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John Passant

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January 2009



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My interview Razor Sharp 18 February
Me interviewed by Sharon Firebrace on Razor Sharp on Tuesday 18 February. (0)

My interview Razor Sharp 11 February 2014
Me interviewed by Sharon Firebrace on Razor Sharp this morning. The Royal Commission, car industry and age of entitlement get a lot of the coverage. (0)

Razor Sharp 4 February 2014
Me on 4 February 2014 on Razor Sharp with Sharon Firebrace. (0)

Time for a House Un-Australian Activities Committee?
Tony Abbott thinks the Australian Broadcasting Corporation is Un-Australian. I am looking forward to his government setting up the House Un-Australian Activities Committee. (1)

Make Gina Rinehart work for her dole

Sick kids and paying upfront


Save Medicare

Demonstrate in defence of Medicare at Sydney Town Hall 1 pm Saturday 4 January (0)

Me on Razor Sharp this morning
Me interviewed by Sharon Firebrace this morning for Razor Sharp. It happens every Tuesday. (0)

I am not surprised
I think we are being unfair to this Abbott ‘no surprises’ Government. I am not surprised. (0)

Send Barnaby to Indonesia
It is a pity that Barnaby Joyce, a man of tact, diplomacy, nuance and subtlety, isn’t going to Indonesia to fix things up. I know I am disappointed that Barnaby is missing out on this great opportunity, and I am sure the Indonesians feel the same way. [Sarcasm alert.] (0)



The Australian economy – from steak to sausages

The cacophonous caterwauling from the wage-cutters’ choir continues. Acting Prime Minister Julia Gillard, channelling former Tory Prime Minister John Howard, has adopted the uninspiring and class laden mantra that one worker’s wage rise is another worker’s job.

The usual conservative commentators, politicians and economists have joined forces to reinforce the message that to save jobs workers must accept wage cuts, or more politely, but meaning the same thing,  temper their wage demands.

The Construction, Forestry, Mining and Energy Union has a claim for 33 per cent increases (over a number of  years) for boiler and turbine workers in WA and for between 5 and 10 per cent for 100 plant operators there too. This has sent the reactionaries like Gillard and various business associations and peak bodies into near apoplexy.

But the claims are so reasonable, so justifiable given labour market shortages in these particular work areas that even Sharan Burrow, the president of the class collaborationist Australian Council of Trade Unions and defender of the profit first, trickle down theory, has supported the CFMEU’s claims.

Ian Harper, the head of the Fair Pay Commission, sets the minimum wage annually for about 150,000 workers.  He has said that in the present economic environment his priority in setting the minimum wage is jobs.  He has also said that inflation this year is likely to be running at between 3 and 3.5 per cent. In other words the increase in the minimum wage is likely to be less than the rate of inflation – in effect a wage cut. This is despite the fact that last year’s large minimum pay increase had no adverse impact on employment levels for the low paid.

Not content with urging workers to accept wage cuts, Acting PM Julia Gillard also says that workers need to work harder and longer. So much for work life balance.  So much for the 38 hour week.  So much for occupational and health safety concerns.  (Work stress is already destroying many workers’ lives.) In fact Australia has the second longest working hours in a year of any OECD country.  Where are these extra unpaid hours to come from?  Out of Family time?  Sleep?

Despite that fact that the ACTU has supported the 33 per cent  CFMEU claim, it is in its view a “special” case.  In fact the ACTU has developed a cunning plan which the Australian Financial Review – the bosses’ paper – described as “pay cuts” (AFR Friday 9 January ‘Pay cuts part of ACTU blueprint’ p 3).

In essence the ACTU wants workers to accept reduced hours (with a pro rata reduction in pay) to “save” jobs. I have an alternative suggestion.  Cut the working week to 30 hours without any loss of pay.  That spreads employment further around and increases workers’ purchasing power thus increasing aggregate demand. Workers will be able to buy more goods.  I wonder why this isn’t part of Labor’s stimulus package?  Oh, because that might impact on the profits of some individual companies and industries?

And that’s the problem.  Profit is the given, the grundnorm of our society. Governments – conservative and reformist –  have as their unspoken assumption the idea that increasing profit (and for the more clever among them, increasing profit rates) is the only way to address the economic crisis.

For many bourgeois thinkers, and for employers, this means wage cuts. (I need to be even handed here.  Many workers, especially those facing job losses, will accept this “logic” too.)

Governments and bosses around the world cut wages during the Great Depression.  It didn’t work.  It made the Depression worse.

In the US unemployment hit 25 per cent in 1933.  Despite six years of the New Deal and wage cuts, unemployment was still 15 per cent in 1939, before the war with all its human misery dragged the economy out of the Depression.

Australia of late has been living off the back of BHP Billiton and the rump of Rio Tinto.  How does cutting Australian wages increase Chinese demand for our resources?  It certainly will reduce Australian workers’ demands for Chinese goods, reinforcing the recession.

So let me tell the ACTU something as they worship at the altar of profit.  Wage cuts don’t work. They don’t save jobs. They merely further redistribute the wealth workers create to capital.  But that doesn’t per se improve profit rates.

