With lots of legal protections for workers gone, and an openly hostile government, new strategies and organising methods are needed. Cleaners face particular difficulties working in isolated conditions and prone to all kinds of exploitation, especially as so many organisations have sacked their cleaning staff and replaced them with contractors. The Liquor Hospitality and Miscellaneous Union international campaign to improve working conditions for cleaners. You can read more about the Clean Start campaign here.
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John Quiggin 
Ernestine,
Let me start by saying that, as you would know, I am not a professional economist. I started in economics and found the partisan Keynesianism of my lecturers unbearable so I switched to commerce. I now work in banking risk management, so reading Humbolt prize winning work is not my usual area. Nevertheless, I maintain an interest in the area.
No problem with your point 1 – as I noted above, and as you and I concur, trade works on all levels, from individuals to corporations to countries and, I am sure that if and when we meet aliens and, if they are peaceful, that trade would work with them. 2 and 3 give similar responses.
4. I am trying to keep this within the confines of a blog comment – but I did not raise the ‘minimum wealth conditions’ point. As far as I can see, you did. Could you please elaborate.
5. As for ‘learning by doing what one preaches’ I do it every day when I catch the bus, walk or drive to work. I negotiate my pay with my employer in exchange for the work I do. I am not a member of a union, so I do it myself. My employer is not incorporated, so the partners of the firm, as owners of the firm, negotiate with me. If I am not happy with the deal offered, I am free to deal with another firm or go and work for myself. I negotiate with our clients to agree a fee for our work with them. What am I doing that I am not preaching?
My guess is that you meant to say “What am I preaching that I am not doing?”
Terje,
Looks like my comment on getting things wrong occasionally in blogs is pertinent.
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Katz,
Of course the theory of comparative advantage makes an allowance for the relative efficiencies of different industries being subject to change. That is the point – relative prices are constantly changing. The relative costs are expressed through the price mechanism. If country A / company A / individual A (pace Ernestine) had a comparative advantage in widget production and the price of widgets (as expressed in terms of other traded goods or services) to A changes then the comparative advantage position will change. The same is true from A’s counterparty’s position.
A then either increases / reduces / eliminates production of widgets depending on whether they can meet or beat the adjusted price.
Correct me if I am wrong, but you seem to believe that there needs to be, or is, some controlling mechanism other than prices, whether expressed in nominal currency terms or in relative good / services terms. There does not need to be.
If your comparative advantage is in producing low value added goods, then that is what you will be doing. If you try to do otherwise you will end up making yourself poorer, not richer.
Or else make yourself richer at a slower rate than what you would have done otherwise.
Perhaps I should have said “poorer than you otherwise would have been”.
AR,
You’ve overlooked the fact that I never said I denied the validity of the theory of comparative advantage.
My comments revolve around the observation that the theory has grown less valuable for prescribing behaviour.
Andrew,
I don’t agree with your interpretation of what I wrote.
You can learn about the conditions under which Ricardo’s comparative advantage result works by going to my post of 22 April on the site https://johnquiggin.com/index.php/archives/2006/03/30/rock-against-workchoices/ , referenced above.
Even casual reading of economic history reveals that the ‘gains from international trade’ are not necessarily distributed between the ‘countries’ (China versus Europe) or among the people ‘within countries’. These are two of my initial points. Another one concerned MNCs. Regarding the latter, Medicci (Italy) and Fugger (Germany) are two of several fore-runners of multinational corporations. They specialised in ‘long-distance trade’. To save space, I’ll only talk about the Fugger clan. The Fugger clan became so rich from international trade that it lent money to the King of Bavaria and graciously tore up some of the debt obligations when the King could not pay. The Fugger clan even had mercy on their ‘workers’, ‘the poor’. They built a little village, part of which is still preserved in the town of Augsburg and is known as the ‘Fuggerei’. Of course, the Fuggers wouldn’t have had to pretend to be so magnanimous and philanthropic, if they would have paid more taxes and paid higher wages to their workers in the first place. [Not sure though whether more taxes would have resulted in the poor being better off, given that the King at the time seemed to have excelled in demonstrating the notion of ‘non-satiation’, on which market economies rely, and there was no parliament and no highly educated population to provide a constraint on his (it was a him) ‘non-satiation’]. (This point justifies my post under the heading of the thread.)
