I’m out of the country at the moment, and possibly missing some nuance. On the other hand, I’m old enough to remember the ill-will the unions built up in the 1970s, with snap stoppages designed to inflict maximum disruption on the public and thereby maximise pressure on employers to settle quickly and on the government to broker a solution. The announcement, without warning, of a lockout by Qantas seems to be straight out of the same disastrous playbook. Even if it works, it must surely kill off any political goodwill for Qantas in the future, or at least as long as the current management is in charge. That’s bound to be costly given the importance of political decisions on things like landing rights for airlines, and the favourable treatment Qantas has had in the past (partly a leftover of its days as a national flag carrier).
Can anyone make a case that Joyce’s action makes sense?
John Quiggin 
To answer PQ’s question about Joyce; the fifth column behaviour the Union has been running must have incurred enormous costs to the company; but has Joyce really looked at these issues from the coal face? I seriously doubt it. Joyce’s management team (marginally better than Dixon’s) has focused on the wrong relationship. They should not be cozying up to the shareholders; as Poet has profiled these groups, they do nothing for the prosperity and performance of the organisation.
Joyce should be looking at the people issues after all, the organisation will get its key performance from the efforts of motivated staff.
By way of illustrating how little things can make a difference to the bottom line; in a blog from news.com.au ‘Graham’ stated:
I was a Platinum level flyer with Qantas (never again) and this trashing of the brand began more than ten years ago. It began with really little things such as the demise of the welcoming smile & concern by cabin staff that you were comfortable. It culminated for me personally (whilst flying business class) being questioned as to my need for a second glass of water !! (Micro cost saving at its best & verified by the cabin crew)
Qantas management has under-valued the recognition of their crews. The issue of denying pilots access to unsold first class seats for example is a shame. Had Joyce been in QF32 when those pilots defied all odds and though sheer talent and brilliance safely landed the A380, then I am sure he and the rest of his management team would have gladly signed off on such a cost neutral reward.
Nation Competition Policy promised cabocharge for the skies across Australia and it still hasn’t been implemented.
The privatized Qantas has been protected by Government (both Coalition and ALP) for far too long; for example, refusing to allow the likes of Singapore Airlines access to the Sydney/LA route; of course that would spell the death of Qantas – but the public would get far superior travel conditions!
Joyce’s predecessor, Dixon, was the main culprit for Qantas exploiting the brand which is now nothing more than another ethicless, profit driven enterprise (again, thanks Poet for drawing attention to the shareholder profile). Although Unions have always played the safety trump card in every industry, in this case I believe there are legitimate concerns; not just crew fatigue and insubstantial safety competency but questionable machine integrity through off shore maintenance.
I don’t want to see Australians lose their jobs, and plenty have excellent careers with Qantas.
Certainly if Qantas air-transport is a national issue then it should no longer be just a private corporation. I would support the airline returning to being nationalised – these crewing and maintenance concerns would no longer be controversial (because they could be in-sourced) and the overriding issue of seeing profits maximised for shareholders would be resolved.
It would also immunize Australians’ travel needs from the financial perils of GFC and would create jobs for Australians. Oil prices will remain an issue no matter what business model is applied.
this brings to mind reagans’ clobbering of the flight traffic controllers in the early eighties.
suspicious mind wonders if the ultimate aim is the destruction of qantas and the unofficial emergency on-call national asset characteristic this airline provides for Australia.
when really needed qantas has been there.
the brand has been built from a continuous standard of excellence.
aknowleged worldwide.
cutting costs = cut standards=devalued brand.
the bottom line may well show temporary improvement.
the cost of that temporary improvement is long term and high.
clever stupidity.
@Fran Barlow
Agreed, freedom is a simple phrase used by the powerholders to exploit or be allowed to exploit on the weak. I’m often surprised that people believe employers should have full fredom over employment conditions; either they are being too ideology about people’s good will or they believe that people are free to refuse to accept employment. The thing begins here: “If people don’t work, how can they afford to live?” and this question is often ignored by most libertarian or capitalist.
@Time4Change
It is a clear answer for the government to buy back Qantas, but there are difficulties with that. One for sure Toxic Tony will have a go at it accusing protectionism or whatever. Second all Qantas cost will inflict damage on the Government’s Budget (unless profitable of course), the current government is being targeted as running budget deficits even when it’s during a global recession/crisis period. It’s already hard for the government to return to surplus due to automatic stabilisers, if Qantas is bought back it would make it harder or impossible which will cause further political instability. The last thing I want to see is Toxic Tony getting elected with his crazy policies that doesn’t make any economic sense.
