Chapter in Hicks, R., Creed, P., Patton, W. and Tomlinson, J. eds. (1995) Unemployment Developments and Transitions, Australian Academic, Brisbane. pp.353 –
The economic fundamentalists tell us the cost of solving unemployment is too high, attempts to lower the rate of unemployment would result in a distortion of the market, and amount to an interference with liberty. In any case unemployment may be God given, beyond our control, beyond our interest, too complicated to solve, an externality, necessary to keep at the present level in the general interest of the economy, or perhaps it is some how the unemployed’s fault.
There are those who claim Australia doesn’t have an employment problem, that unemployment is sectional – affecting only marginalised groups like the young, the old, the uneducated, those who are not job ready, people with a disability, migrants, and Aborigines.
If instead of the press bombarding us hourly with economic statistics over which average Australians have no control, we had the Hang Seng suicide series, the Dow Jones depression index, health and happiness calculations, daily social weighted index, daily job creation figures, and the Nikkei Nirvana Series we might come to understand the social and personal dimensions of joblessness and we might determine to do something about it.
High rates of unemployment have been thought due to a multitude of causes including: downturns in the economy, too many migrants, the work-shy nature of the unemployed or their lack of skills, technological change, the payment of unemployment benefits (Gregory & Patterson, 1980; Dollery & Webster, 1995; contra Manning, 1981, p.17; Patterson et al., 1983, p. 100), the nature of our society – sometimes expressed as the natural rate of unemployment (contra Omerod, 1994, Ch. 6), the rise of part-time work, women (particularly those who are married) entering the labour market, the high costs of labour, or by intentional government and industry policy.
Perhaps the problem of large scale widespread unemployment is unsolvable. Except for the period 1945 until 1973 the rate of unemployment has always been over 3% in peace time in Australia. If that’s the case, then that’s a relief we can stop worrying about it and get on with life. It certainly makes it harder to sustain the argument that high levels of migration cause unemployment. We might try to explain what does cause high levels of unemployment just out of academic interest. There is however another reason why it is necessary to look at the cause of unemployment because – when citizens come to decide who should bear the cost of high unemployment or the cost of solving it then decisions on who should pay are likely to be determined by how voters account for the creation of the problem.
It could be that unemployment is fixed by forces beyond humans’ control – God? the market? For economic rationalisers this amounts to the same thing (Pusey, 1991). Perhaps it’s just that some people are so lazy they wouldn’t work in an iron lung. If this is the answer we would have to account for the reasons why the level of unemployment fluctuates so widely – perhaps laziness is seasonal. Keith Windschuttle (1981) in his ground breaking book Unemployment discovered that many parents were more likely to believe media stereotypes about young dole bludgers than objectively evaluate the efforts which their own children were making to find work.
Some have suggested that unemployment is an economic problem, something determined by the market, by balance of trade, by cyclical downturns in business activity, and so forth. But unemployment is not just and maybe is not even an economic problem – it is a social, political, moral and ethical question. If it were an economic problem, capable of economic solutions then why have the econocrats not solved it? The highest levels of unemployment in recent times in Australia have coincided with the rise of neo-classical economics to the pinnacle of decision making in this country (Pusey, 1991). A thorough criticism of economic fundamentalism and its failure to solve unemployment is provided by Omerod (1994) in his Death of Economics.
We reached a stage a few years back when people with brain tumours no longer consulted neuro-surgeons. They took their problem to an economic rationaliser because they were so good at cutting everything and were reputed to be able to downsize anything. What they were unable to explain away or remove from the equation – they simply termed an externality: they not only had an answer to everything, they were the answer and that answer was the market, the final arbiter. In grim reaper fashion they cut a swathe through common ownership of public assets then told us we were not saving enough – they instituted policies which let private business blow our private foreign debt out of all proportion, used taxes paid by PAYE tax-payers to subsidise these borrowings, and eventually Christopher Skase got away with the lot and Bondy paid less than a cent in the dollar. At the same time they cut our public borrowings which might have let us invest in social and economic infrastructure and in jobs for our future. In order to reinforce the fact that we had missed the point on savings they instituted compulsory superannuation to prop up a corrupt insurance industry and at the same time undermined public confidence in the social security system (ACTCOSS, 1991; Pha, 1992).
