It’s time, once again for the Monday Message Board. As usual, civilised discussion and absolutely no coarse language, please.
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John Quiggin 
The address of Nouriel Roubini’s blog has changed to
http://www.rgemonitor.com/blog/roubini
The following article seems to imply that the effects of voluntary student unionism is already biting.
http://www.theage.com.au/news/national/organisers-rue-lack-of-student-protesters/2006/04/12/1144521401756.html
My question is when and how will the counter attack arrive? Does an ALP government mean a return to compulsory student unions?
Students have little disposable income and wield even less political power. Voluntary Student Unionism will never be overturned.
I hope an ALP government will ensure that the services that students need on campus will be properly funded, and that students will be required to pay a compulsory contribution to those services. The same way I am required to contribute council rates to services I don’t use, but which I must pay as my contribution to the general amenity of the area I choose to live in.
The fee could represent a student contribution to those activities and services that have now ceased as a result of the nerds in the federal government like Costello and Abbott who were young nasties and have never got over the fact that everybody hated them when they were young.Everybody hates them still, but by God they are going pay for it this time!
The article on Abbott in the Good Weekend was the best job I have ever seen on these creepy types-the more so for being measured and letting us all see him through his own words and deeds. Oh dear. What a sorry and scary spectacle he made of himself. Moral compass indeed! I thought I would die laughing at the comment he made when he left the novitiate that the Church was not serious enough for one his calibre and moral gravitas!
I think we have seen the last of any realistic hope this creep ever had of being leader of the Liberal party. Less the moral leader of his own imagining, and more the whited sepulchre of New Testament warnings methinks!
Stoptherubbish: I agree, students are using lecturers, grounds, classes etc without paying. A compulsory fee for those services would be very good idea.
Costello could hardly have been “unpopular” if he won the election to become chairman of the Monash student guild.
Today’s Adelaide Advertiser leads off on the front page with the motor trade bemoaning skilled shortages of mechanics, auto-electricians, panel-beaters and so forth. The MTA wants to access overseas skills where possible. The paper’s editorial takes up the general theme, but then lobs in this comment regarding the industry’s stated push for skilled migration-
“It’s[the industry] announcement comes barely a fortnight after the revelation that 20 per cent, or 159,000 of Adelaide’s working-age population, is on welfare.”
Well my question is 2 fold. Firstly do you think Adelaide is any different here to other major cities and secondly if not, do you really think 1 in 5 Austarlians of working age should be on welfare? Personally, I can now see why the govt is moving to add some push to get people off welfare and ditching unfair dismissals to get employers to take a punt on more of them can’t you?
Voluntary Student Unionism will be reversed if evidence emerges that it is eating into Australia’s ability to attract overseas students.
Universities market themselves not only on the basis of the quality of their formal education but all the things that student unions provide – theatre, music, counselling services, sports facilities etc. Melbourne University’s marketing slogan is “more than just a degree”.
Some universities have decided to pour money from other sources into the student organisations in order to keep these things running, even at a somewhat lower rate – this will impact on their ability to fund research and teaching, but the wealthier universities can afford it for a while at least.
Consequently in some cases we won’t actually see what the effects of VSU could be. However, other universities can’t afford this, or won’t prioritise it. This may lead to a shift in local student choice, but the government won’t care. However, if overseas students start avoiding these universities the government will simply have to reverse or modify the policy – the billions of dollars overseas students bring into the country is simply not something even a government that sees Australia’s future as a quarry can afford to lose.
Stop the rubbish: I have paid my fair share of student union fees at uni, and I must say, I paid it with great reluctance and was sorry to see how it was misused.
I acknowledge your point in contrasting student contribution and paying council rates. I think you have raised a jolly good one. BUT, I see a huge difference in paying rates and paying for student union. Rates you pay goes toward provision of services and facilities that you or anyone within the community can enjoy and benefit from. Student union, whilst they provide scant general services, they spend majority of thier time (and budget) on activities that are completely unrelated to the provision of services or facilities to the general student population. For example, they engage in rallies (and the associated cost of printing fliers) for human rights, rise of communism/socialism vs capitalism, gay/lesbian rights, enviromental causes, abortion, discrimination etc, etc….do you see a general theme here? Yes, they become self-championing “politicial activists”.