@Fran Barlow
I partially accept the rebuke. It was a bit of a cheap shot. On the other hand, I deny that I was in any way alluding to Transportation or the convict period generally. Someone else said that. All I said was
“The only Qantas plane he should have anything to do with is the one taking him back to Ireland.”
It’s fair to criticise that as parochial, but not as specifically anti-Irish. I would have used the same line if he’d been American, or Venezuelan, or Ugandan, or for that matter, Mexican. During the Trujillio reign I said here that the foreign minister should deport Telstra’s CEO on character grounds. But you’re right, that kind of language is on balance unhelpful. Thank you Fran and TerjeP, for calling out my prejudice.
Anti-Irish prejudice is going to be difficult to pull off in Australia, apparently the country outside Ireland with the greatest percentage of Irish blood in its population.
(Eg. see surname of blog host)
@Fran Barlow
Fran writes; “Is a contracted systems analyst, or self-employed dentist with a small staff a worker? Arguably so, but ‘producer’ is neater.”
I disagree. “Producer” is an unnecessary category when, as Ernestine already indicated, a person can belong to two or more categories. A contracted systems analyst is a worker. A self-emplyed dentist with a small staff is a worker. This dentist is also a shareholder (to use Ernestine’s categories) if we assume he owns the dental practice. I wonder why Ernestine’s list does not include “owners” and “managers”. Managers may be workers but many modern managers above line manager do little that could be called real, productive work.
@Ikonoclast
I am replying to your question @44, p1.
(a)The term ‘producer’ belongs to theoretical models of competitive private ownership economies. In these models a ‘producer’ is characterised by a ‘production technology’. This characterisation is a generalisation (broader, deeper, allowing more insights) of the notion of ‘a firm’ in micro-economics ( ‘production function’ ). Depending on the model, a ‘production technology’ can, in an abstract way, deal with possible future new technological know-how. These models do not treat the internal organisation of ‘a firm’ or ‘a producer’ and this is often explicitly stated. The question of who owns the technological know-how is not asked. So, a literal application of this concept to ‘private enterprise’ is, oddly, much more limited than for a social planning context.
(b) In the theory of the core of an economy (cooperative game theory approach), a production technology is made dependent on the set of skills of individuals in ‘a coalition’. That is, the production technology depends on the skills (technological know-how) of people who decide to work together to produce things. Although the terminology in these models does not – to the best of my memory – involve the word ‘producer’, a production technology of ‘a coalition’ is akin to a ‘producer’ with an endogenised production technolog. (The equilibrium concept is different too. Ignored here.)
(c) Now (a) and (b) pertain to models without a government or any other law making agent.
I don’t want to prejudge your reading when I say the notion of production in (b) makes much more sense. But corporate law does not recognise (b). Corporate law – speaking in broad terms – gives directors and CEOs power over ‘a production technology’ even when none of these people have done as much as develop a special skrew for a particular machine or other facility.
The purpose of me writing on these matters is to try to contribute toward disentangling the spin on the legal foundation of corporatist society and ‘market economics’. So far JQ has not objected.
@Sam
Yes, looking back I now see that it was Freelander who said:
I apologise for attributing those remarks to you.
More broadly, we all live in the culture and it’s easy to pick up bits of it at moments of frustration and use them without thinking them through. Over at LP Dr_Tad, a psychiatrist by training described Mark Bahnisch’s position on union attitudes to arbitration as “verging on delusional” only to have to apologise later. Others use the term “retard” or the suffix ” ‘tard” (as in rightard/leftard”) when swinging at someone. I feel sure that I must have used the term “moron” on several occasions despite this being in sharp contrast to my general view that the frontiers ethical states and mental states ought to be very sharply defined. It’s good to be called when we step over the line.
I have at times described certain libertarians and conservatives as ‘vampires’, which in retrospect was completely unfair to vampires.
@Time4Change There is no argument that Qantas have dropped the ball on customer service (and this flows thru to employee relations) but that isn’t Qantas problem, they make heaps of money on el cheapo short haul flights in which customers don’t have very high expectations. Jetstar has hauled Qantas out of the red and their Syd/Melb run is highly profitable. Qantas aren’t into 5-star service anymore as most travellers book on the Internet either directly or indirectly and are looking for the cheapest deal.
