little or any evidence available for a conviction) and certainly blocking from the victim’s social media feeds. When this happens, the ‘troller’ believes they are victorious against a ‘cyber-person’ who has no basis in real life and probably moves on to harass someone else.

So how does this relate to Australian politics? Despite what you think of their policies, it is evident that Malcolm Turnbull loves his family (including the often mentioned and photographed grandson, Jack), as Tony Abbott loves his wife and daughters and Bill Shorten loves his ‘blended’ family. It’s probably fair to suggest that Scott Morrison, Peter Dutton, Sam Dastyari and George Brandis love their families as well. In each case, it would be pretty certain that each politician would do whatever it takes to look after their family and have a pretty good stab at teaching children not to steal or cheat, as well as giving them the skills to ‘play nicely with others’.

So why would the same people act so differently when it comes to running the country? Dutton, in response to leaked reports of over 2,000 cases of abuse and humiliation of refugees (supposedly) in our care on Nauru, claimed there was nothing new to see here when it was first reported; and subsequently claimed he was the victim because he was being verballed by the media. This is despite evidence showing that Dutton had been given extensive briefings about the actions of the contractors he employs on our behalf. Dutton was attempting to shift the blame to everyone but himself and the government for the problem caused by his government’s unbending harshness as discussed by The Guardian here a few weeks ago. Maybe it is a coping mechanism. Assuming Dutton’s claim of a ‘fit up’ are true, Dutton claims there are a number of exaggerated and made up claims (by inference not all the leaked claims are incorrect), and there are obviously some incidents that bring discredit to Australia and Australians. According to his website, Dutton has a family. Even one case where a person is treated less than well is one too many and diametrically different to the care and love Dutton probably shows to his family.

The Sam Dastyari donation issue is equally as instructive here. Fairfax media reported:
It is worth noting Dastyari had broken no law, no regulation, nor even a norm in Australian politics. Technically he had not even taken a donation, but a gift. He had even properly declared the gift. He was determined to ride out the scandal.

Last Friday though, the Prime Minister, Malcolm Turnbull, piled on, pointing to quotes in Chinese media suggesting that Dastyari had advocated China's position on the South China Sea dispute, a position contrary not only to Australia's stance, but that of our key ally, the United States.

‘Cash for comment’, said the PM.
The claimed difference between this ‘gift’ and other ‘gifts’ and donations is that Dastyari is supposed to have publicly contradicted the ALP’s policy on the current South China Sea issue where China is apparently attempting to exert more influence than it currently does.

Dastyari fell on his sword early in September and resigned from the position of Manager of Opposition Business in the Senate. Turnbull’s ‘cash for comment’ claim is full of faux outrage. If Turnbull is claiming that Dastyari’s opinion was changed by around $6,500 (in two individual ‘gifts’), it is worth asking why Turnbull and his Liberal Party colleagues’ opinions are not influenced by the 89.56% (or $9,315,505) of ‘non-individual’ donations above the reportable ‘cap’ received during 2014/5 by the Liberal Party. The Nationals seemingly are more resilient to being influenced by ‘non-individual’ donations — 100% of their donations (above the reportable ‘cap’) were not from individuals; the ALP comes in at 90.22% and the Greens rate the least affected, if you can call 89.19% of their donations coming from ‘non-individuals’ as significantly better than 100%, 90.22% or 89.56%! Fairfax reported:
There is still a large portion of donations in the system falling below the $12,800 threshold required for disclosure, many of which would be small contributions from individuals. Labor's figures include all donations above $1000 as they have put in practice their proposal to legislate a lower threshold.

For the purpose of this analysis, Fairfax Media also counted only the AEC "donation" category and not financial benefits reported as "other receipt".
So it is debatable if the million or so dollars in Liberal Party income from Parakeelia, the provider of the customer relationship software mandated for use by Liberal Party politicians, wholly owned by the Liberal Party and funded by parliamentary services electoral office budgets (aka your and my taxes) is included in these figures — it could have been listed as a dividend.

Dastyari has done some good by focussing the national headlines onto the donation issue for close to a week and weathering the storm of faux outrage generated by Turnbull and a few of his ministers. Should donation reform be on the agenda? Almost certainly, yes it should. But the major political parties are so reliant on the donations received from ‘non-individuals’ there is probably no real appetite by the politicians to really do anything as they rely on the funding to the political parties to gain and retain their seats.

It’s not the first time that political donations have undone a political career. Former Premier of New South Wales Barrie O’Farrell’s career fell apart over a bottle of (supposedly quite nice and definitely expensive) wine. O’Farrell did try to limit donations to individuals in New South Wales, but the law was overruled by the High Court.

The interest in political donations here is similar to the interest in refugees on Nauru as well as ‘trollers’ on the internet. There is a disconnect between our reality and theirs.

Em Ford’s interview with the ‘troller’ shocked her — not for what you would assume but for the reason that firstly the male ‘troller’ was an articulate person who seemed to be a normal member of society who just couldn’t understand that behind each website blog (such as this one), YouTube channel or social media account was a person who has probably tried their best, with feelings and an expectation that people should treat each other with respect, recognising that at times people have a right to express different experiences and values politely. The ‘troller’ just didn’t ‘get it’.

If you meet Peter Dutton (or Scott Morrison, the previous Immigration Minister responsible for the indefinite and proven — in PNG at least — illegal detention of refugees who asked Australia for protection and a safe home), you would probably find a person who treats you with respect. They both also have families and you would have to imagine they would do anything to protect their family from hurt and keep them safe. It seems they just don’t ‘get it’. Refugees are people who by circumstance have been forced to leave their homes and livelihood. They are families as well and deserve to be treated as well as the families of Dutton or Morrison.

Turnbull attacks Dastyari over donations of around $6,500, claiming that the cash influenced his opinion, while saying nothing about the almost $10million the Liberal and National Parties received from ‘non-individuals’ in 2014/15 (later figures are not available). It stands to reason that Turnbull just doesn’t ‘get it’. Somewhere around $10million would purchase a lot more influence than $6,500 or thereabouts. Is Turnbull upholding a principle or ‘playing the man’ for political gain?