If unemployment is not an economic problem but rather a political, social, moral and ethical question then being a non-economist does not rule ordinary citizens out of the debate – rather it rules us in. If we are prepared to make the social, political, moral and ethical decisions which can solve unemployment we may need to utilise technical economic tactics to help us come to solutions but we won’t need to embrace the ideologies of the current plague of economic rationalisers (contra Rees, Rodley & Stilwell, 1993; Vintila, Phillimore & Newman, 1992; Stilwell, 1993; Collan, 1993). We would not be able to ignore the costs, personal or social, which unemployment causes. We would not be able to define such problems away as externalities. We could not prolong solutions to the despair facing the jobless for years while we waited for economic recovery to trickle down from the rich to the poor. We could not, in all conscience, continue to allow people without work to bare a grossly disproportionate share of the cost of unemployment. We would remember that those who are without work don’t want a job in the long run, they want one now.
Of course the scenario I have just painted is predicated upon the belief that Australians want to live in a humane, socially inclusive society, committed to egalitarianism, solidarity and social justice. To the extent that I may be wrong about my fellow citizens, then, were we to make the political, social, moral and ethical decisions which would move us away from a reasonably inclusive, caring and sharing society towards one which rewards the clever, the sneaky, the lucky and criminal individuals we would usher in the sort of divided society about which Professor Gregory warned us in his 1995 National Press Club Address.
Quite frankly I have a preference for the first scenario but am preparing for the second. It would be irresponsible for social scientists to ignore the second scenario or to not make choices as to which side they would be on should the economic fundamentalist succeed in convincing Australians to discard the social and to go with individualised market solutions. I am working on a new cook book with detailed home economics hints entitled Avoid rising food prices – Eat the rich, a cheap entertainment guide called How to bring the Revolution into others’ Living Room, its sequel will be Utilise unused infrastructure – Hang the bourgeoisie from every lamppost in Australia. As part of this series there will be a religious guide to shop lifting entitled God helps those who help themselves, a series on street games starting with Money or your Life, Class War, Blazing Suburbs – 101 ways to ignite your interest in Arson. I trust it wont be necessary to move down this path but just in case there are people who like John Hewson are content to dismiss the needs of what he chose to call the “army of the jobless” (Liberal and National Parties, 1991) I am developing plans to invigorate the Unemployed Workers Army (Tomlinson, 1994a).
At the end of the Second World War servicemen would have come home to high unemployment had it not been for Curtin’s and Chiffley’s fear that the returning troops who had been trained to kill might start culling politicians if there were no jobs. We need to convince the unemployed to stop blaming themselves – turning their despair inwards (Fanon, 1963, p.248) and to understand the reason they don’t have jobs is that government and industry have failed to create employment. If we could evoke the same fear of the unemployed which Labor leaders had at the end of the last World War then sufficient jobs would be created overnight to solve unemployment. Government would soon define the solutions proposed in the White and Green Papers (which might reduce unemployment to 5% by the end of the century) as totally inadequate documents which trivialised the problems confronting unemployed people and would institute full employment programs (Committee on Employment Opportunities, 1993; Australian Government, 1994).
It is still possible, without any mass outbreak of violence directed at those who have decided levels of unemployment at 8-9% are sustainable, that governments might come to realise they have to jettison their plans to keep over 2 million Australians unemployed, underemployed or discouraged from seeking work.