@Dan
Apparently Anastasio Somoza, once “El Presidente” of Nicaragua owned a company that sold indigenous blood in European markets, making him nearly literally, “a blood-sucking dictator”. Close.
He also had a $3 note (!!!!), with a picture of the American ambassador on it. You just don’t get dictators with that kind of style any more.
A lot of comments assume that Qantas management and shareholders actually have a reasonable grasp of what will make Qantas more profitable. This is, on past form, a large assumption. They seem more driven by visceral dislike of unions, a bllthe uninterest in the details of the business they are in (eg the centrality of good government and regulatory relations), and a conviction that lowering costs is somehow all that is needed. But remember, this is the same class of people that thought Enron was the best thing since sliced bread, that CDOs were safe as houses and much more. They may just simply be deluded.
On Qantas, any strategy that gives up the shelter of Australian protection for open competition with Singapore, Thai and Ittihad – with their better placed hubs and strong government ownership – is doomed. And discount flying is a cut-throat game – rooster today, duster tomorrow. But, as I said, I would want to see evidence that Joyce and co have a good grasp of realities, not just take it as given.
And nothing wrong with saying it would be ironic, because it would. Instead of reading things into what is written you should simply read what is written. Given that a very large number of Irish were transported to Australia by the English, and no one here, as far as I know, suggests for good reason. It would be ironic, indeed, if a scumbag who happens to be Irish, was convicted, and ‘transported’ back to Ireland, presumably after serving his sentence. That statement is simply factual, as it would be ironic.
@Peter T
actually
i think the whole thing was a clever share sell off
but by who?
i would love to see who bought all those shares today – i bet they were dumb buyers like the super funds
and the sellers?
if you know that you can precipitate a share price move of 7% boy can you make some fast money
JP Morgan are masters of it
pop
@Ernestine Gross
I much appreciate your comments. It has reference to the Qantas situation as the Qantas situation exemplifies your statement:-
“Corporate law – speaking in broad terms – gives directors and CEOs power over ‘a production technology’ even when none of these people have done as much as develop a special skrew for a particular machine or other facility.”
To me the crux of this issue is the power of a few individuals (the Board) compared to the relative powerlessness of (often) thousands of individuals (the workers). One has to ask the questions of how the few can control the many and what is the ethical justification for such control?
Your interest area (or one of them) is corporate law and its role in the above situation. It is a very important area to examine. It points to the need of course to examine “political economy” and not just economics. I find it particularly galling that the “free market” advocates maintain such a stranglehold on discourse that all that is discussed is economics and this discussion purports to be “purely business”, that is apolitical. A corporatised “free market”, the enabling laws and resultant power structures are all assumed to be proper, normal and natural and thus invisible. What they are is an artificial construct like any construct made by humans. (I tend to use “artificial” as meaning made by artifice, that is to say made by man.)
Unions of workers are always questioned for attempting to assert that they have some right to determine what goes on in the “firm” or “producer”. However, in the mainstream debate there is seldom any questioning of the board’s open and extensive power and no questioning at all about the hidden stuctures which justify and enable this. “Owning” (or managing at the behest of owners) is assumed to confer almost absolute rights of proposal and disposal (short of plainly illegal or criminal actions) regardless of the human impact on workers and others. Even customers can be given short shrift and shareholder value trashed as Qantas management actions most plainly demonstrate.
The “owning” of the means of production by capitalists, especially by non-working, non-managing capitalists has dubious justification at best just as does their initial “ownership” of capital. A further dubious claim is that this ought to give relatively unhindered rights to board managers to propose and dispose as mentioned above.
Coming back to my question: “How can the few control the many?” I mean this question in terms of board control over the company and workers. You have mentioned a key enabler of this control which is corporate law in its current form. Corporate law formalises the control and lends the State’s power to coerce and enforce to the Board. These laws clearly support the rights and power of a minority of wealthy capitalists over the workers.
The next level of control, in my view, comes from the split between “staff” and “workers”. I might be using old fashioned terminology here. Staff are white collar but not all white collars are staff. Lower clerks, check-in clerks etc are white collar but not staff. Staff are usually middle and upper management often assisted by their office support who are not unionised or in separate unions from blue collars. Control of company data, administration, communications, payment systems and personnel (Human Resources) sections and the support of managers and office support staff give the Board the instrumental power to “control” workers.