The real problem here is that there is a disconnect. At what point do people just become numbers, or customers, political enemies or voters? It stands to reason that everyone has people they care about more than the person sitting in the car beside them in the traffic jam, however those who make the decisions in Australia seem to forget that they and their loved ones are a very small proportion of the 24 million plus people who live in Australia or the 7 billion plus people who inhabit the earth. While their job is not to ‘tuck each individual into bed each night’, those who are placed in positions of power need to remember that they are dealing with people’s lives, and act accordingly. Clearly, the Coalition government isn’t. Are they any better than the anonymous ‘troller’ who posts pornography to people’s social media accounts for the fun of it, or those past and present world leaders who carry out genocide for some warped idea of racial purity, without a care in the world about how the victims feel?

What do you think?
Let us know in comments below.
Recent Posts
Modern economics has lost sight of people
Ken Wolff, 7 September 2016
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For those who have followed my pieces on TPS you may recall that I am qualified as a social anthropologist. …
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2353NM, 11 September 2016
Recently on this website, we discussed the nastiness of the conservatives that currently inhabit the halls of power in Canberra. Ad Astra’s article gave a number of examples that demonstrated the point and you can read the article here rather than have me go over the fertile ground yet again. …
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An economy without people
Ken Wolff, 14 September 2016
Last week I suggested that modern economic theory has lost sight of people but the reality is now becoming that many segments of the economy require fewer people to undertake the work and that has serious implications not just for the people losing their jobs …
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An economy without people


Last week I suggested that modern economic theory has lost sight of people but the reality is now becoming that many segments of the economy require fewer people to undertake the work and that has serious implications not just for the people losing their jobs but for the broader economy.

The loss of jobs is not new. In Australia since the 1970s there has been an ongoing loss of un-skilled jobs, particularly for males. In 2006 Sue Richardson, with the National Institute of Labour Studies at Flinders University, wrote in Unemployment in Australia:
By 2001, at every age, at least 20 per cent of men with no post-school qualification were not in the labour force. These men have not withdrawn from the workforce because they have handsome alternatives that mean they do not have to work … Overwhelmingly, the reason they are not in the labour force is because they cannot find work and have given up looking.
And in 2004 Bob Gregory wrote in Between a Rock and a Hard Place: Economic Policy and the Employment Outlook for Indigenous Australians:
An exceptional feature of the Australian labour market over the last three and a half decades has been the loss of unskilled male full-time jobs. This loss has been so substantial that as a proportion of males 15‒64 years of age one full-time job in four has disappeared. Most of this job loss has fallen upon the unskilled …
At the same time there were skills shortages. In September 2004 the Australian Industry Group reported a shortfall of between 18,000 and 21,000 in the manufacturing sector for skilled tradespersons.

And a shift in the make-up of the workforce was already occurring. In 2006, the then Department of Employment and Workplace Relations (DEWR) reported that between 2001 and 2006, 78% of new jobs were created in the four most highly skilled occupational groups: Professionals (17.4% growth), Associate Professionals (18.3% growth), Managers and Administrators (28%) and Tradespersons (10%) but job growth for Labourers had been only 0.6% in that five-year period.

Skills shortages continue. In February this year the Department of Employment published its list of occupations in which there were shortages during 2015. Twenty-five occupations were experiencing national shortages, including higher level occupations like surveyors, optometrists and audiologists. The list included trades such as motor mechanics and automotive electricians, bricklayers, glaziers, roof tilers as well as wall and floor tilers, air conditioning and refrigeration mechanics, chefs, hairdressers and cabinet makers.

The department also released its jobs outlook, Australian Jobs 2016. Overall employment was projected to grow by 8.3% over the next five years which appears to be little more than matching population growth. Six industries were expected to grow by more than ten per cent: Accommodation and Food Services (12.0%); Arts and Recreation Services (10.8%); Education and Training (13.0%); Health Care and Social Assistance (16.4% and it is also the largest industry by employment numbers); Professional, Scientific and Technical Services (14.8%); and Rental, Hiring and Real Estate Services (11.9%). Employment in Mining will decline (‒14.1%) as will Manufacturing (‒5.3%) and Agriculture, Forestry and Fishing (‒3.1%).

When it comes down to occupations ‘Professionals’ provided 41% of new jobs from 2010 to 2015 and employment is expected to grow by 14.5% to the end of 2020. Seventy-four percent of professionals hold a university degree. Professionals are also more likely than other workers to work full-time.

In that period of five years up to 2015 ‘community and personal service workers’ provided the second highest proportion of new jobs, 22% (they also make up about 10% of all employment). Their employment has grown by 16.3% since 2010 and is expected to grow by another 19% in the next five years. Nineteen percent hold a university qualification and 42% a VET Certificate III or higher but 55% are employed part-time. It includes child, aged and disability carers, waiters and bar attendants and baristas.

Technicians and trades work provided 11% of new jobs up to 2015 and employment grew by 5.2% in that time and is projected to grow 5.5% in the next five years. Most of these workers are employed full-time and 62% have a VET Certificate III or higher.

Among the lower-skilled occupations there were, late in 2015, 1.7 million clerical and administrative workers, 1.1 million sales workers, 1.1 million labourers and 740,000 machinery operators and drivers which is still about 40% of the Australian workforce. Their projected growth to the end of 2020 is 1.6%, 9.3%, ‒1.3% and 1.0% respectively. The groups include receptionists and office managers, checkout operators, real estate agents, truck drivers, forklift drivers, delivery drivers, cleaners, kitchenhands and packers, as well as labourers.

The more rapid projected expansion of highly qualified occupations appears consistent with the experience in America identified in 2013. But in America there had also been a loss of middle-ranking jobs, largely due to the automation of routine tasks, not only for manual labour (classified as routine manual work) but by the computerisation of office, sales and administrative work (classified as routine cognitive work). There had been an increase in the number of jobs for non-routine work, both cognitive and manual. The former (non-routine cognitive) requires higher levels of education and generally commands higher wages, but the latter (non-routine manual) involves work such as cleaning, food services, security services, home help, and so on. This is leading to a polarisation of the workforce in America, with more high-paid jobs, more low-paid jobs, and fewer in the middle.

The basic problem with those projections is that they are based on what has already occurred and do not take full account of the increasing pace of technological change nor the areas into which it might move in the coming decades (and the Australian projections are short-term, only for five years).