It is all well and good they are voicing concerns about controversial issues – and I’m by no means advocating a stop, my question is “how does it assist in the facilitation of student services?? Students pay (used to) for provision of services and facilities for thier use within the campus, not to see their student representatives use their contributions to indulge themselves in causes that they think we should adopt!
So sucking up to the Indonesians over asylum seekers has backfired. Big surprise.
Good idea, Dr Yudhoyono. I am thoroughly sick of spineless Australian politicians sucking up to your country every time you get offended by one of the few remaining human rights policies we have.
It’s time Australia stopped kowtowing to Indonesia and started setting its own agenda. Lets start by setting aside a few billion dollars in the upcoming budget for our own nuclear waepons program.
I am always bemused by claims that there are skills shortages. I employ IT professionals and there are frequent claims made that there is a shortage. How do you measure a shortage? I can only guess that claims of a shortage is really code for “we don’t like paying the current price”. So if plumbers are charging $200 per hour then this means there is a plumber shortage. If price is the indicator for shortages then we have a real shortage in Lawyers in Australia. And accountants. And Doctors.
I would like to know if there is some objective measure of a labour shortage other than price. And if it is price then how is it applied in practice (ie is it price relative to historical price or price relative to lawyers or what?).
It seems ironic that those that think university should be without tuition fees are usually the most vocally in favour of a compulsory student union fees, whilst those that think tuition fees are okay (ie advocates of user pays) are usually the most vocally against compulsory student union fees.
If the universities were entirely private institutions offering services to entirely voluntary consumers for a fee in a competitive market then I imagine that there would be some student services paid for out of money raised through student tuition fees. However I doubt that private institution would encourage a buyers co-operative.
Given that the primary motive for going to university is surely tuition, then it seems so odd to have this free whilst charging for other services that are secondary to the offering.
Well my question is 2 fold. Firstly do you think Adelaide is any different here to other major cities and secondly if not, do you really think 1 in 5 Austarlians of working age should be on welfare? Personally, I can now see why the govt is moving to add some push to get people off welfare and ditching unfair dismissals to get employers to take a punt on more of them can’t you?
Observa, your answer is (or ideally should be) here
‘I am always bemused by claims that there are skills shortages….
I can only guess that claims of a shortage is really code for “we don’t like paying the current priceâ€?.’
Classical economics would say you’re right Terje. However it may be that regular bread and butter costs like vehicle maintenance and repairs resist rising prices being passed on more than your occasional use of an accountant or lawyer would allow. In this respect there is a certain fixed quantity of daily vehicle repairs and maintenace demanded, although queuing or high prices may force more owners to neglect their vehicles, which could ultimately feed new car sales. Probably what has happened is more tradesmen retiring or leaving the industry than are being replaced and the squeeze is on. That squeeze is probably felt hardest in the large dealer franchises, which would charge the highest rates and hence afford the highest pay rates. They may like to pay more to attract more trades, but find they are pushing against consumer resistance now. Raising their prices too quickly at the top end may be forcing more of their customers to the smaller self employed tradesmen and the like. Skills shortages may simply be causing a narrowing of returns in the industry, whilst causing queuing at the top end of the market. If the latter is the case, the top end of town would logically be wanting more labour from any source, to satisfy its obvious unmet demand and produce more profit. The small self-employed bloke/partners are probably wondering what all the fuss is about. They’ve never had it so good.
Observa,
Thanks for that. It basically confirms what my own thinking. Those that cry “skills shortage” have vested interests. There is no objective means to measure the claim.
One persons skills shortage is another persons rising real income. As such we should be very cautious about supporting any political fix.
Regards,
Terje.
A skills shortage can be real when it takes a long time to train people in the relevant skills. I know that in some sciences there is a concern that in a few years time there will be a drastic shortage of people to fill the positions. Since to be able to do these jobs properly people need 7-10 years of education (under grad degree, plus honours plus PhD) it doesn’t matter how much you up the pay, if the people don’t exist you can’t fill all positions (this assumes that the shortage is global, not just Australian).
