That’s the title of an article I published in Independent Australia last week. An important part of it was support for the German Kurzarbeit scheme, which pays most of the wages lost by employees when working hours are shortened due to the recession.
There’s a striking contrast with the push by Josh Frydenberg to allow employers to cut hours and wages at will. It’s pretty clear that the days of “we are all in this together” are fast disappearing.
John Quiggin 
I couldn’t locate the linked article.
The recently introduced jobkeeper scheme is a version of the Kurzarbeit insurance system. The former is completely financed out of tax revenue while the latter is a comulsory insurance scheme into which employers must make social security contributions. (This feature of industrial relations and taxation mitigates the cost of a downturn of business conditions being borne by the workforce, much more so by some than by others, for the benefit of shareholders and managers. It also assists businesses in continuing to have customers!)
In contrast to the GFC and other previous recessions, the Kurzarbeit insurance funds available were insufficient to cover the short-work requirements during the pandemic and the government therefore supplemented the funds. Furthermore, other changes to the system were made regarding qualifying for the scheme:
https://www.bmas.de/SharedDocs/Downloads/DE/kug-faq-kurzarbeit-und-qualifizierung-englisch.pdf?__blob=publicationFile&v=5
The Kurzarbeit insurance system is yet another example of the inadequacy of comparing corporate (business) and individual tax rates internationally.
We would do well to study the nations who handle the pandemic crisis best and those who handle the associated employment crisis best. These groups may only partially overlap. We need to take the best ideas (proven empirically in this crisis) from all over the world and use them in a suitably integrated fashion. This would be the empirical and non-ideological approach (within approximately the current paradigm). But it seems that this is something which is to hard to do for neoliberals like our LNP, who are wedded to their “Zombie Economics” ideology.
The Kurzarbeit insurance system sounds wise. I am in general completely in favor of national pensions, national benefits, national super and national health insurance. The empirical evidence is heavily in favor of this approach for improving equality and economic and social efficiency. National (or state) regulation is also required in a large number of fields. Self-regulation and industry self-regulation work poorly and default to “regulation by litigation”.
I have been hit by this latter problem (“regulation only by litigation”) recently where I lost a low five-figure sum to a dishonest “cowboy” in a poorly regulated industry. More fool me, I signed an inadequate contract, which contract I have since discovered may well have been illegal as offered to me by the contractor. However, i decided to break the contract by agreement and to not litigate as that would likely have thrown good money after bad. I can survive this loss essentially unscathed. Many in our society could not. The poor and working poor need to be protected by strong and extensive local, state and federal regulation plus national schemes are mentioned above. The days of deregulating and privatising for the capitalists and cowboys HAS to be over. I know I vow to be a pain in the ass to my local, state and federal members for the rest of the term of my natural life: I have never written a letter to a member in my life before. No more Mr Nice and Passive Guy anymore! Though I never went to church! 😉
If I work hard I may finish at 9:00 pm. But considering I am already leaving comments on the internet it looks like I may be here until 3:00 am. I suppose we could ban the internet and crank work hours down to a reasonable 55 hours a week, but where would we get our cat pictures from?
This should do it:
https://preview.tinyurl.com/y2aljvp4
Thanks J-D
“For more than a century, the workers had the best of it.” – J.Q.
John,
I guess you make this claim in relation to work hours only; but even in that application it is a bit hyperbolic. Workers, at the very best, had a fair deal with the 40 hour week; certainly not the better of it. In other aspects, many jobs left much to desire in terms of health and safety. Speaking as a person who worked in the 1970’s as a farm laborer, tractor driver, gravel quarry pit laborer, loader driver, toilet cleaner and even at the James Hardie fibro factory at Pinkenba (covered at times in fibro-asbestos dust) I can tell you I do not consider that I had the better of it back then. No wonder I went looking for a TEAS funded humanities course (looked like a nice bludge at the time) and then a job in the Federal Public Service. And back then one had to put with people smoking in the office! Side-stream smoke all day. Bloody wonder I’m still breathin’. 😉
Only thing I didn’t have to do was sleep in a hole in the road. (Apologies to Monty Python.)
Stiglitz’ famous efficiency wages theory does not just imply equilibrium unemployment, it implies equilibrium excess working hours.
My complaint about the theory is that both sides to an employment contract wear blindfolds. The employer does not know if the worker is conscientious, the worker does not know if her future employer is honest and intermediate supervisors decent.