In January this year CSIRO (and Data 61) released Tomorrow’s Digitally Enabled Workforce in which it found that up to 44% of current Australian jobs were under threat of being replaced by robotics and other computerisation. It found that, as yet, there was no evidence of the ‘hollowing out of the middle’ in Australia but it did find:
… Australian men, particularly single men with less education, are becoming increasingly likely to drop out of the labour force. … Despite strong jobs growth in the service sector, it appears that for a growing number of men the labour market has little to offer unless they re-train.
That reflects the earlier findings of Sue Richardson and Bob Gregory. But it also found that in the future there will be a greater need for individuals to create their own jobs and even a need for higher skill sets to access entry-level positions. So a new flexible education will be required. Similarly, workplaces will need to be more flexible (which can also lead to greater casualisation and use of contract workers). Some changes, however, may lead to greater disparity in regional areas, particularly for older workers: past experience suggests that displaced older workers in regional areas do not relocate to find work but, if forced to, will relocate to cheaper housing in the same location. So new approaches to unemployment and transition to work will be required.

The difficulty with the emphasis on education and higher skills is that has already been happening in America but simply creating an oversupply. It was found that highly educated workers were being pushed down the employment ladder into lesser-skilled positions, pushing the low-skilled further down or out of the workforce altogether.

The CSIRO report did not go into the detail of individual jobs but its estimate of jobs at risk was based on a model used by Oxford University researchers who did a study of the US labour market: The Future of Employment: How susceptible are jobs to computerisation? That report found that 47% of US jobs are at high risk of computerisation. Given the work currently being undertaken on driverless cars, it is foreseen that in the next decade or two driverless trucks will become the standard form for movement of goods and many truck drivers will become redundant. Some have suggested that on major inter-state routes driverless trucks should actually have their own lane. So governments will also need to respond to those changes.

In Australia, Rio Tinto is already automating its Pilbara iron ore mines with driverless trucks and automated charge drilling and setting machines, and is also hoping to have driverless trains to deliver the ore to port (tests have been conducted but recent software glitches have delayed implementation). That is an example of even some skilled work being automated but the huge driverless trucks do require the worksite being ‘landscaped’ to suit.

As more data becomes available and can be stored, office and administrative support positions will be affected and further encroachment into manufacturing will take place. Even aspects of the construction industry could be affected as robotic prefabrication of parts takes place in factories, requiring fewer workers for the actual construction and even circumstances where robots can piece the prefabricated parts together on-site (as has already occurred in Japan).

The availability of ‘big data’ is important in expanding the reach of computerisation. For example, an American oncology centre is using computers to provide chronic care and cancer treatment diagnostics. This could be done because data from 600,000 medical evidence reports, 1.5 million patient records and clinical trials, and 2 million pages from medical journals were able to be stored and used for ‘benchmarking and pattern recognition purposes’. Examining such a vast amount of data would be impossible for a human but not a computer (if it is programmed correctly). As more ‘big data’ becomes available computers will expand their reach.

The report into the US workforce also found that automation will move into non-routine manual work in sales and services. A simple example is the increasing availability of robotic vacuum cleaners capable of replacing at least one task of a hired cleaner: how many other tasks will follow? This follows the historical pattern of technological change, namely breaking down apparently ‘skilled’ jobs into smaller unskilled components — the move from the traditional skilled ‘carriage builders’ approach to early car manufacture to Henry Ford’s production line manned mostly by unskilled workers. If this prediction proves correct, the growth in low-skilled service jobs that has been occurring in the US will actually begin to reverse during the next couple of decades.

This does not mean that all jobs in these areas will be lost but a significant proportion will be.

Jobs least affected will be those requiring creativity and social skills:
… generalist occupations requiring knowledge of human heuristics, and specialist occupations involving the development of novel ideas and artefacts, are the least susceptible to computerisation.
Others have since suggested that even some creative work can be done by computers: already there are computers capable of creating musical scores (no doubt based on ‘big data’). If that continues into the future, and AI becomes a reality, there will be almost no job that is not at risk.

This new world is giving rise to what is known as ‘the gig economy’. This means that, like a band of musicians, people will work ‘gigs’ for which they must search.

A study released in January this year by The Aspen Institute in the US found 45 million Americans (22% of adults) were working in the gig economy providing ride sharing, accommodation, food delivery and other platform-based services. For 14 million it was their main source of income and just over half, 23 million, were young, aged 18‒34.
However, most workers (72 percent) believe companies should be doing more to provide benefits, and more than two-thirds worry that as independent contractors and not employees, they don’t have a financial safety net.
Anecdotal evidence from participants suggests that many, but not all, see such ‘work’ as extra income to meet bills and so on, or as income in periods between mainstream permanent work. Or they are working many jobs to achieve a reasonable income and that can create problems — such as lack of sleep. Some examples:
[young woman in Turin]
I keep busy but I have to constantly juggle different gigs every day … What scares me most is that I have no guarantees, no steady pay, no stability. Everything could end overnight, so I can never make long-term plans.


[Uber driver in Los Angeles]
In the short term, this way of working works, but there is a long-term downside. It’s very difficult to build a future, to save for a downpayment on a house, say, or to save for [a] college fund, on a full-time Uber driver salary or even if you combine multiple freelance services.


[Airbnb host, charity worker and interior designer]
I definitely advocate this way of working, but it’s not for the faint-hearted — if you’re working three or four jobs in a day, you need to be very disciplined and have a keen sense of priority. You have to be a bit of a workaholic: finding the balance and boundaries to fit everything in can be a bit of a juggle. And obviously not having paid time off is a downside.
Some professionals can do better in the gig economy as the internet (and specific sites) allow them access to a much wider range of clients in a much wider range of locations. For some, whose work can be done over the internet, the location of the client no longer matters and, therefore, having access to a larger number of potential clients is an advantage. Conversely, the sites involved also permit potential clients to more closely match the skills of their selected professional to the work required.

Companies will rely less on full-time employees and will hire on a task or project basis. This will apply across many job categories, not just professionals. Companies will be able to hire the specific skills required for a single task, so the work could range from a few hours to a few days. People will be able to specialise and offer their skills to many clients. But this will also spread the problems described by people currently working in the gig economy.