But wait, there’s more from our beloved peak union body .  The ACTU is also pushing for a retraining scheme in which workers get paid 80 per cent of their working wage to undertake new skills training.    Retraining for jobs that don’t exist is a waste and accepts the logic of lower wages, an idea the bosses will take up and push mercilessly.  Having well  trained unemployed doesn’t address the real problems of the capitalist economy.

However lower wages create problems.  First, for the 150,000 workers on the minimum wage it will mean further  immiseration, and see some of them possibly leaving the workforce to live on the dole.  That will put more downward pressure on the dole, pressure I could see this HowRudd Government responding to as part of its populist agenda. Dole bludger rhetoric could soon be back on the lips of politicians from all of the major parties.

For most other workers , for example those on the average wage (but noting that 70 per cent of workers in Australia earn less than the average wage), it will mean cutting back on spending on white goods, groceries, clothing and services like travel, eating out, and so on.  Some of that cutting back will involve switching from more expensive purchases to less expensive ones.  Our economy is moving from steak to sausages.

So while wage cuts improve the bottom line of some individual companies (assuming they can sell their goods and services and thus realise their profits) they also reduce overall aggregate demand and thus increase unemployment in some major sectors of the economy.   (This assumes that prices don’t drop proportionately to wages, a fair assumption since the driver for wage cuts is to increase profitability and price gouging is one way to do that, if the capitalist can.)

The Government has been sending a clear message with its stimulus package of $10 bn, its preparedness to go into Budget deficit, bringing forward infrastructure spending and giving pensioners and others a $1400 bonus before Christmas.  Their Keynesian response is that low aggregate demand is the problem.  Higher real wages in workers’ pockets might address that.

I say might because the supply/demand model does not identify the deeper problem of low profit rates that the global economy has.

Wages haven’t caused this crisis. According to the Australian Bureau of Statistics the wages share of national income is now 52.4 per cent – the lowest figure in over 40 years.  The profit share of national income is 28.4 per cent – the highest level since figures have been kept.

Workers seem to have made up this wages share loss by increasing their debt levels.  So the ACTU’s grand strategy over the last 25 years of what’s good for the boss is good for the worker has cut the wages share of national income and replaced further wage increases with debt.

Yet despite this historic shift to profits ( a direct consequence of 25 years of the Accord or other profit first, trickle down theories from the ACTU and most union leaders), unemployment in Australia is set to skyrocket.  The latest Internet ad job falls show an economy headed for unemployment rates over 7 per cent this year.  That’s about an extra 300,000 unemployed.  And these are the conservative estimates.  Again wages are not causing this unemployment explosion.

Could it be the problem is low profit rates, caused not by “high” wages but the very way capitalist production is organised?

In the 1920s the organic composition of capital increased markedly.  This just means that capitalists invested more and more in machinery and other capital at a rate faster than they invested in labour.  It is competition which forces them to do this as they search for ever more effective and efficient ways to make profits.

Yet since labour is the source of value, this means that profit rates will fall (if countervailing tendencies like lengthening the working day, cutting wages, increasing productivity, and cheapening the costs of necessities are excluded or are no longer viable – for example because you can’t force workers to work 24 hours a day or because wages are below replenishing value.)

It looks as if this trend to lower profit rates has been going on since the mid to late 60s.  (There may be ups and downs but the long term trend is downwards.)  For example, profit rates fell by thirty per cent between 1967 and 1981, not because real wages increased but because competition had driven the organic composition of capital higher.  The long boom after the second world war was started by the need to rebuild destroyed capital, and then sustained by the cold war and arms race which saw spending on non-productive weapons increase markedly and thus removed much surplus value from the accumulation process.  But eventually the tendency reasserted itself despite this drag on capital accumulation because arms expenditure itself is ultimately dependent on the process of profitable re-investment.

In other words, wage cuts are an attempt to redress a deeper problem in capitalism – the crisis of profitability.
Kevin Rudd is retreating into the refuge of scoundrels – he is sprouting nonsense about how we are all in this together. Actually we’re not. For a start his WorkChoices Lite is aimed at enabling the bosses almost unfettered ability to sack workers and/or reduce their wages and conditions.  There are some minor sops to unions but the bill, as even the conservative trade union bureaucracy acknowledges, doesn’t go far enough. It is bosses’ law.

Secondly there is no recession In Vaucluse or Toorak. The not so well paid CEOs of major companies – those on say a miserly ten million a year before bonuses, stock options and the like –  earn in a little over 3 minutes what those on pensions or the dole earn in a week.  The relationship between labour and capital is inherently antagonistic.  We want decent wages; they want more and more profits.

Are there alternatives? Workers didn’t cause this crisis.  We shouldn’t pay for it.  Cut their profits, not our wages.   Demand a 30 hour week without loss of pay. Strike for wage increases and against job cuts. Take over the factories, mines and other workplaces and run society democratically to satisfy human need. But that’s a story for another day.


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