James Wimberley,
Hence the need for heavy regulation of capitalism and then finally the abolition of capitalism. Capitalism is unbearable to humans fully exploited by it and unsustainable in nature. Nature is already saying to capitalism, “This earth ain’t big enough for both of us.” Nature will win. Have no doubt about that. To co-exist with and within nature humans must obey nature.
Robot tax too please.
Independent Aust article. Link: https://independentaustralia.net/business/business-display/now-is-the-time-to-reduce-overlong-working-hours,14125
“Going to a four-day, 32 hour week would require a further 9% reduction in hours. But some of this would be offset by productivity improvements and the rest would represent only a partial offset to the wage stagnation of recent years.”
Fair enough, but what of the woolies warehouse workers displace by ‘automation’? How many robot minders. As Bill Gates said – tax the robots.
This is not utopia. ABC re:
“They resent the fact I’m not a robot’
“At Amazon Australia, warehouse staff are constantly timed and monitored as they pack goods under instruction from an algorithm — all so you can ‘buy it now’ and get it tomorrow.
” Instead, workers have told ABC News:
– the workplace is built around a culture of fear where their performance is timed to the second;
– they are expected to constantly work at ‘Amazon pace’, described as somewhere between walking and jogging;
– high-pressure targets make them feel like they can’t go to the toilet and sometimes push them to cut safety corners;
– they can be sent home early without being paid for the rest of their shift when orders are completed;
– everyone is employed as a casual and constantly anxious about whether they’ll get another shift
https://mobile.abc.net.au/news/2019-02-27/amazon-australia-warehouse-working-conditions/10807308
“Advancing the Debate on Taxing Robots
“The idea seemed so farfetched that I didn’t really take it seriously, but over the last couple of days I have changed my mind. What changed it for me was a debate at the Emtech NEXT 2019 conference, put on by MIT Technology Review.
“One session at this year’s conference was a debate on robot taxation. It was anOxford-style debate; the proposition being debated was “This House believes a robot tax would help solve the problem of jobs being lost to automation.” Arguing in support of this resolution was Ryan Abbott, a law professor at the University of Surrey. The opposition position was argued by Ryan Avent, an editor and columnist for The Economist. They became known as “pro-tax Ryan” and “anti-tax Ryan.”
https://www.forbes.com/sites/tomdavenport/2019/06/13/advancing-the-debate-on-taxing-robots/#262a453325a4
Iko,
looxury.
Iko: The information problem highlighted by Stiglitz is inherent in the employment relationship. It applies just as much under socialist ownership. My local hypermarket, Eroski, is a Basque worker cooperative. It faces the same incentives on new members as capitalist competitor Mercadona (also a decent employer) does on new hires. Socialists often don’t get the human condition
The excess hours mechanism on the employee side is the same “better the devil you know”. The employer prefers to pay known good workers overtime than to take a chance on new hires. The worker accepts the deal partly because a different employer could easily be much worse.
Well, it’s just past 5:00 am and I have just finished work after coming into the office at 9:30 am yesterday. Why the 19.5 hour day? Well, I’m not very good at my job. Always, since I was a kid, I’ve had trouble focusing. If I only spent 8 hours a day on work I’d probably be unhireable. The ability to out hour those poor fools with families and the need to sleep 8 hours a day keeps me employed.
Hardly working class man,
Not smart. Very few people are productive beyond 8 hours. Quite a few are not even productive out to 8 hours. When over-tired you can spend hours trying to debug a computer program and fail. Sleep on it, wake up refreshed and have a good breakfast with a good cup of coffee. You will likely debug the program in minutes, not hours. I’ve experienced this myself. It’s real.
Most O/T beyond 11 hrs (8 standard + 3 OT with appropriate meal breaks) is a complete waste of everybody’s time and money.
James Wimberley,
There is no need for an employment relationship as you envisage it. Workers’ cooperatives should properly work for 4 days and everyone comes together to make management decisions on the 5th day. No need for any managers or management hierarchy whatsoever. All equal. All owners. All workers, all managers. Technical hierarchies will still exist but that is something different. Things wont be perefect, nothing is with humans. And some worker cooperatives will self-destruct just some businesses today self-destruct or go broke. But the net result will be better than capitalism.
It’s actually capitalists who don’t get human nature. They believe everyone except themselves should be exploited and screwed. They want to dominate and control. It’s all about their power and wealth and nothing about anyone else. They care about no other human except themselves. They are remorselessly selfish. And they wonder why people aren’t happy with the oppression and exploitation they dish out.