Such an approach is already moving down the employment ladder to very mundane tasks, and to ‘micro-tasks’ such as tagging images, extracting keywords, checking address data, which sometimes may be no more than a few minutes work for each ‘job’. These are termed human intelligence tasks (HIT):
At the time of writing [August 2015] there were about 300,000 HITs on offer on AMT [Amazon Mechanical Turk]. An average Turker (as they are referred to by AMT) can expect to earn US$2 to US$5 per hour on a good day but there’s no guarantee in terms of regular work availability.
Not all of these jobs will remain. Uber, for example, is already investing in and preparing for driverless vehicles. And computers can already undertake some of the minor tasks currently available. Whether people can be prepared in time for the new jobs that may emerge, or there will simply be massive unemployment, will be the big question.

All of the above may prove to be wrong as we do not have a very good record predicting the future — some things change less than we foresee while we seem to completely miss other significant changes. In the 1960s some popular magazines were predicting that by the early 2000s we would have flying cars, or at least hover cars. I also recall a television program from that time, specifically looking at future change, that predicted we would be required to work only ten hours per week in the new millennium to maintain our lifestyle.

Cars have changed, being more luxurious and incorporating many more safety features than in the 1960s but they still have wheels and still require roads. And, in Australia prior to the GFC, individual work hours were increasing, not decreasing. Our lifestyle has changed: the average new house is now twice the size it was (as is the cost); more homes incorporate central heating and/or air conditioning; televisions have grown both larger and smaller and few households are now satisfied with only one. But the biggest change that few, if any, predicted was the explosion in digital technology; the rise of computers, the internet and the information age; and now the portable devices that allow us to access that information at any time and almost any place.

So do we have the rise of robotics and ‘the gig economy’ right? We cannot say with certainty. But to the extent that they are already happening we do need to plan for them and consider their ramifications both for people and the economy as a whole because so much work will no longer require people, or require them for only short durations. We may not get it quite right but we cannot ignore it.

Next week I will consider Modern Monetary Theory (MMT) and what it may offer to meet the challenges of the new economy.

What do you think?
How far can robotics and computerisation go in reducing the need for humans? Is there a limit?

Will unions themselves become redundant if more and more people do not have work or enter (or are forced into) ‘the gig economy’?

Let us know in comments below.


Recent Posts
Toxic talk
Ad astra, 4 September 2016
Are you as offended, as disgusted as I am with the language used by our politicians day after day? Have you noted how mean-spirited, antagonistic and adversarial their words so often are?

They use words like poison arrows aimed at the heart of their political opponents …
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Modern economics has lost sight of people
Ken Wolff, 7 September 2016
This is the first of four articles looking at particular changes, and potential changes, in our economic environment and approach to economics generally.

For those who have followed my pieces on TPS you may recall that I am qualified as a social anthropologist. …
More...
Our Government is morally bankrupt
2353NM, 11 September 2016
Recently on this website, we discussed the nastiness of the conservatives that currently inhabit the halls of power in Canberra. Ad Astra’s article gave a number of examples that demonstrated the point and you can read the article here rather than have me go over the fertile ground yet again. …
More...

Our Government is morally bankrupt


Recently on this website, we discussed the nastiness of the conservatives that currently inhabit the halls of power in Canberra. Ad Astra’s article gave a number of examples that demonstrated the point and you can read the article here rather than have me go over the fertile ground yet again.

To paraphrase a sacked host of an extremely popular BBC television program loosely based on cars when talking about their ‘tame‘ racing-driver; some say they reached a low with treatment of refugees, others might suggest that the blatant disregard of human rights was worse — all we know is that the government allowing these things to happen is morally bankrupt. How about we look at the claim of moral bankruptcy in the cold light of day. There are a host of examples that could be provided.

Example 1: Offshore detention

We’ll start with offshore detention. During August, The Guardian came into possession of over 2,000 claims of mistreatment and abuse perpetrated on refugees held at a Detention Centre on Nauru funded by the Australian government and staffed by contractors to the Australian government. A significant number of the subjects of the reports were children. The holding company currently contracted to provide management services to the offshore detention centres was recently bought out by Spanish interests and —
… has been warned by professors at Stanford Law School that its directors and employees risk prosecution under international law for supplying services to Australia’s camps on Nauru and Manus Island in Papua New Guinea.
“Based on our examination of the facts, it is possible that individual officers at Ferrovial might be exposed to criminal liability for crimes against humanity under the Rome Statute,” said Diala Shamas, a clinical supervising attorney at the International Human Rights and Conflict Resolution Clinic at Stanford Law School.
They will not be extending their contract arrangements.

Dutton seems to have no problem in continuing to justify the obscenity perpetrated on refugees immorally held on Manus Island in our name. Dutton’s response to the (embarrassing to the government) release of the documents was to downplay the seriousness of the accusations, suggesting ‘Most of this has been reported on before.’

While Dutton may be correct in his assertion that ‘asylum seekers are … setting themselves on fire, deliberately self-harming, or making false allegations of sexual assault in order to come to Australia’, it is beyond comprehension to believe that every one of the 2,000 reports originally authored by Save the Children (who had a contract with the government to provide humanitarian services on Nauru) was false or exaggerated. When challenged, Dutton doubled down on the insults telling 7.30's Leigh Sales : ‘I think the situation is that people have paid people smugglers for a migration outcome.’

Dutton is a proxy for all Australians. We pay him to represent our standards, traditions and moral standards when the Coalition government is dealing with immigration matters. So his (as well as the actions of immigration ministers back to the days of the Keating government) actions are the actions of all of us because we elect the government. The current prime minister and most of the country were disgusted with the reports of abuse that occurred to children at the Don Dale Centre in Darwin. Yet the same government sees no problems with similar claims coming from children that this country put on Nauru on indefinite detention. At least those at Don Dale had a date they would be released.

Example 2: Changes to the Racial Discrimination Act

Senator Bernardi is canvassing support for a private members’ bill that will allow for discrimination to others based on race. While it could be argued that someone else’s opinion could be considered to be risible, their religion, gender, race or ancestry is not a determining factor in why their opinion or statement is what it is. Nevertheless, Bernardi claims every Liberal Party Senator bar one has signed a petition supporting the change.

Clearly we should not ‘offend’ or ‘insult’ anyone. Bernardi wants to legalise it, while not allowing intimidation and humiliation. That would be a fine line.