Your job as ‘bank risk manager’ (or any other risk manager) would be redundant if there would be a ‘price mechanism’ such that Ricardo’s comparative advantage theory would hold for economies with technologies a little more complex than that described in the above mentioned site. Chief Financial Officers’ jobs would be redundant too because the financial decision making could be out-sourced to anybody who can put numbers into a spreadsheet and perform a few routine calculations.
I understand Ricardo’s old ‘comparative advantage’ theory was dug out during the early days of the ‘globalisation’ propaganda campaign. We don’t hear much about ‘globalisation’ these days – maybe it is just me who has found an appropriate information filter.
Incidentally, Ricardo’s ‘comparative advantage’ result can be usefully applied in some situations by managers within some enterprises when allocating work among people who each can do at least two things but not equally well. There are potential ‘productivity gains’. Another application in the present context is self-evident.
Andrew,
I don’t agree with your interpretation of what I wrote.
A longer reply is in the pipeline.
Ernestine Gross,
I take it the posts got turned around and that the longer reply is in fact the one you have posted.
I am mystified by how relevant those little Fuggers (or even the Medici) are to this thread. How the gains from trade were distributed when an arbitrary state power sought to gather them to themselves and believed in the tenets of merchantilism are relevant to a free and open world trading system is beyond me. Perhaps you can enlighten me.
I am surprised that you seem to consider the finance role within an organisation to be the role of a spreadsheet jockey. Risk management, whether credit, operational, market or the other common risks are key concerns in any changing environment, and particularly one where the prices of almost everything are constantly changing. The international regulatory framework alone is a huge concern and probably puts out more sheer paperwork in a day than a Humbolt prize winner’s entire lifetime output. Have a look at the BIS Website as a starting point on bank regulation. The Basel II framework in particular is fascinating.
Can you give me a copy of your filter? The amount of conspiracy theories put out about globalisation is annoying, not least by some of the commenters on this blog.
Andrew,
1. Your assumption about the traffic regulation in the pipeline of posts is correct.
2. Prove that distribution of gains from trade is different in a system of international trade where there are no tariffs, unrestricted capital flows and multinational corporatons and wages are market determined. (Walmart might be a good example as a background case study).
3. Your surprise is the result of you having left out a conditional statement in what I wrote. Please self-correct.
4. No. You’ll have to develop your own filter.
5. My original comments remain unchanged by the information I have received.
Ernestine Gross,
1. Cool.
2. Are you seriously contending that Walmart operates currently in an environment that has “…no tariffs, unrestricted capital flows and multinational corporatons and wages are market determined”? Of course I am unable to prove that, as you would be well aware, as no such system exists. What can be proven is that reducing tariffs, freeing capital flows and deregulating wages increases wealth and tends to improve wealth distribution. If you need a reference for this let me know and I will provide.
3. Appropriate risk management becomes more important as deregulation occurs. In a world of fixed prices and a static legal environment the need for risk management diminishes.
4. Bugger.
5. I would expect nothing less.
Andrew Reynolds,
You are providing support for Katz’ point, namely:
” You’ve overlooked the fact that I never said I denied the validity of the theory of comparative advantage.
My comments revolve around the observation that the theory has grown less valuable for prescribing behaviour.”
Andrew,
You seem to have a strange sense of proportion!
You seem far more indignant at Latham’s assault of a journalist whom Latham alleges was stalking himself and his family, than you are about our Prime Minister’s shameful role in having helped to ignite the current conflict in Iraq.
I can’t comment further on the assault charges. It seems that Mark Latham may be a flawed human being.
Nevertheless, from what I have read, so far, in his diaries, his motivations from entering politics seem to have been the best. Let’s not forget that for a year after Mark Latham became leader of the oppostion, he had this Prime Minister on the back foot. If John Howard had not so disgracefully abused the advantages of incumbency Mark Latham would most probably be Prime Minister today and, for all his faults, possibly an even even greater PM than Gough. (I have already covered much of this in another thread “Is Howard Defensible?”)
Andrew Reynolds wrote :
It appalls me that you seem to regard as acceptable a ‘democratic’ system in which the electors are deliberately deceived and manipulated by the newsmedia and by the Government itself using taxpayers’ money and in which most of the policies which the Government planned to implement were concealed from the electorate.
There is no way Howard could possibly be Prime Minister today if the electorate had been told the truth.
… and let’s not forget the original point of the thread. It is about a campaign to give cleaners decent rates of pay and dignified working conditions.