However, in areas where training is a year-long apprenticeship I suspect you are right. If the pay was high enough more people would elect to train in the relevant discipline and the market would solve the problem – people are simply not wanting to pay the going rate, and then whinge about the shortage of supply.
“‘I am always bemused by claims that there are skills shortages….
I can only guess that claims of a shortage is really code for “we don’t like paying the current priceâ€?.’”
It’s mendaciously claimed that there is a skill shortage in the supply of GPs.
Here’s a good test.
The price of GPs services could be reduced overnight and the shortage of supply of GPs could be obviated almost as quickly if every adult were allowed to write presciptions for medicine.
Oh, hang about, maybe not everyone has the skill to write the correct prescription.
Damn reality!
Hang about again,
No matter, open slather on prescription writing would constitute a classic application of neo-liberal social darwinism. Idiots would die and smart people would learn to right the correct prescription.
Excellent! Neo liberalism triumphs again.
“If the universities were entirely private institutions offering services to entirely voluntary consumers for a fee in a competitive market then I imagine that there would be some student services paid for out of money raised through student tuition fees”
Oh dear oh dear – what a beautiful dream – a ‘competitive market for education’.
May I ask for a reference to a paper which shows that a model of a competitive market for education has a non-empty solution set?
Katz,
I don’t know where you are going with this. My question was a very basic and simple one. How do we objectively define a shortage? Is price the only indicator?
For instance bananas recently went up in price. Does this mean that there is a shortage? Was there a lesser shortage before the recent price increase?
Lets say it takes 10 years to train a GP. Given the lead time we would be very interested in knowing as early as possible if there is a shortage of GPs so we can train some more, maybe even subsidies the cost of training to encourage more students in that area. So how do we know when there is a shortage? Is price the only indicator? And is the historical price the only benchmark?
Perhaps instead of slagging of a liberalism you might address the actual issue.
Regards,
Terje.
Actually I think you’d find the idiots would soon learn to pay the smart people to ‘write’ their ‘right’ prescriptions for them Katz 😉
Seriously though Katz, there is no undersupply of GPs, just an undersupply at current Medicare scheduled fee rates, particularly in certain locations. I’ll give you a tip though. If you doubled this taxpayer subsidy at the stroke of a pen, I’d suggest you’d drastically increase the overall ‘shortage’ of GPs. Well at least the overall screams of consumers would soon indicate that, although they’d be a different mix of consumers.
You can ask. But I don’t know of any such reference.
I do know that out of the formal qualifications that I have personally the one which is the most marketable is taught by multiple alternate outlets operating in a competetive market. There are four of five private companies within a ten kilometer radius of my office that provide this training. I could do the training in most major cities around the world. The curriculum is defined by a private company. People with these qualifications are sort after by employers around the globe.
I also know that when I recruit people the key qualifications that I am looking for on their resume are available primarily from privately run institutions operating in a competive education market. I routinely filter applications on this basis. I routinely ask for evidence that people actually have these qualifications as claimed.
The certification process for these qualifications is rigereous. Certification is run by a private company, seperate to both the training company and the company that defined the curriculum.
Competive private sector education markets exist so I don’t need a theoretical model to confirm the concept. They don’t just exist but the are in fact prolific, wide spread and well established.
But let us assume for the moment that there is no such model that has a non-empty solution set. And let us assume that a private education market would never work. Then the core point of my original post is not diminished.
Terje might just be on to something here. Measuring a shortage is harder than it sounds.
Consider your traditional supply/demand diagram for a good (say, bananas). Suppose a unique equilibrium exists for a certain price and a certain quantity. If you are a consumer that purchases bananas, then your benefit exceeds the cost. No big deal.
If you are a consumer whose benefit does not exceed the cost, all you can observe is that the higher price is not worth it. You can’t observe the supply and demand schedules, only that a certain quantity has been provided at a certain price. From your position, you can’t say for certain that this is the equilibrium result, or a disequilibrium result (from, say a shortage, like a quota set in supply, or some shock that restricts supply).
Apart from using past price/quantity data, or econometric analysis from such results, another approach might be to use revealed preferences in order to try and discern the actual preferences of consumers/producers to determine if there is a market failiure such as a shortage.