That the law was felt necessary in the first place is a sad indictment of Australian society as it demonstrates that a number of Australians believed they could insult and offend people based on their religion, race or ancestry. It is even a greater stain on our society that politicians are now actively campaigning to allow it to reoccur.

Example 3: The same sex marriage plebiscite

Since the election of the current parliament, there has been a continual debate about the necessity for a $160million plebiscite to ask Australian voters if the government should legislate to allow same gender marriage.

Let’s get something out of the way first up — there is no need for anyone outside parliament to do anything to make ‘same sex marriage’ legal in Australia. The Howard government inserted the ‘man and woman’ clause into the Marriage Act in 2004. According to Howard at the time:
(It should) not over time be subject to redefinition or change by courts, it is something that ought to be expressed through the elected representatives of the country.
So why can’t the elected representatives of the country change the law now?

According to The Monthly’s political editor Sean Kelly:
For a start, Turnbull accepted the plebiscite as a condition of becoming prime minister. We will never know if this was unavoidable or if, given the choice between losing government under Abbott and accepting a free vote under Turnbull rather than a plebiscite, the Nationals and the conservatives would have backed a strong-willed Turnbull anyway. Certainly Turnbull’s negotiating hand within the Coalition has never been stronger than it was then. But the lure of power can be hard to resist, and at the time the compromise would have seemed like a small thing to give away.
At the end of August, Fairfax’s Matthew Knott suggested that the brutal reality is there will be no free vote on marriage equity, although more recently apparently there have been discussions to make the plebiscite ‘self-executing’ (if the plebiscite is successful, it doesn’t need a vote in Parliament to become law).

The morally bankrupt issue here isn’t who sleeps with whom in the marital bedroom, it is the double standard that allows one conservative prime minister to engineer a change to an act of parliament to ensure that Courts do not have the powers to change or redefine the participants in a marriage, and when it comes time to reassess the action some 12 years later, the same process is determined to be insufficient by another Conservative government to make a change should it be deemed necessary. Instead the country will be forced to the polls in an exercise expected to cost over $160million (while we have a federal budget expenses problem) solely to shore up the credentials of the current and immediate past prime minister in the eyes of his own side of politics. To add insult to our injury here, one of the talking points with the ‘self-executing’ option would be:
… that no taxpayer money be given to either side. That would delight the "yes" camp but anger conservatives, given the Australian Christian Lobby has asked for $15 million in public funds.
Given that some of the same people that want no change to the Marriage Act want to change the Racial Discrimination Act Section 18C to allow offence and insults, opposition leader Shorten’s comment that the plebiscite will be ‘a taxpayer-funded platform for homophobia’ is probably closer to the truth than Turnbull’s claim that ‘Australia is capable of having a respectful debate on same-sex marriage’.

Example 4: Political donations

Senator Sam Dastyari resigned from the ALP ‘front bench’ last Wednesday night over the acceptance of an amount of around $1600 from a Chinese company to repay excess travel claims as well as around $5000 from another Chinese company to settle a legal case. While Dastyari was apparently compliant with federal law as both amounts were declared, he may have been in breach of ALP policy. Either way, why a Senator who receives around $200,000 in salary per annum needs assistance to pay his expenses is a matter for concern.

While the Coalition was claiming that he must go immediately, Deputy Prime Minister Joyce was far less damning regarding his own future last Tuesday night on ABC’s 7.30 current affairs program when asked why he received and kept donations from Mining Magnate Gina Reinhart. Is it splitting hairs to be able to justify some donations while decrying others?

The initial claim here is that our government is morally bankrupt. Surely the government’s treatment of refugees, changing legislation to allow offence to be legal, generating the conditions that will ensure homophobic behaviour is considered fair and reasonable as well as the splitting of hairs around political donations demonstrates the point.

Members of parliament are our employees. It is time for us to tell our politicians that we expect morals, ethics and consideration of the rights of others (regardless of their gender, religion, ancestry or sexual preference) to be more important than political point scoring, looking after mates (who probably donate to re-election campaigns) and the smell of ministerial leather in Canberra.

Jobs and growth as well as 100 positive policies are useless to Australia without the moral and ethical background that is necessary to implement these policies equitably.

What do you think?
Let us know in comments below.

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Modern economics has lost sight of people
Ken Wolff, 7 September 2016
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Modern economics has lost sight of people


This is the first of four articles looking at particular changes, and potential changes, in our economic environment and approach to economics generally.

For those who have followed my pieces on TPS you may recall that I am qualified as a social anthropologist. I take the anthropological view that economics is about how a society uses and distributes its resources — that is any society, whether hunter-gatherer or a modern technological society. It is a view that raises some questions about our modern approach to economics.

Basically the ‘use’ of resources includes a social responsibility for sustainable use so that resources can be utilised by others when required and also be available for future generations. And ‘distribution’ of resources includes a social responsibility to ensure that everyone in a community gets a reasonable share to enable them to survive comfortably within the context of their society.

Classical Western economics, however, is based on the tenet of the rational self-interested individual: that people make rational choices in the market that best provide ‘utility’. ‘Utility’ is something that provides the user/purchaser with satisfaction and/or meets their desires in some way. Adam Smith also introduced the concept of the benevolent ‘invisible hand’ whereby decisions made in an individual’s self-interest actually prove beneficial for society.

In classical economics there are also the concepts of ‘perfect knowledge’, by which the individual makes rational decisions based on information about all the prices in the market, and ‘perfect competition’ by which a product reaches an equilibrium (supply matching demand), and its price also reaches an equilibrium for all suppliers of that product, meaning there is then no competition nor need for advertising of the product. Of course these do not exist in the real world. Neither are individuals always rational in making their decisions in the market. So what was classical economics actually describing?

Even the concept of the market needs exploring. Markets of course go back millennia but the concept of the market has changed over time. Early in human history people shared goods, then exchanged surplus goods for other desirable goods and, as villages and towns developed, for services. Money eventually became the medium of exchange for any good or service.

Markets were not always based exclusively on the individual. In medieval Europe if a merchant from town A left debts when he departed town B, the merchants from town B didn’t pursue that individual merchant directly but would detain the next merchant who arrived from town A and hold him until he, the original merchant, or anyone from town A paid the debts. In that sense, the role of the individual in the market wasn’t as important as it later became — at that time it was believed that the community from which the merchant came also had a responsibility for his behaviour (and his debts). Subsequently merchant guilds were formed in which debts could be settled and over time that grew towards individual responsibility for the settlement of debts.

