Sunday, November 12, 2017

ACTU chief’s fake facts on wages undone by history


It is a truth universally acknow­ledged that we live in a post-truth age.

That Sally McManus’s speech on the 110th anniversary of the Harvester decision last week is ­replete with claims whose only ­relationship to reality is that they contradict it may therefore be par for the course.

But as demagogues have known since time immemorial, myths can have powerful consequences; and McManus’s myths are made all the more dangerous by the remedies she proposes to the problems she invents.

At the heart of those inventions is the assertion that Australian workers are being brutally crushed. “Labour’s share of ­national income,” she says in ­support of that assertion, “is at a 50-year low.”

Like so many of her purported facts, that claim is simply incorrect: at 54 per cent, the share of wages in national income is line ball with the 55 per cent that has been its trend level since the late 1980s.

Moreover, far from being at a low, the wages share of national ­income is materially higher now than it was during the mining boom, when surging export prices boosted profits and helped finance a doubling in Australia’s capital stock.

As for profits being at historic peaks, profit rates, as measured by the national accounts, have dropped since the boom ended to well below their long-term ­average, and the profits share of national income has fallen with them.

But however shonky McManus’s data may be, it shines compared to her understanding of Australian economic history.

Eulogising Justice HB Higgins’s Harvester decision, which increased the minimum wage by 18 per cent, she argues it shows that raising the minimum wage lifts the living standards of the poorly paid and reduces inequality.

That decision, she claims, consequently stands as a ringing endorsement of the ACTU’s call for a more than 10 per cent  increase in the minimum wage.

No characterisation of the Harvester decision could be more fanciful. In reality, Justice Higgins had little regard for productivity; accused by his critics of refusing to “consider the rates which industry could bear”, he readily admitted that was “very nearly true”. As a ­result, the higher wages he ­mandated benefited the most skilled and productive workers, but cast the less skilled and ­disabled on to the dust heap of long-term unemployment.

“Higgins thought he was protecting the weak,” Colin Forster concluded in his classic assessment of the Harvester decision; “in fact, he was aiding the strong.”

But McManus did not need to plunge into the scholarly archives to see the dangers of raising the minimum wage without taking ­account of productivity. Rather, even the most cursory examination of the Whitlam government’s experience should have set alarm bells ringing.

Much like McManus, Gough Whitlam, and his minister for ­labour, Clyde Cameron, believed there was an urgent need to ensure “wage justice” for those “who have been disadvantaged by their ­relative bargaining weakness”.

On coming to office, they therefore secured a 27 per cent minimum wage increase in the 1973 National Wage Case.

As that increase spread through industry, triggering a wages explosion, unemployment soared, leading Cameron to complain in August 1974 that “union bloody mindedness” was “slowly but surely pricing thousands of Australian workers out of employment”.

By the end of 1974, even Whitlam admitted that “employees can price themselves out of the market”, while also admitting that the “sharp squeeze on profits” — which, much as McManus hopes to do, had slashed profits’ share of national income from 45 per cent to 38 per cent — was causing a complete collapse in investment.

The 1973 rise in the minimum wage was therefore one of the worst economic policy mistakes in Australian history. And yet again, it was the most vulnerable who paid the price, with younger ­workers the hardest hit.

As Cameron recognised in his 1982 memoirs, “we have not helped the young by demanding that they not be employed unless paid excessive wages. We priced them out of the labour market and we deserve no thanks for that.”

By then it was, of course, too late. Correcting the Whitlam ­disaster took nearly 15 years, with the Hawke government’s ­Prices and Incomes Accord, which reduced the wages share of national income towards its current level, beginning the recovery.

All that ought to have taught McManus an obvious lesson: firms won’t hire workers who cost more than they produce. Productivity growth therefore sets a constraint on wage rises.

That McManus entirely avoids that issue is unsurprising: our  productivity performance hardly creates scope for the steep wage hikes she advocates.

Multifactor productivity — which measures how much output we get for each unit of capital and labour combined — is only 1.5 per cent higher today than it was in 2006-07, implying an annual growth rate of less than two-tenths of 1 per cent.

Yes, labour productivity has ­increased more rapidly. However, 90 per cent of that increase is just the result of “capital deepening”, that is, of the rise in capital per worker.

In marked contrast to their counterparts in the US and Britain — where less than half the growth in labour productivity is due to capital deepening — Australian workers are not more productive because they are doing things ­better but simply because they have more capital to work with.