Terje,
So you don’t want the right to write your own prescriptions?
Why not?
The price would be right.
I know people qualified to work as GPs that don’t because they can make better money doing other things. So if the price did rise then they would no doubt look to sell their relevant skills. There would be no need to wait 5-10 years for new graduates. Although at the extreme there is obviously some limit to the number of people that could come to market in the short term.
It’s an interesting question and goes back to wilful’s reference about training and lead times etc. Are there clear enough cases of market failure here and even if there were, could public servants, econometricians or simply thinkers in residence do any better than the market? The motor trade is perhaps a good example. Why didn’t we pour resources into training more unemployed or potentially enemployed into being mechanics etc in the past? Seems pretty logical at first glance. Consumers as motorists are presumably suffering for ‘our’ collective oversight now. Or are they? What if the higher/rising costs of repairs has been responsible for the push to more reliability in cars, longer service intervals and longer warranties and further that the rising cost of keeping older vehicles on the roads, means we update our leaded fuel/less efficient bangers sooner? Who is to weigh and judge these competing social benefits? I can tell you as a resident of Adelaide with one of the countries oldest car fleets, that’s not an easy one.
It would seem that you are determined to change the topic to one about Neo liberalism or some such thing. I won’t be taking the bait at this point in time. Perhaps later.
If demand and supply for a specific time period is related to the previous time period(s), then its logical that there is some level of uncertainty in the producer’s mind about the amount of goods he can sell and at what price in future time periods. If this is true: Then there should be some form of insurance market present for it.
This sounds interesting. Can you elaborate?
Terje and alpaca,
Just note that there is a difference between a shortage caused by a shock to production (e.g. Larry’s effect on bananas in FNQ), a shortage caused by institutional factors (e.g. a doctor’s union restricting supply and earning rents) and a shortage caused by market failure, or information asymmetries. The first can be identified by an abrupt increase in prices above the historical average. The second and third cannot. The second type of shortage is often hard to address for political reasons, including arguments about maintaining quality and the lobbing power of the relevant group (hello AMA). The third type of shortage can give rise to a legitimate case for market intervention.
Katz,
If you’re interested in getting that case of the smarms corrected, I’m opening a neurosurgery clinic. Really cheap rates…
Nevertheless, I still choke on the fact that 1 in 5 working age Adelaideans now receives welfare and this when our unemployment rate, around 5%, has aligned with other states these days. You get the feeling some welfare dependency categories have to radically change real soon, with more aged pensioners about to fill this bucket to overflowing.
Terje:
The problem of discerning a “real shortage” is that utility functions are not observed (hence demand and supply functions are also not observed) in practice. All that is observed (through time) is a set of prices and quantities.
Using revealed preferences it may be possible to determine these demand and supply functions to see if an equilibrium is actually being reached. Hypothetically, if revealed preferences were used and found that the equilibrium is not being reached, then it could be argued that there is a “real” shortage in that there is a market failure.
Chappelli:
Agree 100%: There are different ways shortages occur, but using previous data (such as a massive rise in price, or observing the presence of a union/collective) is not always going to answer the question of whether there is a market failure.
How do we know that Larry didn’t merely correct a long standing oversupply of bananas?
I am not arguing that this is the case just asking how we would know.
stoptherubbish, your reasoning relating paying compulsory student union fees to paying compulsory rates, in each cases for unwanted and unused services, is the same reasoning as two wrongs making a right. You should look at each of them to see if there really is any right there, not simply accept a general principle that since there is already some rolling over, there should be no objections to other rolling over.
You’re right, alpaca, all sorts of other factors can give rise to market failure. Most of them relate to the quality (or presence) of information surrounding a trade.
Katz did have a legitimate point: I could be the greatest neurosurgeon going around, but without some sort of recognisable qualification, I doubt you would trust my scalpel near your miniature poodle, let alone your cerebral cortex. OTOH, even if I were a below average neurosurgeon, with the appropriate piece of paper hanging in the waiting room of my chambers many would be happy to pay for my services.
However this type of “quality assurance� can be hijacked if all my neurosurgeon buddies had colluded to restrict supply, effectively preventing competition, and keeping our wages suitably high.