The other concept relevant to the modern market is private property. While the idea of private property now dominates our economic and social thinking it was not always so. Even in medieval England when land was held by dukes, barons and the like, there was common land used by the serfs, so both common and private property co-existed. It is estimated that, although serfs had to provide labour to the rich landholders, by using the common and small plots around their own dwellings they were actually able to keep from 50% to 70% of the product of their own labour. An industrial labouring class was created during the industrial revolution with the enclosure of the commons (in modern parlance, the land was privatised) and poor farmers and rural labourers no longer had access to that land to supplement their incomes and so had little choice but to work in the factories.

In the market, the logic is that to exchange something I must own it in the first place and the other party must also own what they are exchanging. The logic of that seems apparent when one considers what a thief may offer for exchange: we undoubtedly consider that not to be a fair exchange because the thief does not actually own the item of exchange — or does he? The thief clearly has ‘possession’, so is there a logical difference between ‘ownership’ and ‘possession’ in the economic system?

The emphasis on private property as central to a market economy goes back at least to the 1700s in England. C B Macpherson, a political scientist also trained in economics, argued that political freedom came before economic freedom and was first obtained by the property-owning elites who then used their new political power in their own self-interest to entrench private property rights. And it also goes back in history in the sense that much modern ‘ownership’ is based on past dispossession of previous owners and yet the economic system is based on the modern possession not the historic ownership.

Now private property, whether physical or intellectual, is central to thinking in a modern market and in modern economics.

These concepts were put together by the philosophers Hobbes and Locke but Macpherson also argued that they were bound by the values of their time and hence developed their philosophies around the market, contractual obligations and property; and the concept that an individual is the sole proprietor of his or her skills and owes nothing to society for them — what Macpherson called ‘possessive individualism’.

In rejecting a social element to ownership, economists refer to the ‘tragedy of the commons’ to justify that individual ownership, that is private property, is superior to common or social ownership. Although the idea has a longer history, the phrase came from a paper by Garrett Hardin in 1968. It was suggested that, when people grazed their herds on a ‘common’, a self-interested individual could improve his situation by adding one animal to his herd. The individual would gain the benefit. But if each individual added an animal the common would quickly degrade. While the individuals retained the benefit of having an extra animal, the ‘cost’ (the degradation) was shared, leaving them with a self-interested benefit — before the failure of the system. Following this argument, and its corollary that Adam Smith’s benevolent ‘invisible hand’ of individual self-interest does not work for the commons, economists argue that private property, and the individual’s responsibility for that property, remedies the situation and that became central to modern economics.

That approach is based, however, on a misunderstanding of how commons worked. They were not ‘open access’ as the theory implies. Throughout the world where people shared resources there were usually social and cultural rules that controlled that sharing. In Iceland, for example, the common resource of the fisheries was traditionally controlled by kinship rules that allocated spaces on the beach, that were necessary for launching fishing boats, to individual families. In some communities in India the allocation of the common resource of water for farming was determined by community meetings. People accepted these approaches as essential for the well-being of their communities or, in other words, social responsibility was more important than individual self-interest.

The modern market idea of private property and individual self-interest has basically destroyed social responsibility and the concept of the common good and allowed polluters to pour their waste into the ‘commons’ of the rivers, oceans and atmosphere.

We now use GDP to measure the ‘success’ of our economy but the use of GDP to measure economic activity only arose after the Great Depression of the 1930s when the American government was concerned that it did not see the depression coming. The government asked economic experts for a model that would allow it to keep track of the economy and so have a chance of foreseeing such events in the future.

The use of GDP, however, was being questioned as early as the late 1950s. Even its creator, Simon Kuznets, said that ‘the welfare of a nation can scarcely be inferred from a measurement of national income’.

A major problem with GDP is that it measures only productive activity and takes no account of the losses or costs associated with the activity:
… it tends to go up after a natural disaster. Reconstruction and remediation spur intense activity that is registered by GDP, while the destruction, lives lost, suffering and disruption to families and communities in the wake of a flood, cyclone or bushfire are ignored.
Or as Robert Kennedy said in 1968:
… the gross national product does not allow for the health of our children, the quality of their education or the joy of their play. It does not include the beauty of our poetry or the strength of our marriages, the intelligence of our public debate or the integrity of our public officials. It measures neither our wit nor our courage, neither our wisdom nor our learning, neither our compassion nor our devotion to our country, it measures everything in short, except that which makes life worthwhile. [emphasis added]
Yet we still rely on GDP as a measure of a nation’s progress although it has nothing to say about the well-being of the people. Gross GDP per head is sometimes taken as a measure of the economic prosperity of individuals: if that is rising people are said to be better off but it does not tell us whether that prosperity has enhanced ‘happiness’.

There is a long history in which ‘happiness’, or well-being, was removed from economics. A chapter in the World Happiness Report 2013 provided a potted history of the changes in the Western view of happiness: from the Greek philosophers and early Christian church’s view that happiness was achieved by being virtuous, to the economic theory of ‘utility’ in which individualism and consumerism prevailed — the early economic theorists brought material goods into the happiness equation, suggesting that people purchased that which brought them pleasure or happiness (‘utility’). In the twentieth century, however, economics came to be dominated by mathematical formulae and the question of whether market consumption could increase happiness and well-being was no longer a consideration.

Economists claim their field is a science and value free but the economy depends on social values like trust. We cannot even have a ‘market’ unless we trust each other. In a shop, the shopkeeper trusts that I will hand over the money after he hands over the goods or I trust that he will hand me the goods after I give him my money — otherwise we could be there all day arguing over who should make the first move. It could be argued that the behaviour of large multi-national corporations is destroying that trust, as is the use of tax havens to avoid social responsibility. And are we now so distrusting that we require automated payment systems, including even when paying for our goods in supermarkets? — now we have to trust a machine! Human interaction is being removed from the basic market process of exchange.

