15 thoughts on “Monday Message Board

  1. Good morning John, congratulations on your fundraising efforts and to all who helped.

    This is a comment on collective bargaining and the right to strike. I noted in the thread on Evans and Astroturf that the late Bill Hutt argued that militant trade union action can only advance the interests of some groups of workers but not the whole of labour at the expense of capital at large. James Farrell asked for the bare bones of his proof.

    First of all, Hutt, like the HRN Society, had no objection to the existence of trade unions, merely to certain activities which he claimed could only widen the gap between workers in the most powerful and unscrupulous unions (producing a “a bloody aristocracy of labour”) and otherworkers, including those unable to get a job at all. As to the positive functions of unions, among others he suggested support for workers who have suffered from unfairness and discrimination at work; the friendly society function to provide health care and welfare benefits; and providing training and advice on the best job opportunities. The old mechanics institutes and the WEA come to mind.

    His argument runs along these lines, spelled out in the first chapter of his book “The Strike Threat System” (Arlington House, 1973). He first claims that any restraint on the price mechanism may be held to “exploit” the community as a whole. For example if the price of leather is forced up by either collusion by suppliers of hides or strike action by workers in tanneries, the community is worse off because incomes will buy less.

    If collective action or state regulation forces wages above the level that employers can afford to pay, unemployment will result. Hence the mass unemployment in the Great Depression. Usually the effect is less dramatic,merely reducing the level of employment in the firm or the sector where the wages have been forced above the level that would be set by uncoerced agreements. At the same time, prices will be forced up, which Hutt pointed out is a regressive result, hurting the poor more than the better off. He also argued that successful trade union action in some sectors will have the long run tendency to force down wages in other sectors.

    In addition to widening the gap between different groups of workers there are other undesirable results of militant trade union activity. The whole process is propelled by the corrosive doctrine of the class war (in militant unions) or merely in the mood of “us versus them” which is bad for human relations in general. Real gains can only come from increased productivity but this requires creative cooperation between workers and management, not a constant state of undeclared war. The strike depends on violence to be effective and the apparently sanctioned violence of the picket line is destructive of the morale of society and respect for the rule of law.

    In addition to arguments along technical lines, Hutt questioned some of the traditional ideas that are used to justify militant union activities and government intervention beyond maintaining the rule of law. In particular he disputed the claim that workers have aways been at a disadvantage in free bargaining with capital, and that labour had to endure a bitter struggle with capital to get a fair deal. The historical material in that chapter comes after some turgid theoretical stuff. Near the end of the chapter is the story of the Tolpuddle martyrs who were transported to Australia.

  2. Wolfowitz opens the door for TNI to upgrade counterinsurgency skills.
    God Bless America! And G-d help the rest of us.
    Aid workers returing from Aceh should be able to provide insightful sketches of SBY’s finest. Did those guys get muck on their shiny, black boots? Or were they happy to swagger around with their M16s?

    Watch your charitable donations morph into profits for the US armaments industries. Missed Vietnam? Stick around, the replay is coming right up.

    Downer’s reaction will be predictable, and assisted by a costume of cap and short pants. Or he could follow Prince Harry’s trend. The Murdoch press-gang will have a problem – some will be cock-a-hoop, but what about Rupe’s love affair with China?

    Here’s an opportunity for Labor to provide some differentiation. Rudd knows China – how will Beijing react to this? Has Beazley been brushing up his nuancing around the politics of our near northern lifelines, like the Malacca Straits? Will renewed devotion to 24/7 shopping for cheap Asian commodities keep us afloat, if dissidents blow up a Jap supertanker near Singapore?

    Expansion of direct US military influence back into Indonesia is a serious and far-reaching development. Especially with the architect of the conversion of Afghanistan into a narco-state, and the author of lies about Iraq, at the helm. If Latham can’t direct a prompt response from Labor, he should quit politics.

  3. congratulations John on your tsunami relief fundraising (although I didn’t donate via this route because I’ve donated a large sum directly to Oxfam already).

    on the tsunami response, the Australian government response has been quick, generous, well targeted and useful. Hardly put a foot wrong. The one thing that I find disturbing is the way they have taken the opportunity of the tsunami disaster to reinforce Australia’s regional security paranoia. At least they quickly stopped making that link in official ministerial comments – the public reaction when the government suggested that we needed to be generous in aid to prevent terrorism was overwhelmingly negative. It did however remain a subliminal message in the way the government conducted itself, illustrated by the publicity given to the tour of the affected areas by Downer accompanied by Australian Federal Police Commissioner Mick Keelty. Why was such prominence given to the AFP versus the other agency heads Downer might have brought along? say the aid agency Ausaid, the Australian Defence Force (which has a large force on the ground doing relief work), or even the acting head of Downer’s own department? There is a role for the AFP in identifying dead bodies, and that is really important for families of missing people, but this is specialised and detailed work – is it really the main policy or operational issue involved here? This contrasts with say the Bali bombings where there was a crime involved – policing was therefore a much more prominent part of that response than it is in the case of a natural disaster. It does seem the only reason for giving such a central role to the police is to reinforce the constant government message that there is a looming security threat about which Australians need to be alert and alarmed.