The authors of Work for All have laid out a blue print which could reduce unemployment to 3% in a couple of years (Langmore & Quiggin, 1994). Their plans include massive job creation in the human services and environmental projects, governments becoming an employer of last resort, social and economic infrastructure developments, some redefinition of work, job sharing, humanising employment and redirecting macro-economic policy away from narrowly defined eiticiency targets towards social and economic effectiveness targets (Langmore & Quiggin, Chs. 8-1 1). Their plans are predicated upon a Keynesian boost to the economy, the installation of a far more progressive taxation regime than the Hawke-Keating Government has been able to implement, and some borrowings. Their plans are in no way economically irresponsible, given that budget outlays and losses to revenue as a direct result of our levels of unemployment cost us presently $20 billion annually. “The proposed net increases in government expenditure would be less than three per cent of GDP and would still leave Australia as one of the lowest taxing, lowest spending countries in the OECD, with a similarly low level of public debt” (Langmore & Quiggin, 1994, p. 144). The major shortfall in Langmore and Quiggin’s analysis is that they are still tied to the idea that the poor should sing for their supper – that the unemployed should in some way justify their being provided with income support by undergoing training or study, volunteering, or making some other contribution to society. This active citizenship concept is enshrined in the White and Green Papers, in the Cass’ review of the Social Security System, in the works of writers like Pixley and Probert and which is supported by the current Minister for Social Security (Committee on Employment Opportunities, 1993; Australian Government, 1994; Baldwin, 1995; Cass, 1995; Pixley, 1993; and Probert, 1994).
There are additional progressive ways to remove the scourge of unemployment entirely which could be built upon the Work for All framework. The first step is to introduce a non-presumptous social security system (Goodin, 1993). This would necessitate severing any link between income support and employment, jettisoning targeted income support, ending once and for ever the artificial distinctions which our current worthiness based categories of assistance maintain. That is, introduce a guaranteed minimum income as the social base on which we set out to build a solidarity between all permanent residents of this country. Secondly we need to place this nation on a PEACE FOOTING. Build sufficient houses to accommodate the homeless, upgrade community services to a point where we might take pride in the way we treat those of our citizens who experience disability or disadvantage, ensure our educational facilities have sufficient resources to allow all residents the opportunity to reach their optimum education, expand our environmental research in order that we are able to halt species extinction and ensure a sustainable future. Meet at a very minimum the UN target of 0.7% of GDP in untied peaceful foreign aid and add a further 1% of tied aid. Recognise Aboriginal sovereignty as coexisting with other forms of sovereignty in the land mass the invaders chose to call Australia. This would necessitate coming to a proper reconciliation with Aborigines in relation to land, resources and the criminal justice system. Dismantle our armed services beyond that which would he necessary to maintain fisheries, customs, and immigration functions and to meet our obligations to UN peace keeping.
Of course such a change would necessitate expanding massively our intellectual and productive effectiveness, we would no longer be able to ignore the creative ideas of our citizens or to let their creative ideas drift off shore as we did with the orbital engine and gene shears. It would mean we could not afford corrupt business practices and non productive investments – we would not be able to afford the 1980s style of entrepreneurial arrogance, criminality and stupidity but we would in Eric Bogle’s words “live in a land that’s fit for heroes and you and me as well”.
We would have to let go of some very silly thinking predominantly inspired by the economic rationalisers and other reactionary elements. We could no longer be content to recognise that with unemployment at anything like its current levels, “The loss of production through unemployment is the single greatest source of inefficiency in our economy’ (Committee on Employment Opportunities, 1993, p. 1) and then cut $400 million from the Working Nation expenditure as was done in the 1995 Federal Budget. We could no longer afford to prop up the corrupt insurance/superannuation industry with ever increasing amounts of public money, when they have patently shown that without massive tax advantages superannuation is a very inefficient savings or investment process. Even if it was an effective way of increasing personal wealth there is nothing in the corporate make up of the people who decide investment priorities for the funds to suggest they would ever put long term national interest ahead of turning a quick buck for the company.