When capitalists have things their way they run slave systems and/or criminally corrupt systems. Every time, everywhere, every place, they do this same thing unless they are strongly controlled by democratic government and regulation. Witness historical slavery under early capitalism. Witness the Apple Foxconn scandal in China. Witness the Saipan scandals. Witness the Paradise paper. Witness the LIBOR rigging scandal. Witness the scandals in Australia (you might not have heard of these): to do with banks, nursing homes, tertiary education, plus under-paying of workers by $100s of millions of dollars, plus buildings with unsafe cladding and cracking structurally. All uncovered in the last decade. All occurring under privatization and deregulation which gave capitalists the right to do what they like. It’s a coast to coast disaster even before COVID-19.
Capitalists are unutterably corrupt exploiters. All of them. They are ALL moral criminals and most are legal criminals too. Capitalism promotes the worst of the worst to run our society with money, exploit others and destroy the earth.
The problem more generally is the power imbalance – workers find it hard to fight both government *and* employers to get decent conditions. The sarcastic take is that in a free market when there’s excess demand for labour wages go up, but nowadays we have the government preventing that. So there’s the annual “who will harvest our crops” outcry, now made worse by the pandemic.
And somehow the “essential workers” haven’t been getting pay rises (except in NZ to some extent), but shortages of them have definitely made the pandemic worse (understaffed retirement homes, for example, and notoriously the cut-price quarantine facilities in Victoria).
Prof Q’s suggestion that hours be cut doesn’t work when the people you’re trying to help are casuals with legislated hourly pay rates (the minimum wage, as a rule). The obvious limit here is to mandate that no-one work more than required to get them $1 above the poverty line. Suggesting that salaried workers do fewer hours might easily end up with even more people becoming “independent businesses” as their employers switch to dictating the work to be done and requesting that they submit tenders to perform it. Business owners will presumably be exempt from any restriction.
But given the neo-feudalist government we have that might be the least awful option.
Ikonoclast, as my weariness increases my ability to be distracted decreases, so my ability to concentrate tends to increase the longer I go without sleep, up to a point.
Can’t help thinking your productivity must be enormous Professor !
Iko: your four-day collective is fantasy. Eroski is not a big operation by the standards of modern retailing, but it has 35,000 workers and €5bn in annual sales. I don’t know how they manage the tension between full members and contract employees. For more, look up Mondragon, the framework cooperative of which Eroski is a part. It’s faced and overcome serious problems in the past, the latest of which was the failure of the Fagor stove company.
PS: The stores are open six days a week, like those of their competitors. Spain still holds out against Sunday shopping.
“The program was introduced as part of Germany’s successful response to the Global Financial Crisis. Although it was an emergency measure, it has been maintained in operation ever since. Conditions have been relaxed and eligibility expanded in response to the pandemic.”
That is not correct, kurzarbeitergeld exists since forever. German Wikipedia tells me its precedessors dates back till 1910, and it exists since 1956 in its current form.
James Wimberley,
Your view that capitalism is sustainable is a fantasy. Capitalism is collapsing right now before your eyes but you clearly cannot see it.
1. I second hix on the history of Kurzarbeit in Germany, using information independent of wiki.
2. I agree with James Wimberley regarding asymmetric information on both sides, employees and employers, and among members of a cooperative. I’d like to add that the USA preferred method of ‘hire and fire’ isn’t going to solve this problem, except perhaps in extreme cases of incompetence or some form of criminality and assuming it does not involve the top of management.
3. For discussion purposes, it seems to me requiring employers to into a jobkeeper insurance scheme instead of increasing the superannuation contribution is worthwhile to examine in detail regarding the benefits for employees over their working life, particularly that superannuation returns are tied to financial markets.
Correction.”… it seems to me requiring employers to PAY into a jobkeeper … “
The problem is the employer – employee paradigm itself: the owner to wage slave relationship. That has to be radically superseded, as indeed do money and capitalist ownership in the long haul if civilization is to survive. It is true that competence, honesty and dependability cannot be superseded. However, it is possible to jettison the employer – employee paradigm while keeping a watch over competence, honesty and dependability and even over differing true levels of capability.
Private ownership must not be permitted to extend past consumption items and possession of items up to and including a house, apartment or unit of reasonable size. Personal ownership of fortunes, companies etc. must not be permitted to extend past a total per person amount equal to the value of two houses of median size and quality. Things should not be judged or valued by money as money is a false social-fictive dimension. A better method must be found.