  4. I would like anybody with an informed view to suggest why the various Peak Oil doomsayers are overwrought and/or scaremongering.

    eg1 – that oil wars such as we see in Iraq will not grow more common in the coming years

    eg2 – that the inevitable failure to find & shift to alternative transportation will lead to depression as high petrol prices make provision of many services/goods unprofitable

    there seems a total disconnect between the volume with which a few are worrying about the oil crisis and the complete absence of mainstream discussion. Either the former are loony or there is a mass psychosis of denial.

  5. This is a brief but comprehensive overview of the oil industry with commments on the reserves in relation to the trends in use, especially the implications of China’s surge in consumption, some historical perspective on the rise of OPEC, the non-OPEC suppliers, the pricing mechanism, and alternatives to oil as a source of petrol for domestic transport.

    The author concludes”I don’t necessarily trust technology, but I do trust human ingenuity. Civilization as we know it will grind to a halt without the energy we derive today from crude oil, and that’s in and of itself is motivation enough to make sure that future energy is widely available at prices people can afford”

  6. The author’s conclusion is ridiculous. Energy can be derived from other sources. Its a matter of getting those sources to be efficient.

    Anyone got any idea when Strocchi is going to blog again?

  7. Vee, it’s not just a matter of getting the alternative energy to be efficient, not even if you were thinking “cost effective”.

    There’s also the form in which it comes. Coal is more cost effective than oil and has been over the last couple of centuries, except in special uses. But the particular features of liquid fuels set them apart, and petroleum products were the most suitable of those.

    That’s why proposals for usgar based alcohol fuels shouldn’t just be dismissed but should be addressed seriously, showing just how they are unsuitable. If you don’t do that you miss the possibility (which happens not to be correct) that the other energy inputs might be drawn conveniently from other things like coal, i.e. making ethanol at least as amuch an exercise in making the energy accessible for certain uses. It isn’t, but shallow arguments don’t help anyone.

    For what it’s worth, the most realistic alternative liquid fuel of those I’ve done a casual bit of research for are, biodiesel made from non-edible oils from trees that can be grown on roadsides etc. and generally neglected, like Honge nuts. Anything else has opportunity costs for agriculture, whether concealed by subsidies or not. And it isn’t clear how much could be grown that way until it started needing excessive inputs.

  8. I’m not sure what the proposed biodiesels are made of but u should be happy that Deniliquin and Narrandera in regional NSW, Australia are about to build biodiesel plants then. Front page of the Southern Weekly today.

  9. Thanks, Rafe. I was curious whether Hutt had any novel or ingenious ideas. But these are essentially the same economic arguments – dating back to the mid-nineteenth century or further – that union busters have always used. The basic idea is that union-sponsored wage deals distort what would otherwise be a competitive equilibrium. There are a couple of fundamental objections. The first is that, even if the labour market was structured like a classical commodity market, it’s impossible to define a demand schedule for labour without invoking the now discredited concept of marginal productivity. In any case there is the second objection: very few labour markets are competitive, either on the buyers’ or the sellers’ side. Perhaps you are familiar with the standard textbook demonstration that, in the presence of a monopsony buyer of labour, a union-enforced wage floor actually increases economic welfare.

    You refer to what ‘employers can afford to pay’ as though this is some straightforward empirical quantity, which the employers openly reveal. But what they can ‘afford to pay’ depends not just on the cost of materials and components, but also on their aspirations in terms of executive salaries, dividends and retained earnings. These can all legitimately be challenged. Furthermore, even though an individual firm might claim it has to cover capital costs and pay executive salaries at ‘market rates’, at the aggregate level these are much more arbitrary, and are subject to custom, societal consensus, and political negotiation. Of course, there will always be some employer that can’t pay, so unemployment is an inevitable result of wage rises. But the question is whether labour income would rise or fall on balance, and this is why so much effort is expended on estimating elasticities.