We would have to let go of the myth that the increasing ageing of the Australian population will necessarily create an unaffordable drain on public provision of retirement incomes. We are going to have to recognise that overall dependency ratios – those in and those out of work in 2040 are not necessarily going to be very different from the 1995 dependency ratios. We would have to get serious about abolishing ageism and utilising the skills of Australians who wanted to work. The adoption of universal income support (whether in the form of a basic income or guaranteed minimum income) based on the individual and which made no presumptions about social features would be integral to such processes.
We still have Neanderthals who oppose foreign aid on the basis that it always exports resources and therefore jobs out of Australia. It certainly is possible to construct foreign aid programs in this way. However, even in relation to totally untied aid, there is a trade off between peaceful aid and savings which result from military expenditure foregone (Smith & Smith, 1983), and even cash aid can finish up being spent within Australia if we can produce goods required by the recipient country. I am suggesting we devote a further 1% of GDP (on top of 0.7% in untied aid) to tied aid. This tied aid should be made up predominantly of environmentally sensitive and technologically appropriate equipment (e.g. developing fuel from coconuts for diesel generators, solar cell technology), medical technology and services or food aid. These types of “aid” actually generate jobs in this country, may enhance our environment, and help to cross subsidise environmental research and development into issues of particular concern to citizens in this country. To the extent that we can solve some of our environmental problems, e.g. salination of the Murray/Darling River system via CSIRO developed “smart trees”, we create economic efficiencies which lower the cost of rural products and hence enhance export opportunities which creates work in Australia. To the extent that we can help solve medical problems in the third world we increase poorer countries’ economic efficiency and their buying power and perhaps our exports to them. But more importantly if we are able to find cures for newly discovered diseases such as the Ebola virus which kills within 7 days 90% of those affected (they die an excruciatingly painful death bleeding from every orifice) then we are not going to suffer massive economic dislocation should outbreaks occur in this country. And even if after finding a cure for the disease, establishing treatment regimes, and finding a preventive vaccine, we discovered that it was highly improbable that the virus would have ever come to this country we could still sit back with a sanctimonious smug grin on our collective face.
To the extent we can ensure environmental sustainability and diversity we enhance the prospects of increasing eco-tourism (the largest growth area of world tourism). As Australians become obsessed with the beauty of nature in this country the greater will be the number of them who choose to tour here, creating jobs locally and limiting the outward flow of capital.
In coming to find a way to recognise the sovereignty of Aborigines of their country we would have to come to an understanding with Aborigines and Torres Strait Islanders in relation to the rape, invasion, murder, brutality, theft, cultural imperialism, attempted genocide, and our ignorance. We would have to do something about our entire criminal justice system which incarcerates far too many Aborigines – ten times the rate for whites (Australian Government 1992, Tomlinson 1994b). The money we waste jailing Aborigines could be put towards Aboriginal communities controlling the economic development on their land. We are also going to have to put an end to the class war we wage against low income earners of all races in this country.
Government and industry policies cause unemployment. The solution to unemployment does not lie in economic policy but in social, political, moral and ethical choices capable of being made by Australian citizens. Solving unemployment is not without pain nor without gain – it is not only economically achievable it is an economic necessity. Langmore and Quiggin have laid out a workable blue print which could go a long way towards the solution. Unfortunately they, like Baldwin, Cass, Pixley and Probert are ideologically tied to the crucifix of active citizenship.
If we are going to abolish unemployment then we need to trust our fellow Australians enough to install a guaranteed minimum income, based on the individual, as the corner stone of social welfare and labour market programs. This would ensure a citizenship which was productive and effective to replace active citizenship. This would be a vast improvement on Keating’s inactive (unemployed) citizenship or Howard’s moribund economic rationaliser agenda for the citizenry. Howard’s agenda would ensure that many of those who work full time would still be living in poverty. The guaranteed minimum income policy proposed here would free all Australians to be productive.
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