I think the support given to, or obfuscation in regard to, the most immoral political leader this country has ever had by people opposed to this campaign may be a very good indication that the demands of this campaign are just and fair.
Hi all as a cleaner and union member (LHMU) i think it’s great that this campaign has sparked so much debate from you all.
But most of you have gone off the rails. The whole campaign is about a fair days work for a fair days pay. with job security and better conditions,and changing the industry to make cleaning a respected job
Most cleaners i know are of non english speaking background and work 2 or more jobs just to make ends meet,and put food on the table.The two largest growing industries in australia are cleaning and security both contract industries and both are under attack from Mr Howards work place reforms. It’s not the unions campaign it”s the cleaners who are standing up for there rights. Instead of hiding behind you computers why not join us at the next rally on Thursday the 27 outside waterfront place 1 Eagle st Brisbane at 12 midday. You never know it might be your toilet we glue next.
Good on you, “The Cleaner”. Keep up the good work. A “fairs day work for a fair days pay” may not be politically correct anymore, but I still say it is something worth fighting for.
Please ignore the libertarian stooges who frequent this blog. They are not worth taking seriously.
How do you aim to do this? Some of the options available might be:-
1. Regulations.
2. Employer attitude.
3. Market conditions.
Its all well and good to have rallies and raise the profile of cleaners but what is the game plan.
Clearly cleaners are interested in outcomes. However others (such as myself and also probably some clearners) are just as interested in the means used.
Ernestine,
It is not our role to prescribe (or proscribe) behaviour – neither should it be the government’s, except to the extent that the bahaviour materially affects others. That is the point of being a liberal (note the small “l”, aka liberatarian). The side advantage is that this typically gives better wealth outcomes and also tends towards better wealth distribution.
James,
You are of course entitled to your view. What appalls you obviously does not appall a substantial number of Australians. Best of luck at the next election. My guess is you will need it.
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Steve Munn,
I do not, and have never disagreed with the concept of a fair day’s work for a fair day’s pay. The disagreement is about how to get it. The current, highly regulated, system has not delivered it (or were cleaners paid enough by your standards before). Why not try allowing them and their employers to negotiate freely with or without union involvement?
Andew,
Your reply to me makes no sense at all. You write:
“It is not our role to prescribe (or proscribe) behaviour – neither should it be the government’s, except to the extent that the bahaviour materially affects others.”
Why are you telling me this?
The only point of my involvement in the series of your posts was to object to your advice on a theoretical result in international trade theory, known as Ricardo’s theory on comparative advantage’.
I objected on technical grounds. That is, it appered you did not understand what you were talking about. You admitted that you don’t understand.
Andrew Reynolds, I apologise for having spelt your name wrong in the preceding post.
Ernestine,
Whilst it is not your fault if people incorrectly impute a wider meaning to your technical points (I suspect that I have done this more than once), it does not help that your points are often raised within the flow of a more general argument.
Perhaps you could avoid confusing the kiddies if you prefixed your arguments with some comment such as “I don’t wish to contest (or support) your wider argument but I would like to challenge you on the following technical point”
Or else you could just keep doing what you do and we could all be more cautious in how we read your pitch.
I think that the time shifted nature of these discussions sometimes leads to difficulties of this nature. Given that it is sometimes days between replies it is easy to focus merely on the flow of the overall argument and the latest counter points and in so doing lose track of who said what, and who is defending which position.
Regards,
Terje.
Terje,
I don’t like the “avoid confusing the kiddies” approach. It conveys an arrogance to which I don’t subscribe.
Regards
Ernestine
Ernestine,
No problem on the mis-spelling – I have no doubt you would not seek to advance your argument by childish abuse – even to us kiddies (thanks, Terje – but I am also sure that was not meant abusively).
The reason I was telling you this was that, from my reading of your post above, where you said “My comments revolve around the observation that the theory has grown less valuable for prescribing behaviour.” I read that as saying that I believe we should be using Ricardo’s theory to prescribe behaviour.
I see Ricardo’s analysis as a normative observation of outcomes – a simple mathematical demonstration of the gains from trade. It does not necessarily follow that the better economic outcome is one we should go for if there are other issues than a straight wealth outcome to consider, a point that I think many here would agree with.
Personally, I see the role of the State as attempting to maximise the ability of each individual to achieve the best life for themselves – a position that I again do not doubt the bulk of the participants on this site would agree with.