The key areas to change are corporate law, lack of worker representation on Boards and the staff / worker split which alienates certain classes of owrkers from each other and pits them against each other.
I think it is a mistake to think that Joyce is the “boss”, he was hired to do a job by the chairman and the board who in turn have to meet the demands of the banks. The unions are just speed bumps.
@Peter T
Joyce and the others have a very good understanding of what will make their employment profitable, and as long as they can do that, by giving themselves big pay increases, concerning themselves with what makes Qantas profitable is completely secondary. After all, it is not as though their pay depends on their performance or even Qantas’ performance. To make themselves rich they simply ladle some of the revenue stream into their own pockets. You don’t expect any of them to stick around for the gold watch? Modern management is all hit-and-run. You don’t think any of the banksters lost in the GFC? The banks lost, bank shareholders lost but those who lost shareholder value, certainly not. The same with Enron, most of those who ran the company are still billionaires. The poor suckers further down the food chain who they conned into putting their super into Enron shares and Enron investors, well, that’s another matter. The easiest way for those running a company to get rich is by raping shareholder value in one way or another.
A lot of money is held in trust for ordinary punters as reserves for insurance, banks, superannuation. And lots of that money is invested in shares. The ordinary punter gets no say over how those shareholdings vote. Who do they vote for? The crowd that controls that money. Because it is other people’s money, those controlling that money really don’t care. There sole concern is how they can ladle some of that money into their own pockets. They do that by voting each other on to boards, and giving each other generous pay and bonuses, and generously using the share-owners money to lobby and bribe politicians, contributing to their campaigns, and ensuring that politicians don’t interfere in their activities. That’s the way the world works. That is why one per cent is screwing over the ninety-nine. Unfortunately, too many of the ninety-nine are too dumb to see what is happening.
@Ikonoclast
Yes. The Germans have an interesting board structure which means the interests of workers actually get represented in the decision making process. Maybe they have something to teach the arrogant English speaking world. As difficult as it would be for some in that world to believe.
@Time4Change
When management treats their staff like dirt and staff start to hate their job, staff cease to have any loyalty to a company that clearly has no loyalty to them and shows by its actions that they consider them disposable. In those circumstances, pride in their job, pride in their work, will start to suffer, so will service. The focus of modern management today is not on customers; the main focus is about being creative in dreaming up ways of justifying a large bonus for themselves and jockeying for position to move up the corporate food chain. Actually doing their job, let alone doing that job well are completely secondary. This managerialism has transferred across from the private sector into the public sector as well. Increasingly over the years, senior public servants who did have a public service spirit, tried to do a good job for the public, and tried to serve the public good, and were proud of their professionalism, have been replaced by a new modern managerial class whose only interest is “what’s in it for me”. Increasingly, “What’s in it for me” doesn’t include doing their job, because doing their job is not how they got their job and is not how they are going to get their next one. The whole system only seems to be surviving because, there are enough ‘suckers’ left who actually care and are still silly enough to have ‘integrity’. Those fools will eventually learn the error of their ways and the system will collapse. Assuming that we are not already witnessing that collapse.
@Freelander
The structure of trade unions is also different in parts of Europe. I suspect we could learn much from them regarding that also.
@Ikonoclast
So as not to leave a misleading impression on this widely read blog, I’d like to note that my interest in and knowledge of corporate law is very limited. It came about when I developed and taught corporate finance classes. The divergence between underlying economic theoretical models and observable reality (not requiring any specialist knowledge) became very obvious. Jaque Dreze did some interesting work in this area in mathematical economics.
If you want to get an insight into contemporary management education outside a Faculty of Economics, I suggest you get hold of some books on ‘strategic behaviour’ and ‘strategic management’ (now there are even books on ‘strategic human resource management’ and on strategic finance – strategic lunch next?) Compare the content of these books with game theory books and imagine the former are taught by people with a background in some humanities other than economics. Let me know whether or not you think this is a worry.
Also, enterprise bargaining and the devolution ‘policies’ enhanced the corporatist power – IMHO.
IMO, the main contemporary problems can be discussed without using the word ‘capitalist’. This might be helpful in the disentangling of the various spin operations (or honest confusions). For example, most people I know don’t object to someone who made a very profitable invention becoming ‘rich’. Similarly, I have yet to meet a proverbial cleaner who objects to being paid significantly less than a medical practitioner or an architect or an engineer. The label ‘corporatist’ and ‘financial capitalist’ seem to me more appropriate at present.