Instead of addressing our ­productivity crisis, the myriad restrictions McManus wants to impose on Australian workplaces would worsen it. And the higher wages she seeks would merely  induce more inefficient substitution of capital for labour, compounding the problem.

Those are truths phony facts cannot wave away. After all, to say something is true is to say it is the case whether we want it or not. And nothing can be made true by words alone. Not even Sally McManus’s.


Why the history wars matter

Jeremy Sammut

Before I became what I half-jokingly describe as a fact-grubber and barrow pusher — a think tanker — I was formally trained as an historian.  My PhD thesis examined the political ideas and ideals of the men who founded the Commonwealth of Australia.

I was — and still am — a big-picture national history kind of historian. At a time when deconstruction is the intellectual fashion, my historical interests continue to lie in the national story.

And not only as a historian interested in getting the national story right about contentious historical and social issues such as gender and race; but also as a think tanker interested in the contemporary importance of the national story to the national interest.

For despite what the post-modern theorists claim, the nation remains the ultimate political reality. The power of the national story to inspire our collective beliefs about ourselves as Australians, and for those beliefs to inspire the direction of our national life, is the reason the history wars matter.

The history wars — the on-going debate about the practice and teaching of Australian history — and about vitally important and potentially divisive subjects such as the history of Australian racism — remain a critically important battle of ideas.

Understanding the true meaning of Australian history, and debunking the perennial claims routinely made about the role our supposedly perpetual of history of ‘racism’ allegedly continues to plays in Australian society, is increasingly in the national interest today.

In the current age of grievance-mongering identity politics, the use, abuse and distortion of Australian history lies behind the politicisation of racial issues by organisations such as Australian Human Rights Commission.

Getting the history of Australian racism right has therefore never mattered more than now to counteract to the threat identity politics poses to the social harmony that has become the hallmark of modern multi-racial Australia.


Right of entry permit stripped from swearing CFMEU official

A construction union official who called non-union workers as "f---ing dog c---s" at the Gorgon Gas LNG project has been stripped of his right of entry permit.

Fair Work Commission Deputy President Melanie Binet dismissed CFMEU organiser Brad Upton's request for a right of entry permit on Monday after the Commission heard he threatened to write the names of workers who had left the union on backs of toilet doors and used the derogatory term for them.

The decision contrasts with Fair Work Commissioner Bernie Riordan's recent finding that another CFMEU official, Matthew Gosek, was unfairly dismissed after using almost identical language.

Mr Gosek allegedly called co-workers "f-----g dog , c--t and dog c--t" which Commissioner Riordan described as unfortunate but very commonplace and "used across all walks of life".

In Monday's decision, Ms Binet said Mr Upton failed to meet the "fit and proper person" test for holding a right of entry permit.

She said Mr Upton's use of obscene and abusive language revealed a "pattern of repeated conduct". She said the pattern of behaviour suggested a "lack of genuine contrition and a propensity to engage in unlawful conduct".

"This is highly relevant to the question of whether Mr Upton is a fit and proper person," Ms Binet said.

The Federal Court of Australia in September found Mr Upton addressed a group of workers at the West Australia Gorgon project for about ten minutes in a manner "which might best be described as a rant", during which he said words to the effect of:

"The f-----g 90 dog c----s that resigned from the union the day after we f----g signed the [Enterprise Bargaining Agreement] after we got the conditions we got now, this is a f----g union site. If you don't f-----g like it, f--k off somewhere else. We got you these conditions, we know who you are. We're going to put your names on the back of the toilet doors...

"If you're not in the union, you can f--k off somewhere else".

The Federal Court found Mr Upton caused a non-unionised employee emotional distress and harm.

A spokesman for Employment Minister Michaelia Cash said bullying behaviour demonstrated by the CFMEU official should have no place in any Australian workplace.

"Sadly, hardly a day goes by without a court or commission finding against the thuggish and bullying behaviour of CFMEU officials," the spokesman said.

"These findings demonstrate the endemic cultural problems of Australia's most militant union, and the utter failure of its leadership to do anything about it."


More BOM Shenanigans

Australia’s @BOM_au ignores all pre-1910 temps, because it was warmer in the late 1800’s, than now, leading up to the “Federation Drought” – and that wrecks their and @abcnews' scam.

Posted by John J. Ray (M.A.; Ph.D.).    For a daily critique of Leftist activities,  see DISSECTING LEFTISM.  To keep up with attacks on free speech see Tongue Tied. Also, don't forget your daily roundup  of pro-environment but anti-Greenie  news and commentary at GREENIE WATCH .  Email me  here

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