As Jeffrey D Sachs wrote in the World Happiness Report:
A prosperous market economy depends on moral ballast for several fundamental reasons. There must be enough social cooperation to provide public goods. There must be enough honesty to underpin a stable financial system. There must be enough attention paid to future generations to attend responsibly to the natural resource base. There must be enough regard for the poor to meet basic needs and protect social and political stability.
After all the economy does not exist in its own right. The market and the economy is people, as producers and consumers, as it has always been. It is the approach to it that has changed.

In an article in The Monthly, Richard Denniss argued that we are being led to believe that governments, in making their decisions, have to be conscious of the reactions of ‘the markets’. He wrote that we should remember that ‘markets’ per se do not have feelings, do not have needs or demands. What we refer to as ‘markets’ is actually people buying and selling and attempting to manipulate trading for their own advantage.

So historically we have moved from social co-operation in economic activity to twentieth century economic theories that have reduced people almost to invisibility. We discuss economics in terms of markets, GDP and monetary and fiscal policy as though these are entities in their own right. There is no economy without people, no markets, no goods and services without people as producers and consumers but this now gets less attention. The economy is deemed to have its own ‘scientific’ rules that operate irrespective of people and, as mentioned earlier, can now be analysed simply in terms of mathematical formulae.

Until people are re-introduced into the equation (both metaphorically and literally), the economists will not be describing the real economy nor will those utilising economic theory, such as governments (and their advisers), pay enough attention to the needs of their people. When ‘markets’ and GDP come first, people come last.

We need to measure the well-being of the people rather than only production; we need to pay more attention to the sustainability of our use of resources, not only for future generations but to ensure that current generations have reasonable and continued access; we need to ensure a fair distribution of resources, not only within our own society, but for all people globally; and only then will we have an economic approach that is realistic rather than the narrow view of current economic theory.

Next time, continuing the economic theme, I will discuss ‘an economy without people’ as robotics and other changes reduce the size of the workforce.

What do you think?
Who benefits from economic theory if it does not pay enough attention to people?

Why have we accepted the propaganda that even social progress hinges on the economy?

Let us know in comments below.


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Toxic talk



Are you as offended, as disgusted as I am with the language used by our politicians day after day? Have you noted how mean-spirited, antagonistic and adversarial their words so often are?

They use words like poison arrows aimed at the heart of their political opponents and those in our society whom they despise.

They have no concern for the damage their arrows might inflict, or how injured or offended their targets might feel. Wounding, disabling, hurting, demeaning is their purpose. The more damage they can inflict, the more satisfied they are.

It’s akin to schoolyard bullying, but much worse. Can you recall language as ranting, as poisonous, as hurtful, as damaging, during your school days? I can’t.

Listen to them – try to pick their targets, and watch their reaction.

There is a group that conservatives loathe passionately – those at the bottom of the social scale who rely on welfare support: the unemployed, the job seekers, the homeless, the disabled, and the mentally ill. They are Joe Hockey’s ‘leaners’.

This derogatory language goes back a long while. Do you remember when Tony Abbott, as a minister in the Howard government coined the tag ‘job snobs’ to denote those who were too lazy to look for a job, or too fussy about what work they would do and where, or too demanding about terms and conditions? Those who eventually did get a job might then oversleep, or not turn up because the travel was too arduous or inconvenient or they had no transport, or they would leave work early or slack on the job – thus the tag ‘job snobs’. When job seekers moved onto Newstart, the term morphed into a peculiarly Aussie term: ‘dole bludgers’.

Joe Hockey upped the ante when he pushed his ‘end of entitlement’ message, first at a conference in Britain. Far from trying to conceal his theme, he proudly shouted it from an international pulpit. His point was that there were some, indeed too many, who felt entitled to welfare, entitled to support from the government, and of course the taxpayer, if they had no job. Not long after we heard his now-infamous descriptor – ‘leaners’ – to designate this despicable mob, who depended on Hockey’s ‘lifters’, the good guys who had a job or a business, who pay their taxes and support the idle leaners.

Hockey’s message did not go down well, especially when those castigatory tags were given effect in his punitive 2014 budget, in which he punished the leaners and the less well off. Even his own supporters recognized that his budget was unfair. Rudiments of it still languish in the Senate wistfully awaiting endorsement.

Then along came Scott Morrison, keen to transmit the same message but unwilling to use Hockey’s tags. So he coined some of his own, not as elegant as Joe’s, but replete with the same pejorative meaning. So now we have the ‘taxed’ and the ‘taxed-nots’. As keen as Hockey, and Abbott before him, to divide our nation into ‘them and us’, into ‘the deserving and the undeserving’, Morrison launched his unique tags at the Bloomberg Summit on the economy last week.



Here’s what he said:
“A generation has grown up not ever having known a recession, of seeing unemployment rates at more than 10% … On current settings, more Australians today are likely to go through their entire lives without ever paying tax than for generations. More Australians are also likely today to be net beneficiaries of the government than contributors – never paying more tax than they receive in government payments. There is a new divide – the taxed and the taxed-nots.”
Remember though that in his mind the ‘taxed-not’ cohort are the dole bludgers, the leaners, those who suck the welfare system dry because they don’t, won’t, or can’t work and therefore pay no taxes. Somehow, the almost 600 companies, major ones such as Qantas, Virgin Australia, General Motors, Vodafone, ExxonMobil, Warner Bros Entertainment, Lend Lease and Ten Network Holdings, who paid no tax last financial year, were not mentioned. Nor were international giants Apple, Microsoft and Google, who paid very little tax here on the large profits they earned in this country. Presumably Morrison does not categorize them as ‘taxed-not’. Why?

The reason behind Morrison’s apparent inconsistency is ingrained conservative ideology. Conservatives believe that we get what we deserve. Those who work hard, or are entrepreneurial enough to own a business, deserve the monetary reward they get, and what’s more deserve to keep that reward and not have governments take it away as taxes and give it to others, to those who do not work and earn. Thus we hear endlessly that Liberals want to reduce tax, and have seen them propose to do that, even for the wealthiest. The promised $48 billion tax cut to businesses awaits the verdict of the Senate.

Moreover, conservatives believe that those who have little deserve their impecunious state. They have not worked, or have not worked hard enough, or have not saved enough, and therefore deserve to be poor. These people ought not expect to get handouts from others, or from their government. They deserve their poverty-stricken situation, and should not expect the milk of human kindness to be offered to them. This view is consistent with George Lakoff’s model of politics. Using the metaphor of nation as family and government as parent, he argues that conservative politics corresponds to the strict father model that posits that people should not look to the government for assistance lest they become dependent. Conservatives regard the inequality that is a sequel to such an ideology as part of the natural order. There have always been lords and ladies, and serfs to bow to them and serve them. They see no need for egalitarianism in what they see as an inherently unequal world.

