What’s happening in the labour market ?

With the Howard government focusing on industrial relations reform, it’s important to be well-informed about what’s going on in the labour market. Last time I posted on this topic, a number of commentators suggested that I had missed some important recent developments. In particular, regular commenter Derrida Derider supplied me with some useful stats that support this, so I need to begin with a revised assessment.

During the 1990s, I argued consistently, and I think correctly, that measured gains in productivity were being driven by increased intensity in the pace of work, longer working hours and a labour market that marginalised those unwilling or unable to put in long and intense hours, notably including older workers.

It now seems clear that most of these trends levelled out in the late 1990s, and went into reverse after 2000
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Good(?) News from Iraq

Australian blogger Arthur Chrenkoff has attracted a lot of attention for his “Good news from Iraq” posts. Not only has he had a piece in the New York Times, but he’s been at the centre of a lengthy debate between Media Watch and the Australian (covered here by Tim Dunlop)

One problem with good news, though, is that it tends to be announced, reannounced and then re-reannounced for good measure. During the Boer War, Lloyd George caused a stir in Parliament when he did the sums and found that, according to the body counts announced by the British Government, they had killed more Boers than the entire Boer nation contained. According to Orwell, Arthur Balfour rose to his feet and shouted “Cad!”

Tim Lambert applies the same metric to electricity, finding that, despite nearly continuous good news, electricity generation is lower now than in the immediate aftermath of the invasion, and far below the level prevailing in 1991.

That’s the time-series approach. I thought I’d take a different tack, and look at the bits of bad news that can’t be concealed, even when, like Chrenkoff, you are looking exclusively for good news. That is, I’m doing what Chrenkoff does, but in reverse, using his news stories as the source.

Here’s a selection from Chrenkoff’s April 25 edition. Remember this is all supposed to be “good news”:

“The State Department has ordered a major reevaluation of the troubled $18.4 billion Iraqi reconstruction effort, blaming problems on early decisions to hire US companies for major infrastructure projects.”

“In a report to Congress last week, the State Department said reconstruction officials will cancel several planned water and electricity plants”

“The three-story hospital in downtown Fallujah sits empty and abandoned”

“Most of Iraq’s schools are still run down and out of date. According to the Ministry of Education, 5,000 additional schools are needed, and repairs are required at 80 percent of existing ones.”

” The Baghdad Police College says it has no shortage of recruits. In a country with unemployment well over 50 percent, a police paycheck — about $200 a month — is simply too tempting.”

“The stock exchange may be one of post-war Iraq’s few success stories”

” Production from the southern oil fields has recently reached 1.1 million barrels … The rate is close to what the company produced before the war …”

Why bother hammering the bad news? The obvious reason is that, until the failure of existing policies is recognised, there’s no chance of any better policies being adopted. The whole history of the occupation has seen the US persisting with policies long after they were obviously doomed, from radical economic reform, to the “regional caucuses” plan, from Chalabhi to Allawi, from Najaf to Fallujah and beyond.

Dictators sticking together

According to the People’s Daily

China firmly supports Uzbekistan’s moves to crack down on the “three evil forces” of terrorism, separatism and extremism, and maintain domestic and regional stability for peaceful development, a Foreign Ministry spokesman said in Beijing Tuesday

To the extent that the Chinese regime has any coherent foreign policy, its primary principle is opposition to any intervention in the internal affairs of dictatorships. The more brutal the dictatorship, the happier China is to lend its support, and of course, the better the Chinese regime looks by comparison. Sometimes, this principle brings China into conflict with the Bush Administration, as in the case of Iraq. In other cases, as in that of Uzbekistan, the two see eye to eye.

I look forward to a possible future when only democratically-elected governments are regarded as legitimate. That doesn’t mean support for the Bush doctrine that any external enemy who wants to overthrow such a government by force should be free to do so. But it would mean suspension from the UN and all similar bodies, in the same way as currently happens in the event of a military coup in a Commonwealth country, as well as embargos on any form of military contracts or arms sales. The critical requirement for such a future is a democratic China. As I’ve written before, I don’t think this is as impossible as it seems. The apparent solidity of the Chinese regime conceals the erosion of its foundations in Communist ideology, and in the historical legitimacy of past generations of leaders. It’s a statue with a golden head and feet of clay.


I was reading this story in The New Republic (subscription required, I think) about the problems of US cities and it struck me that little of the discussion would make sense in an Australian context, simply because Americans and Australians understand the city-suburb distinction quite differently. As noted here, in Australia , a suburb means “one of the units comprising a city”, corresponding roughly to the American “neighborhood”. By contrast, in the US the term is understood to mean “a district, especially a residential one, on the edge of a city or large town”. British usage is somewhere between the two, but closer to Australian.

This distinction is reinforced by the fiscal system in the US, where more tax is raised, at the local government level, and more functions, notably education are undertaken by local government, so the boundary between local governments makes a bigger difference. This seems to cause a lot of problems, with the result that US cities seem to be in difficulty most of the time. Perhaps the Australian setup produces different problems that aren’t so obvious or pressing.

Beyond this, though, I think there really is something to the Sapir-Whorf hypothesis here. The fact that everyone in Australia regards the suburbs as part of the city to which they belong, regardless of local government boundaries, affects the way we think about all sorts of things. For example, even if inner-city suburbs are thought of as hipper and cooler than the outer suburbs, the distinction is one of degree rather than kind, since there is no sharp dividing line between the two, so we don’t really have an urban/suburban distinction in the way that Americans do.

Mistaken identity

Brad DeLong coins a useful phrase. Referring to Bernanke’s global savings glut theory. He says

I’m very skeptical. It is of a brand of macro that I think of as one-identity-economics. You take an accounting identity. You assume that certain terms of it are fixed. And you then derive conclusions–in this case, that the growth of the budget deficit has moderated the fall in private savings.

The problem with one-identity-economics lies with the assumption that certain terms in it are fixed. There are lots of channels of adjustment in the world economy, and it is a safe bet that with different levels of interest rates and different levels of wealth we would see different levels of corporate investment and of net exports.

Some other examples of one-identity-economics are the crowding out hypothesis and the twin deficits hypothesis.

More on Uzbekistan

The NYT has survivors’ accounts of the massacre in Uzbekistan. Meanwhile, on last night’s ABC News, I saw the commander of the US base in Uzbekistan interviewed. He said something like “The host country military are doing a wonderful job protecting the base and we have had no trouble from the disturbances”. That’s the same host country military that was murdering hundreds of its own people a few days earlier. I can’t find a link to this on Google news, so I’d be grateful to anyone who can point me to a transcript.

Bush’s friendly relations with the Uzbek dictator Karimov have been unshaken by this, and any stated opposition to Karimov’s use of torture and murder is meaningless: it’s an open secret that a good deal of it is being done on behalf of the Administration, as part of the policy of extraordinary rendition.

The blogospheric right has mostly been either silent or supportive, along with much of the pro-war left. But some cracks are emerging. Here’s a piece by Stephen Schwartz and William Kristol from the Weekly Standard. And on the pro-war left, there are some good pieces from Eric the Unread and Harry’s Place.

Update JF Beck offers a defence of the Karimov dictatorship, ending rather lamely with the weasel words “Now don’t get me wrong, I’m not supporting the Karimov government or its actions. I’m simply pointing out that the “wanton murder” scenario being pitched by the left is open to question”. For Beck, and the rest of the RWDB crew, the important thing is to support Bush and attack the left on every possible occasion, even if it means giving someone like Karimov the benefit of the doubt.