    I’m not sure what you mean about strikes relying on violence to be effective. Under Australian law you can’t hire scabs to undermine a legal strike, so there is no need for violence. Even without such protections, the moral sanction of a picket is often enough. Or do you consider a picket to be some kind of emotional violence? And why would legal strikes undermine the rule of law? As for the suggestion that strikes – at least widespread and long ones – undermine social morale generally, that’s absolutely right, and it’s a good reason to have an umpire like the IRC on the job.

  10. Thanks for your comments James. As you might expect I do not find them convincing. On a point of detail, I am not talking about union busting, merely about controlling abuses of power which as you point out are now institutionalised in Austalian law. Much to the detriment of our freedoms and our econonomic welfare.

    There is no need to define demand schedules and establish perfect equilibria, merely to allow management to negotiate with workers to reach mutually satisfactory arrangements. Frustration of that process by the IRC caused mass umemployment during the Great Depression and you have provided no answer to that. Until you can answer that objection I am inclined to think that Hutt’s arguments are not merely old but also robust.

    Can you indicate the situations in Australia where there are monopsony buyers of labour? And how that would affect Hutt’s argument? He does treat that situation but it is past my bedtime and I am loth to prejudice my good days work tomorrow by staying up late to find the arguments and summarise them:)

    Nothing in your para about ‘afford to pay’ affects Hutt’s argument.

    As to your last para, nobody disputes that workers should have the right to leave their jobs if they want to, subject to contractual agreements. However the strike is rather different from just walking off the job, it also involved stopping other people from doing the work. That originally involved violence until the politicians decided to bid for the workers vote by providing special favours, namely to favour the employed over the unemployed (and people wonder why unemployment is so persistent). It seems to me, in the light of work by Hutt and other, that some of the rationalisations for those special favours to organised labour do not stand up to critical examination.

    Anyway, I hope we can explore these issues in a cooperative manner because the stakes are high and I respect the power of the mythology of organised labour even if I do not agree with some of the premises and many of the conclusions.

  11. I’m not a labour economist, Rafe, but I would have thought monopsony employers account for a significant proportion of large firms, especially in remote areas, as with mining, and where there are substantial economies of scale, as with stevedoring. But I’ll see what I can find in the literarture when I have time.

    However, your main point about the need to ‘allow management to negotiate with workers to reach mutually satisfactory arrangements’ is singularly lacking in content. I suppose you really mean ‘negotiate individually’, in which case you are simply restating the original and unproven assertion that individual rather than collective bargaining yields a better outcome for the workers. Obviously I disagree. As for the suggestion that the Industrial Court caused the Depression, that’s a new one on me.

  12. Not the onset of the Depression but the mass unemployment which became the most obvious and damaging feature of the decade.
    Later the Industrial Court destroyed the livelihood of native stockmen in Northern Australia, reducing them to the status of mendicants.

  13. James,
    Employers can only be a monopsony if a worker can only do one job. This is simply no longer the case, if it ever was. If a person chooses to be inflexible and say that they have always been a (insert job name) and I will always be in that job and will do it until I retire, then the cost of that inflexibility my well be to end up as a wage taker. The same is true about living in one place all your life. That, however, is not the fault of the system, but of the individual.
    I have been through several differing ‘careers’ from builder’s labourer and driller’s offsider to IT analyst and project manager. I have worked in the remote locations you mention, but have always been able to find job offers from more than one employer and ofter in more than one role.
    I may have been consistently lucky, but I doubt it.

  14. Rafe, the reasons for the depth and persistence of the Depression, and the role of wage rigidity specifically, are extremely complex issues and matters of on-going scholarly debate. There is no place in this debate for dogmatic claims that this or that circumstance was primarily responsible. In any case, the original issue was strikes and in particular Hutt’s theories thereof. On that score, we seem to be to be in agreement: Hutt is indistinguishable from every other free market ideologue who has assreted that workers would be better off if we took away the right to strike.

    Andrew, I accept the logic that if all the miners in Mount Isa were ready to pull up stumps at a moment’s notice and accept jobs in bottle shops in Perth, then MIM would no longer be a monopsony. However, if you’re asserting this is the case I will need some evidence. On the other hand, if you’re merely saying that in your opinion it ought to be the case, that doesn’t advance the argument very far.

  15. Andrew Reynolds, I have been trying to get out of IT for over twenty years, and the type casting has always prevented it. On one occasion I even found that a non-IT job I had applied for had come up alongside an IT one, and the firm’s HR had just passed my application over for that so I was facing a wrong interview, which wasted everyone’s time.

    I tried to do that for a number of reasons including what I saw coming. What I experience is a lack of interest in letting me in anywhere else as I am perceived just to be in there for the short haul. That’s becuase people wrongly perceive that I like IT, on the basis of my cv, despite my never having had the option of getting in anywhere else.

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