Enough of these zombie ideas: let’s be bold
That’s the title of my last piece in the Fin (Thursday before last), which was about the zombie push for productivity (code for working harder) and the failure to pursue the genuine productivity gains that can be achieved through improvements in education, and particularly better education for kids from lower-income families. Ross Gittins made a similar argument, with some nice touches a few days later in the SMH. I particularly liked his point that the “productivity agenda” is essentially about making life easier for bosses.
Enough of these zombie ideas: let’s be bold
Labor’s leadership struggle, reminiscent of the Howard-Peacock battles of the 1980s, has raised justified complaints that personality conflicts have obscured the need for a new reform agenda. Indeed, neither of the contenders for the Prime Ministership offered much beyond the consolidation of measures dating back to the government’s first term. On the other side of politics, Tony Abbott offers nothing more than opportunistic populism and appeals to the politics of fear.
Sadly, however, the advocates of reform have little more to offer than our current leaders. Rather, they are pushing an agenda that also harks back to the 1980s: the tired old package of microeconomic reform, workplace reorganization and productivity growth. The benefits of this package, oversold at the time, have long since been exhausted.
Even back in the 1980s, careful estimates suggested likely benefits amounting to only a few per cent of national income.
In respnse, the advocates of microeconomic reform invented ‘dynamic productivity gains’ that would supposedly be unleashed by reform. They seized on methods of estimating productivity growth that appeared, for a few years in the mid-1990s, to reveal a ‘productivity miracle’ unparalleled at any time in our history.
In reality, the apparent increase in productivity arose from the increase in the pace and intensity of work produced by the combination of microeconomic reform and the adverse labour market conditions that followed the ‘recession we had to have’. These increases in effort weren’t sustainable, and as Herbert Stein famously observed, a trend that can’t be sustained won’t be.
The speedup in the pace of work, and the resulting problem of work/life balance were described by John Howard as a ‘barbecue stopper’.The imbalance between work and life was apparent to everyone in Australia except the economists looking at the productivity statistics. Although work intensity can’t be measured directly, we can look at related measures such as the number of people working extremely long hours and the proportion of workers compensation claims citing stress. All these measures rose during the spurious productivity miracle of the 1990s, and fell back again during the 2000s. As a result, measured productivity growth slowed to a crawl in the 2000s, even as good macroeconomic performance and favorable terms of trade allowed steady increases in living standards.
The way ordinary Australians understand the push for productivity was underscored by the outpouring of anger against WorkChoices, and the lack of any support for its revival. As has been shown on numerous occasions, Australians understand that ‘workplace reform’ and ‘productivity’ are codewords for ‘work harder and faster, with less autonomy’. Yet, presented with a vacuum at the level of political leadership, the advocates of refrom can come up with nothing better than another attempt to reanimate these
Meanwhile, reforms that could produce genuine and sustainable improvements in productivity have languished. Rudd’s ‘Education Revolution’ is barely a memory. Julia Gillard, who once made much of her passion for education, dropped the phrase the moment she left the portfolio behind. Throughout her period as Minister, Gillard pointed to the forthcoming Gonski review of school funding as a reason not to take any substantive new steps in this area.
Gonski’s committee finally reported last week. It made a powerful case, on both equity and efficiency grounds, for a substantial increase in funding to the most disadvantaged schools, almost all of which are in the public sector. If we are to become a more productive nation, we cannot afford to lose a quarter or more of our young people to inadequate education and social exclusion.
The alternative can already be seen in the United States, where what was once the land of opportunity is now characterized by the highest levels of inherited inequality in the developed world, largely because of unequal access to education.
Gonski’s report was dead on arrival. Responding to the report, Gillard made it clear that the government’s need to achieve a surplus by 2012-12 trumped any need for long term investment in our future.
Naturally, the advocates of ‘bold reform’ are nowhere to be seen in this fight. The only concern of free-market thinktanks like the Centre for Independent Studies is to protect the class interests of wealthy private schools ‘Gonski: less for private schools, AFR 21/2/12’.
This is, indeed, a time for bold new ideas about reform. What we are getting instead is personality politics and zombie economics.