In light of the foregoing, Alan Joyce is doing a responsible job as a minion despite his personal high educational achievements (math and physics).
One thing worthy of study is that in parts of Europe they have eschewed the adversarial approach still so loved in the English speaking world. Of course, Europeans have had more experience of the consequences of extreme adversarialism during two World Wars. The English speaking world has been lucky enough to have escaped fighting on their own land for quite some time. For the English speakers most recent wars have been wars of choice, and some could even have been described as recreational. Certainly never a recreation when a war happens on your own land.
N@Freelander possibly more an expression of loss of identity?
Try this experiment- instead of blaming super funds for eating into your nest egg try running your own. It’s quite simple, you just set up up your SMSF.
As they say, thats when the rubber hits the road. To make money you have to go against popular opinion, you have to form and ave confidence in your own and drive a stake into the ground. Then it gets interesting.
switched to star alliance 4 years ago
Anyone who didn’t see Qantas going busto from a long time ago has their head in the sand on a number of issues; peak oil, EROEI, bad management from Dixon-era and before, a safety record that is increasingly compromised. Most people on this site are still in denial on the first couple of these points.
To go back to the original question, does it make sense? It looks to me like a win for Qantas management who have had the protected industrial action banned (not suspended as requested by the unions) and 31 days to a settlement. So yes, it did make sense.
Especially as FWA cited the broader interests of the tourist industry, according to media reports.
@2 tanners
From events thus far the obvious conclusion is that the lock out tactic has delivered and management is thus vindicated in it’s decision. Mean while the government has egg on it’s face.
@rog
I am not blaming super funds for eating into ‘my’ super money. My super money doesn’t depend on those funds so my critique has nothing to do with them eating into my money. However, the fact is that there is a massive accumulation of funds in insurance reserves, and in super funds, and in reserves of various kinds. Those funds are held in trust for others and are invested with various people taking a significant cut off the top and giving themselves undeserved bonuses and pay rises and seats on boards and so on. And when public companies hold AGMs those institutional ‘shareholders’ who are not the owners but are supposed to be working for the real owners interests, will vote. They vote and of course they vote for their own interests which are not the same as the interests of the real share-owners. A great example of that was the Qantas AGM where the shares that were directly owned voted one way and the ‘institution’ shareholders who only stand in for the real owners voted the opposite way. Forty years ago shareholding was not dominated by these institutional ‘shareholders’ and that today these ‘shareholders’ dominate is one reason for the massive failure of governance that has taken place.
By the way, anyone who has been holding Qantas, or Telstra in recent years and admits it, is twice a fool. If you are/were foolish enough not to have ditched both long ago, you ought not to be so foolish that you admit to the error.
@rog
By the way, ‘rog’, the rules that constrain self-managed super do not leave much room for driving ‘a stake in the ground’. And owning shares in a public company nowadays rarely provides a vote that is ever going to make a difference, unless, of course, you are a billionaire. When as a shareholder your vote will never make a difference, the CEO and executives, nominally your employees working for your interests, can just ignore you. And being ignored is the regular experience of most of those who do own shares directly.
@Freelander
Nice to see somebody enthusiastically sticking up for the owners of capital.
@Freelander
SMSF – it’s easy enough to set up and if you can write a financial report (balance sheet and income statement) there’s only really the audit costs and annual ATO costs to pay
it does however give you much better control over your funds – because if you set up your Trust Deed properly you can pretty much turn on a dime which you can not do if you are stuck with the limited and very slow to change choices that most funds provide
for anyone thinking of it do your homework first and understand that accountants and lawyers will take you for a $5K ride (for doing virtually nothing) if you let them
and yes, you no longer have to worry about the fact that whatever happens to your savings in a fund the people who work there all get to keep their paychecks and bonuses
as for voting with your shares – forget it – shares are not for holding – they are for trading tactically and like anything you want to grow they need to be tended daily – pull out the weeds, provide nutrients here and there, keep the pests away…..
pop
This is brilliant; Idi Amin certainly nailed the look but it sounds like El Presidente had the whole package; casting aspersions on the sexuality of your opponents via legal tender is classy stuff.