I see this as achievable through increasing the freedoms of each individual to the highest level possible through the reduction of State interference to the lowest level that remains achievable. If that also provides a better economic outcome, great. If not that is not a telling blow against it. I also believe that the work of people like Smith, Ricardo, von Hayek and the more recent writers in this area show the two are not only interlinked, but co-dependant.
Andrew,
You are quoting out of context. I wrote to you:
“You are providing support for Katz’ point, namely:
‘You’ve overlooked the fact that I never said I denied the validity of the theory of comparative advantage.
My comments revolve around the observation that the theory has grown less valuable for prescribing behaviour.’ â€?
I understand Katz’s point as:
Paragraph 1: A theoretical result is true in the logic of mathematics, given the assumptions. In this sense, the validity of a theoretical result is time invariant. Theoretical results of this nature are referred to as ‘descriptive’ or ‘explanatory’.
Paragraph 2: The assumptions underlying Ricardo’s theory of comparative advantage are not adequate approximations of empirical observations in contemporary economies. New theoretical results are available which provide better approximations of data collected during the 20th and 21st century.. Hence, policy advice, based on Ricardo’s early 19th century theory is no longer good advice for prescriptive behaviour.
I quoted Katz because by that time I concluded that you had contradicted yourself.
Now you write: “I (ie Andrew Reynolds) see Ricardo’s analysis as a normative observation of outcomes – a simple mathematical demonstration of the gains from trade.â€?
What is a “normative observation of outcomes”? I can read two meanings into your statement:
a) You don’t know what you are talking about. To put it in a form more suitable for this forum, you may have had a temporary lap in concentration. This would be a minor problem because surely everybody is allowed a lap in concentration or incidentally misuse of a few words.
b) You chose your words very carefully to say that not all observations of outcomes should be looked at. It is not clear whether you retrospectively accuse Ricardo of academic misconduct or whether you prefer to look only at data which suits your preconceived ideas.
I would not post on any of your writings if you would preface your advice to others on economic theory by telling them what you keep on telling me, namely you are not an economist but you hold strong beliefs.
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Just a reminder, the present thread is concerned with “a fair deal for cleaners� and not with your beliefs.
Ernestine,
Apologies, I got my ‘normative’ and ‘positive’ mixed up. I trust we are allowed a single phraseology error as opposed to a name error before accusations of ignorance are bandied about.
The origin of the trade discussion was with James’ comment regarding foreign workers here. He was, as far as I understood it, indicating that low worker’s pay here was due to world trade. I was, I believe, countering that. Thus far, you have not opined on that, merely discussed Ricardo’s trade theory, a discussion I was happy to continue.
Additionally, Ernestine, some of the most incompetent economists I have ever met were very well educated in economics. One of the senior lecturers of economics at the university I studied economics at may have been well educated at economics but his belief in Marxist economics and the likely success of the Soviet Union, or at worst a socialist system, brought this home to me.
As for a ‘fair deal for cleaners’ the fair deal is one they negotiate for themselves or through their union if they choose (freely) to use a union to negotiate for them. Anything else will only reduce the outcomes for all in our society.
If only educated economists were allowed to comment on economic matters this would be a very boring discussion. Perhaps you should preface your comments with everything you believe in – but somehow I think this whole commenting on blogs business would also get a bit boring if we had to do that.
Andrew,
You introduced Ricardo’s early 19th century ‘comparative advantage’ international trade theory result. I did not.
You advised James Farrell:
“If you can disprove comparative advantage I can smell a Nobel Prize for economics in your future. This was said about it, quite accurately –
“That it is logically true need not be argued before a mathematician; that it is not trivial is attested by the thousands of important and intelligent men who have never been able to grasp the doctrine for themselves or to believe it after it was explained to them.â€?—Paul Samuelson”
May I suggest, if you don’t like being taken apart on technical grounds, it might be useful not to pretend you sit on the committee which awards the Bank of Sweden’s pseudo Nobel prize in Economics.
Yes, you are right, I did not “opine” on the wages for the cleaners. The reason seems to be pretty obvious: Opinion mongering doesn’t help these people.
I do know that you have very strong opinions. May I remind you that the government has set up a commission for the purpose of deciding on a few parameter values of the recently introduced industrial relations legislation. To the best of my knowledge, this commission has not as yet decided on anything.