PML,
If we were to accept the principle pointed to by stoptherubbish (just for the sake of the argument) we could then point to the fact that State governments already regulate local government rates (at least in NSW they do) so it is okay for the federal government to regulate student union fees.
After all its for the greater good.
😉
Regards,
Terje.
Terje,
I guess in the absence of reasons for an oversupply (such as subsidised production) you just assume that a relatively stable long-run price is indicative of a market in equilibrium. So in response to your earlier question, you need to know more than the price of a good (relative or otherwise) to determine whether there is a shotage in a market.
Ahh, the whole idea of equilibrium is floppy anyway…
Surely the government would only ever subsidise production in order to correct a shortage due to market failure? It would never do this in an instance where it created an oversupply.
🙂
Terje
BaUnless the suppliers / producers of bananas were running consistent losses due to a lack of pricing power you can safely bet there was no oversupply.
Alpaca, having not encountered the term before, I looked up your reference to Revealed Preferences
From the article:
“Further theory states that preferences are transitive”
Hmm, really? I prefer tall, attractive, and intelligent women, with equal weight on each trait. So I’ll prefer Jill over Mary since she is both taller and more attractive than Mary. And I’ll prefer Mary over Jane since Mary is both taller and more intelligent than Jane. But while Jane is clearly rather short, she is in fact more attractive and intelligent than Jill.
So I prefer Jill over Mary, Mary over Jane, and Jane over Jill. Legitimate non-transitive preferences, no?
sdfc,
So you measure a shortage by how profitable the producer is? In terms of a labour shortage how do you do that calculation?
Regards,
Terje.
No Terje I didn’t say that. I just suggested that oversupply infers that producers are forced to sell below cost, otherwise wouldn’t low prices just suggest a healthy competitive market.
If there is a shortage of any vocation wouldn’t this allow those particular labour suppliers to bid up their price? Hence skilled workers are generally in a better bargaining position than unskilled workers.
I would like to address the definition of ‘skills shortage’. This term seems to be poorly understood and infact mis-applied in most cirumstances which invariably complicates subsequent measures of it. Skills shortage encompasses two concepts: skills gap and recruitment difficulties. Whilst skills shortage per se implies interplay of demand and suppy, it is the two latter terms that determine adequacy of measure. Identify what a particular firm faces (whether skills gap or recruitment problems) and then adequate supply/demad responses can be taken.
Skills shortage facing many industries in Australia, particularly the trades are due because of inadequate supply of ‘appropraitely skilled labour’. That is, employers demand for labour is not met beacuse they require workers with the right type of skills and experience, not mere qualifications alone: skills gap. This demand for skilled-up labour is driven by the exponential technological change taking place in the economy. Employers demand workers that are not only equipped to harness current methods of production but also to adopt to future changes. Here, generic skills play a vital role.
As for recuitment difficulties, this is where labour market conditions, such as wages, work conditions etc are pertinent.
For an excellent treatment, see Sue Richardson’s recent article ‘what is a skills shortage?'(Draft 2005 NILS). I’m sure it will go a long way in answering Terje’s question on measuring skills shortage, but in short, no one factor can adequately measure skills shortage.
I could only find a draft version of the paper by Sue Richardson.
Click to access whatisaSS.PDF
It is well worth the read. She clearly articulates the problem in measuring shortages and offers a number of useful insights on the topic. She also expresses what I would regard as appropriate reservation about any automatic public policy response to claims of a shortage.
I also found the section on quality adjustments fascinating. Having done a lot of recruitment I recognise the process immediately. An employer advertises a job and then rather than vary the wage to get an adequate candidate at the lowest price they quality shop to get the best quality for the set wage. In other words the quality of candidate accepted becomes the main variant in the process not the actual wage offered.
For non-fungible goods/services such as labour this quality adjustment process must significantly conceal inflationary/deflationary processes within an economy. For a fleeting moment I can imagine an episode of inflation in which the nominal price of a loaf of bread remains the same but the quality declines.