The Peak Oil Poet, you seem to have a very interesting mental model of how an economy works. Not sure though whether or not it is a model of an ephimeral economy which starts immediately after ‘money’ has been issued by an outsider – say an MMT agent via shares in Wall Street banks – and stops shortly after dinner time or, at the latest, a few days later when the last two traders die due to starvation.
Terje, you also seem to have an interesting mental model of an economy. How would you classify an individual who owns equity shares (ownership of capital in your model) in company XYZ and he or she is an employee of XYZ? Suppose this individual gains $.11*5000 financially in his role as a shareholder the day after he or she has been made redundant due to cost saving measures by the management of XYZ. His wage is, say $1000 after tax and he will be unemployed for an unknown number of weeks in ‘the global economy’ and permanently unemployed in the local economy. How does this example fit into your model and under what category label would this individual live?
EG – I would classify them as an unemployed owner of capital. It fits into my model quite readily. There is no problem with people being sellers of labour and owners of capital.
Verrender claims that it isn’t Joyce its the board and the stoush is ideological. http://www.smh.com.au/business/qantas-dogfight-prelude-to-real-war-20111031-1ms37.html
@rog
I think Verrender’s article sums up the state of play very well. Essentially, Mordor (corporatist capital) wants a final war to utterly defeat Gondor (workers and democracy) and cover all the earth in a final darkness (climate change, mass extinctions etc. etc. ). The detail they have overlooked is that Mordor collapses too.
@Ikonoclast
Yes. That about sums it up except that Mordor and the corporatists are using capital but most of that capital is other people’s money Gondor’s money as you have it. The component of capital that Mordor has is simply Gondor capital that was expropriated at some earlier date. It is ideological minus any logic. Just more libertarian craziness with them trying to create a world where they as Nietzsche inspired supermen will end up ‘fairly’ with everything due to their innate superiority. A heaven or a utopia on earth. Libertarians like to see themselves as life’s ‘winners’ but when they don’t win they are immediately life’s whiners blaming big government, unions, workers, regulations, red tape, the bureaucracy, the dog ate their homework, whatever for their failures. Assailed on all sides by the injustices of the world, they are the Atlases who can shrug, the Randian heroes. But to the rest of us, we can identify exactly what they are. Not heroes but a#holes. Sociopaths with no redeeming features. Simply more evolved forms of parasites. Parasitic bloodsuckers in human form.
@Freelander 19
Would not progressive high marginal tax rates stop this, even confiscatory 90% level?
No manager would raise their salary and bonuses above confiscatory level. They would be forced to leave the cash for workers and investment making the corporations lean and highly profitable. That would also shift the manager’s focus from “me, me, me” to how to get a positive fame of good management. Then there is a problem where shareholders are corporations themselves.
@critical tinkerer
Quite right. If there were a high marginal tax rate they wouldn’t find it so easy to make themselves rich overnight and they then would have to consider what might happen to the company because their golden parachutes would have become rather leaden. Also, at least if they gave themselves large pay days at their shareholders expense most would go to the state’s coffers which should allow either better service provision or a reduction in tax burden on those who actually do the work.
Australia has a very comfortable little clique of interlocking directorships and rather tame completely domesticated ‘independent’ directors who are so honour that the club has given them a seat at the table (or is that a pew at the trough) that they wouldn’t even dream of questioning the insiders’ decisions. Look at the Qantas board. No resignations. No public statements questioning management’s moves. No doubt a unanimous vote. A quick Saturday rubber stamp, take the director’s cheque and off to the pub for a drink or the links for a quick round of golf. With that crowd its all getting on by getting on. Make no waves and you guarantee continuing to draw your obscene pay. If you do your job, as, for example, recently the Ombudsman had the temerity to do, well its out on your ear. Management and governments depend on independence. They have no end of independents ‘scrutinising’ what they are up to, no end of independent reports coming to predetermined conclusions. But if those poor souls dare do their job, then they are no longer dependable and find themselves quickly replaced.
I have been asked elsewhere why I am critical of the government for not intervening earlier when I normally advocate free markets and claim that governments should not intervene in the market. This is in my view a vitally important question and one that free marketeers need to take seriously and answer clearly.
“Protected industrial action” is basically a legal right to breach your employment contract without the other party to that contract having legal recourse. In so far as the government has used legislation to create this unnatural right and disarm employers it has a high duty of care to ensure alternate remedies exist or to reinstate the means to self defense when the situation is being abused. It has effectively done this now however not before considerable harm was done. Removing “protected industrial action” status is in my view not so much a market intervention as a restoration of normal contract law. Not in a pure sense but sufficiently to make the case. The government was not late in intervening in the market, it was late in withdrawing from the market. Again not in a pure sense but sufficiently to make the case.