All other ownership should be state or by voluntary collective self-association. A whole new suite of socialist laws and democratic socialist precepts would be required. Those who cannot envisage progress beyond capitalism are like those who once could not envisage progress past feudalism.
There is no excuse now for that lack of imagination. Our “socially imaginary significations” and our potential social-ideological constructions and ideations are much greater in the modern world due to historical and comparative studies, multicultural insights and the modern self-reflexive critical capacity in relation to our own ideological and social constructions. To show this lack of insight today is to show a lack of reading and research, or too great a specialization into received subjects in the (bourgeois) economic arena or a wholly conservative bent which cannot see beyond the extant; just like the proponents of the Ancien Regiem. There may be other reasons including a skepticism about human capacity or nature. However, if capitalism is the best that humans can do then it is tragic; including for the reason that it means we will definitely fail to save the habitable biosphere and we will go extinct.
Okay! I’m back at work and today I swear I’m going to stay focused and get my work done during office hours and be home by six. I will stay off the internet and… oh crap.
Robot tax please.
“Japanese construction giant to build massive dam almost entirely with robots
…
“The company calculates that, even after all its robotic and automation technologies are implemented, productivity increases by about 10 percent.
However, that is mostly because, at the moment, a relatively large number of human workers are still on site to closely monitor the robots, and step in if necessary.
Ten percent is still a significant amount if you are talking about a multimilion-dollar dam project, but in the future, the productivity gains will be even bigger, according to a Obayashi representative.
Akira Naito, head of Obayashi’s dam technology unit, told Nikkei: “Eventually, we may be able to cut building time by 30 percent.”
https://roboticsandautomationnews.com/2020/07/24/japanese-construction-giant-to-build-massive-dam-with-robots/34428/
I also saw but can’t find link, mini drone – palm size – able to flock, avoid, fill in for diwned drones, and act independently.
Goal: 1,009’s to build or assemble any physical infrastructure.
E G… Bunnings – Yes we will lay all bricks too. 2-5yrs as technology renders this capable now.
Iko: Where did I say that the current model of capitalism is sustainable? It clearly needs more than a paint job. The Chicago recipe of making markets work better has flopped: “flexible labour markets”, unrestricted capital flows, shareholder sovereignty, and high-frequency trading have just made matters worse, while the Coase solution to externalities through property rights is a pipe dream. On the other hand, capitalism has been in crisis before, and the last Keynesian fix at Bretton Woods is only 75 years old. Covid offers an accidental dry dock for a thorough overhaul.
We differ on methodology too. I suggest looking closely at outlier businesses that survive on a non-Chicago model, in spite of laws like limited liability that favour stockholder capitalism. Real live cooperatives like the Mondragon group are one. Another is the 3,000-year-old patrimonial firm. My take on these from 2013 still fits I think: https://www.samefacts.com/from-phlebas-to-ikea/ The €30bn Mulliez family retail empire flourishes. If there are bitter disputes among the 250-odd co-owners, they are well-concealed, and though there are inevitably idle wastrels in such a large clan, their misdeeds at Gstaad do not make the headlines. Dunning-Krueger is a bigger problem; they must have an effective mechanism for easing out clan members who think they are talented managers but aren’t. I suspect strategic exogamy is part of the recipe. They will hire bright graduates from HEC, and expose them to eligible young family members, who know where their duty lies.
China seems disappointingly unoriginal in developing new models of corporate governance. Post-Deng, they seem just to have copied the US. No doubt, with the Confucian family culture, there are far more companies that look like the Mulliez ones than Mondragon. BYD seems a good counterbalance to the deplorable Foxconn. Its California electric bus plant is unionised (after a fight, but contrast Tesla). The billionaire founder and boss, Wang Chuanfu, eschews Elon Musk’s personality cult. BYD USA offers jobs to ex-felons, which is not standard practice. Companies like this that on the whole treat employees decently and sell sound, reliable products at a fair price have a Darwinian advantage. https://www.forbes.com/sites/russellflannery/2019/09/18/the-businesswoman-behind-the-wheel-at-a-model-chinese-employer-in-america/#1c4bdcbb5dfe
James Wimberley,
Capitalism is theft. Patriarchal capitalism is not the model we need to save people or the planet. If you haven’t been a member of an exploited class or country (temporarily or permanently) then you will simply have no idea of what happens to people at that level. It is impossible for you to conceive. You will not understand the levels of exploitation, deprivation and misery, nor the ways the imperial boot is always on the neck. You will always have the unenlightened viewpoint of an over-privileged person from an over-privileged class in a over-privileged country.