We ought therefore to not be surprised when we hear Scott Morrison or Mathias Cormann or Kelly O’Dwyer perpetuate ’the workers versus the bludgers’ way of thinking. Remember the fury Eric Abetz generated while he was Minister for Employment when he sought to introduce a rule that the unemployed must complete forty job applications a month. As far as he was concerned, they had nothing better to do. The impracticability of this soon mugged him, particularly when it became apparent that it was unlikely that forty jobs would be available in Tasmania close to where the job seeker lived. His object was not really to find a job for these people; it was to punish them with ‘homework’ for being unemployed.

Abetz reasoned:
"We undertook what we believed would be a fair consideration of an application of a job every morning and every afternoon should not be too onerous."

"There doesn't seem to be a community complaint with the cut-off of 20 job applications per month, so one assumes one might be able to increase that without too much extra community concern.”
Eventually, the idea was scrapped out of concern that employers would be ‘swamped with fake job applications’, rather than the imposition on job seekers of forty applications a month was unreasonable and stupid.

So long as conservatives are in power, we can expect this toxic talk to continue, directed as it is at what they see as a lesser grade of citizens, a poorer class of people. It is a reflection of their entrenched ideology, which they will not, indeed cannot change. It is in their DNA.

There is another variety of toxic talk, one that we witness, in fact suffer every day, many times a day. We see it whenever politicians are confronted with uncomfortable facts. Rarely prepared to say: ‘We messed up’, ‘We made a mistake’, or more benignly ‘We could have tried a different approach’, they barrage us with a deluge of disingenuous words to justify their actions, and just as deceitfully, to blame others for the situation.

All politicians are adept at this stratagem. Blame shifting, and aiming their poison arrows at their opponents, comes easy. But few do it as spitefully as our odious Minister for Immigration, the Honourable Peter Dutton.

Confronted recently with the shocking report by Save the Children about the impact prolonged detention was having on children held on Nauru, he quickly dismissed reports of sexual assault and abuse as ‘hype’ and ‘false allegations’. He went on to roundly condemn The Guardian and the ABC for promulgating the report and the ugly accusations it contained.

He accused those seeking to expose the awful occurrences on Nauru as maliciously denigrating the government’s effort. Never was there a concession that things were bad on Nauru, and needed urgent attention. To Dutton, this report was a storm in a teacup, exaggerated out of proportion. He maintained that protective systems were in place and operating effectively. He accused asylum seekers of setting themselves on fire, deliberately self-harming, or making false allegations of sexual assault in order to come to Australia. He airily dismissed the reports of sexual assault, child abuse and self-harm written by detention centre staff, insisting: “Most of that’s been reported on before.”

To Dutton, whistleblowers are simply troublemakers hell bent on embarrassing him and the government.

He was quick to add that the genesis of this situation was Labor’s relaxation of ‘border control’, and the resultant arrival of thousands of boat people, with hundreds drowning on the way (he has always got his figures off pat). His argument is that if only Labor had continued the Howard border protection policies, this situation would not have arisen. Now poor Peter has to cope with Labor’s legacy of neglect and incompetence!

So he delivered the double whammy: nothing much was wrong on Nauru, and what was wrong was Labor’s fault anyway.

Perhaps more than most, it is those ministers who are tasked with managing the nation’s finances who most regularly engage in toxic talk. Never prepared to concede that they haven’t got all the answers, or that they might have achieved a better result with another approach, they continue to blame the previous Labor government for their fiscal woes. We are regularly reminded about Labor’s legacy of profligate spending, ‘debt and deficit’, and Labor’s determination always to raise taxes, and never to cut spending. It matters not that under the Coalition spending has increased, taxes have risen, and the deficit has ballooned; it is still all Labor’s fault. Labor continues to be condemned with this toxic talk, this disingenuous language, extravagantly embellished with straight-out lies.

I could go on for pages recounting this type of toxic talk that so infuriates us all day, every day. I wrote about it extensively on The Political Sword almost eight years ago in The curse of adversarial politics. It is still worth reading. The penultimate paragraph reads:
“Those who despise adversarial politics find it to be contemptible, a damaging affliction on our political system. They resent the stifling impediments it places on governing, on governments carrying out what they promised the electorate they would do. They see it as focused on ‘winning’, on gaining a political advantage, rather than telling or establishing the truth, or contributing usefully to the discourse.

“It sets the teeth of the electorate on edge, which ‘turns off’ in despair. Voters would prefer politicians to be open and upfront, more focussed on the good of the nation, less willing to corrupt the usually-worthy principles that brought them into politics in the first place. Adversarial politics may be an important reason the public has turned away from politics and has become cynical about the motivation and behaviour of politicians. The more adversarial politics becomes, the greater the erosion of voter engagement and threat to the democratic process.”
That was written eight years ago. What’s changed? Nothing!

The public loathes toxic talk as much as ever. Will politicians ever learn?




What do you think?
Let us know in comments below.

How do you feel about the way politicians use pejorative words to describe citizens they despise?

How do you feel about the adversarial language our politicians use against each other?

What do you feel about the way they use toxic talk to attack and berate each other?

How would you prefer them to behave?



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A once and future Senate
Ken Wolff, 21 August 2016
We now know that the Senate elected at the July election comprises 30 Coalition members, 26 from the ALP, 9 Greens, 4 from One Nation, 3 from the Nick Xenophon Team (NXT) and one each from Family First, the Liberal Democrats, Derryn Hinch’s Justice Party and the Jacqui Lambie Network. Thirty-nine votes are required in the Senate to pass legislation, so the government will require either ALP or Green support, or otherwise support …
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The meaning of life
Ad astra, 24 August 2016
As you sit on your comfortable chair after a satisfying meal with a glass of your favourite drink in hand and view current affairs programmes on TV, do you reflect on the plethora of distressing images that assail viewers day after day? Do you ponder how you might feel if you were part of those images?

How did you feel when you saw the stunned, blackened, bloodied face of …
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