When I was in Tonga in the mid 1990s I visited the local market place to buy vegtables. I was struck by the non-conventional way of selling vegtables. Everybody sold vegetables for one Tongan dollar (which solved the problem of lose change). The haggling involved the number and quality of vegtables in the pile (ie the quality of the pile). Inflation in such a market would be characterised by a decline in pile quality not a change in pile price. It occurs to me that this is in fact very comparable with how we shop in labour markets.
Thanks to Fraiser Crane for an excellant reference.
StephenL: If Australia wishes to attract overseas students, abolishing compulsory student unionism is one of the best moves we could make.
Overseas students enroll in an Australian University to either:
a) Study and pass their exams.
b) Lay the groundwork for Permenant Residency.
They have no interest in engaging in “protest” or activist causes. They are generally quite conservative, focused on the end result, and opposed to paying student union fees.
Their parents, who have worked hard to pay the fees, are usually aghast at the waste of money by student unions, and detest seeing money they worked for being squandered by Australian bimbo student activists.
There are international students who pay their tuition and all other costs from money they earn in small menial jobs in Australia. Those people have to work quite hard waiting tables etc and living like a churchmouse to scrape through uni. They have no respect nor need for student unions at any time.
A stint of working in such a manner for their education wouldn’t hurt any of the erstwhile student union hierarchy of recent years, not one bit.
Shortage of skills? How to measure it? How about when there isn’t anyone to do a job?
Reality in my town is: I cannot get any builder in town to QUOTE on a set of approved plans for an outdoor smoking garden. I am asking blankly for a figure to complete the work, ANY figure. They can quote as high as they like. I am known for paying over the odds, and showing additional appreciation in liquid form. I have stated that I “want it done” (smart builders can read my meaning into that)
Nobody can be bothered to quote, they are too busy.
Would this qualify as a skill shortage? Rather than a matter of price?
Terje,
You just hit the utility-maximising / cost-minimising duality of standard microeconomic theory on the head. The theory (and it is only a theory) shows that a competitive market will arrive at equilibrium by any combination of people getting what they want for the lowest cost and others getting the most they can for their money.
Steve,
Maybe you just need to show them more cash again. That ought to move you up the list.
I am getting tired of this government. Now we’re going to get more
vote buyingtax relief for families. Even though a family of four on median wage pays no tax anyway. No relief at the top-end. No relief for singles. No attempt to reduce tax code complexity. No efforts to reduce the punishing EMTRs across the board. No effort to increase workforce participation. A $16B surplus and the best they can come up with is more of the same. This is one awfully lazy government.Bill Leak’s cartoon in The Australian sums it up nicely.
It seems it no longer matters which side you vote for. Canberra is just one giant, taxpayer-funded, policy vacuum.
This once-rusted-on Liberal voter plans to register a protest vote at the next election.
Interesting comments Dogz.
Does your intended protest vote extend as far as denying the Coalition your effective vote? i.e., do you contemplate preferencing Labor over Coalition?
Steve at the Pub, you start from the assumption that all student organisations do is run political activities, and all else follows from there. However, this assumption is completely wrong.
I am reasonably familiar with the budgets of student organisations on three campuses, and on all of these less than 5% of the student fees goes to the sort of political activity you describe. By contrast roughly 20% goes on sporting facilities. General interest clubs and societies, music, counselling, unsatisfactory progress representation, etc, etc make up the vast bulk of the expenditure.
International students make little use of some of these, but are over-represented in their use of others. I was passing through one campus recently when the night markets were on – there were several thousand students there, overwhelmingly from overseas, enjoying the music and dance from their home countries. For many students experiencing extreeme culture shock such events are a vital lifeline to home. All paid for out of the Amenities and Services fee which will be abolished next semester.
It is true that International students are generally more conservative than local students, and many are probably opposed to the political activities, but they’re unlikely to avoid a university because $20 of their fee goes to support such things. On the other hand they may well go elsewhere if there are no such events as the one I witnessed.
Absolutely, Katz. If you’re going to protest you may as well go the whole way. I’ll be voting 1 for Labor if the coalition doesn’t pull their collective fingers out.
There’s just no excuse for lack of action on tax reform: surpluses approaching 10% of government expenditure and control of both houses of parliament is a once-in-a-lifetime opportunity.