The West (my home too) was built on 500 years of slavery, theft, rapine and plunder. These were and are the very warp and woof of our entire system and all our wealth. If there was a god we would all be condemned for we are unrepentant and we worship nothing but money.
https://www.aljazeera.com/indepth/opinion/britain-stole-45-trillion-india-181206124830851.html
Anyway, Karma is catching up with the West. The West is collapsing and failing faster than the East. Of course, all will fail while they pursue capitalism and endless growth in a finite system. Complete collapse is absolutely certain under capitalism. That’s not the same as saying some other system can save the earth. I don’t think any system can save it now. Too much damage had been done. However, we should try and the only chance is a radical departure from capitalism to full democratic socialism.
James Wimberley’s appeal to reason and observations rather than relying on words such as ‘capitalism’, ‘socialism’ and other ism words makes sense to me and I appreciate such contributions.
Ernestine Gross,
I understand you why you say that but I do disagree for well thought out reasons. I think you know I am not just a knee-jerk reflex anti-capitalist (though I may seem to be one at times). There is more to my thought than knee-jerk reflexes. I am a systematic critic of capitalism from a complex systems science, empirical ontology and priority monist philosophical perspective. At the same time, reason, passion and even justified anger are all required at the proper time and place. There are certainly limits to my my tolerance of specious arguments: arguments which are objectively and demonstrably false.
I did not mean to make an ad hominem attack on James Wimberley and if I have done so I apologize. However, a patronizing and condescending “it’s not realistic” about democratic socialism simply does not wash with me. I will contest such statements vigorously. I worked in dangerous occupations, early in my adult life, and I saw the cavalier approach of overseers, bosses and owners to workers’ health and safety and also their overall exploitative approach to workers. There is a deep well of grim anger in me and I will never forgive and forget certain things. I saw a bit of what capitalism, all capitalism, is about when it is not properly moderated by social, democratic and scientific values. Nobody from any elite gets to talk down to me anymore. That’s my position. I will vigorously contest everything I disagree with.
The word “capitalism” does have content. I still don’t fully understand your denial of that. Of course, the content of an extensive and ramifying concept is complex. Capitalism is only adequately defined by large tomes on the topic and their various views and pictures of it. A considerable amount is contested but a base definition is possible. Also, if excluding “ism” words is to be de riguer, then a whole host of other words must be excluded as meaningless and content-less also:
“ocracy” words like democracy, theocracy,
“ology” words like ontology, epistemolgy,
“ity” words like Christianity, (which strangely escapes being an “ism” word like Buddhism, and
“phy” words like philosophy.
I could probably go on. I could make an argument (again) in the Sandpit for “capitalism” as a word with content but it might be a waste of time. Capitalism is to many people living in it like water is to a benthic fish. It’s the standard medium of life and hence unperceived for lack of contrast to any other medium. Finally, there is no absolutely pure water on earth. Equally, there is no pure capitalism on earth. The fact that an existent does not exist in pure form does not make it non-existent (which often seems to be the implied argument).
Ernestine Gross: Thanks for your support. The thread has gone OT and I’ll leave it at that.
This blog is billed by John Quiggin as “Commentary on Australian and world events from a socialist and democratic viewpoint”. Thus I would think that any argument invoking democratic socialism would be on topic in any topic. Any statements that democratic socialism is “unrealistic” or that the term “capitalism” does not refer to any definable concept ought to expect vigorous push back, certainly from me (a known quantity here), and to be understood as “on topic”. If J.Q. thinks I go too far at any juncture argumentatively or personally, he will warn me or more.
Ernestine, I have great respect for your knowledge and many of your ideas. On a few points I think you are wrong and it is true that I don’t refrain from saying so very forthrightly. James, I agree with you on energy issues and sustainability, at least. There are probably many other areas of agreement.
As a mea culpa: I have not troubled to learn the academic and diplomatic arts of disagreeing tactfully. Obviously, I need to work on that.
Ikonoclast, you know that I know that you know I read many of your posts with great interest. My comment was intended to indicate that a) issues can be approached from many different angles (evidence: your and my conversations) and b) the word capitalism is attached to societies with significantly different institutional arrangements and therefore different life experiences. I agree with you, the word democracy is similarly not uniquely defined or practised.