@Terje
The government was not late in intervening in the market, it was late in withdrawing from the market.
What kind of anarchy do you want? Even Somalia has some form of government with its effects on economy, even tough very random and spotty government. In the whole history of market and government, government have a role of setting up and enforcing the rules of the market. What kind of history did you learn in school? You show total lack of knowledge and reality based perspective
@TerjeP
The government was not late in intervening in the market, it was late in withdrawing from the market.
My first response to you might be moderated away, so i want to ask you. Why did government start to intervene in the market in the first place?
It thinks employers have too much negotiating power and that legislation protecting certain types of industrial action is required in order to provide balance.
@TerjeP
When did that happen first and why did government “think” that
Was there riots in the streets at the time? Was there a revolution in information speed and philosophical thought at the time? Was there a threat of communis|m at the time? What made government “think” that they have to provide balance?
Terje,
the employees could have gone on strike on legislation going back to almost Federation.
the Government had no nned to intervene. If Qanatas management do not knoe how to negotiate then they have to learn.
@TerjeP
Well, unfortunately it’s not too hard to see the sarcasm there. The Qantas Pilots haven’t been taken a strike since 1966; all of a sudden, after 45 years they realise their right and start abusing it when the unions are much more powerful and the labour market is much more regulated back then and 70s-80s? Thats makes a lot of sense.
Also if you don’t see the imbalances of powers of negotiation in a free market economy then you are being too ideological. In the real world assuming the market is free, no matter how harsh the employment condition is one will have an inertia to refuse because they need to work to survive in the modern world. In the reality one can not survive without shelter (maybe they can sleep under bridges as a substitute in a libertarian society) and food which can only be obtained via money (meaning one have to work).
You have argued in previous comments in other posts that in your ideological society is the government would only provide minimum laws and zero interference with the market/economy. This would mean that all employment conditions will be based on “volunteer goodwill”; but how can you believe in that thinking the employers will have those “volunteer goodwill” when you fail to see the goodwill of the workers to contribute to their company and thinks that they are abusing their rights when their powers are much weaker than of the employers’.
In the end, I suggest you should think about this contradiction before setting your mind on an ideological society. Also if you have extensively studied economics along with a degree relating to business without biased opinions; you should be able to see that some business goals conflicts with macro-economic growth/stability. One easy example of that would be the reducing labour cost of lower/middle class workers (not through ways of improvements in technology leading improvements in productivity) will reduce the consumption demand of the economy because their MPC is greater than of those are that substantially wealthier. A larger proportion of income of the wealthier will be used on investment; in theory this will create economy growth, but if the income inequality continues to grow some of these speculated bubble investments will collapse due to large falls in demand such as we are seeing now in the housing industry in America.
Looks like managers like Joyce and his backers want a return to feudalism, only then might they consider the workforce ‘flexible’ enough. As for overpaid CEOs? Not a lot of ‘flexibility’ there. The strong message is do what I want TINA – there is no alternative to be offered or negotiated. Plenty of ‘good faith’ there.
Tom@45 – the ‘volunteer goodwill’ thing doesn’t even merit the title of wishful thinking.
Of course there’s an imbalance of power between labour and capital, but moreover there is a structural fissure in capitalism; wherein competition on the supply side depresses the demand side.
The *only* way markets can be saved from themselves is by measures such as organised labour and to a greater extent, good regulation.
@Dan
Good Post. There is a serious assault on social cohesion in the west that has been underway for over thirty years. The vast majority of the population whose wealth and income have progressively been harvested more and more ruthlessly for the sole benefit of the already rich are becoming mightily unhappy about the process. Society, property rights, the whole structure, relies on its existence on an implicit social contract between all parties involved. Those property rights only exist by consent and with the long withdrawal of reciprocity that consent is likely to also be withdrawn.
@Tom
Tom – there is plenty of fertile ground for disagreement. My main point was merely that this decision to terminate protection for industrial action is not necessarily an increase in market intervention. The intervention was dictated via legislation long ago. The question in my mind when I answered the question was about how do we characterise this action as opposed to how we judge this action. Whether we judge the action good or bad is an important but slightly different question.