Economics.org.au

— Aren’t forced formalities disparaged as affectations?
— The mind boggles at “feminist” “progressive” “democratic” “welfare lobby” “compassion industry” “Nanny State” policies towards commoditising, subjectifying, entitling, professionalising, bureaucratising, standardising, credentialing, certifying, decreeing, decreeing degreeing, unionising, nationalising, guaranteeing, taxing and subsidising housework, childcare, charity, casual work and employment with benefits.
— At least we have Paddy McGuinness to guide us through the thick smug, often displaying his distinctive triple-threat of huge nuance, extreme empathy and sneaky truth-telling:
1. “Welfare, mainly for social workers,” The National Times, January 13-18, 1975, pp. 33, 37.
2. “The poor and the social workers are always with us,” The Australian Financial Review, September 16, 1975, pp. 3, 6.
3. “Prayers from a Marxist litany,” The National Times, week ending March 24, 1979, p. 54.
4. “Providing proper child-care facilities is the major issue,” The Sun-Herald, June 5, 1988, p. 32.
5. “How to create more jobs,” AFR, July 15, 1988, pp. 84-83.
6. “The irresponsible buyer,” AFR, September 20, 1988, pp. 76-75.
7. “Housing the poorest,” AFR, November 30, 1988, pp. 92-91.
8. “Homeless used as cannon fodder,” The Australian, March 2, 1989, pp. 1-2.
9. “What price marital sex?,” 27/2/90
10. “Just what is a woman worth?,” 9/1/91
11. “Economic arteries hardening,” 24-25/8/91
12. “Why welfare is of poor benefit,” 8/10/91
13. “We need to make people want to work,” 28/2/92
14. “A poor show when private welfare stays in the shadows,” 22/5/92
15. “Vested interests leaving young out in the cold,” 7/7/92
16. “Older but no wiser on jobless,” 8/7/92
17. “Ideology burdens the state of welfare,” 9/7/92
18. “Unemployed plight the shame of mindless militancy,” 10/7/92
19. “Sacrifices vital to overcoming unemployment,” 11-12/7/92
20. “Childcare figures reveal zealots behind statistics,” 18-19/7/92
21. “Domestic work holds the key to unemployment,” 22-23/5/93
22. “No-nonsense charity converts a nation,” 26/1/94
23. “Poor show when homeless at mercy of politics and yuppies,” 28/4/94
24. “Workplace welfare costs poor their jobs,” 12/8/94
25. “Women and work,” SMH, 23/11/94
26. “Machinations of the system,” 21/6/95
27. “Bleeding hearts with tight fists,” 31/8/96
28. “Old-style families at a financial loss,” 21/9/96
29. “Young people are the losers,” 14/12/96
30. “Rights-based view of welfare is wrong,” The Age, 23/6/97
31. “Why raddled old feminists are wrong on parenting,” SMH, 29/8/98
32. “What price the housewife on the open market?,” 19/10/00
Appendix: Parallel paragraphs put P.P.McG in good company

1.
P. P. McGuinness, “Welfare, mainly for social workers,”
The National Times, January 13-18, 1975, pp. 33, 37.

There is an excellent weekly published in London which is widely read by those interested in the problems of modern society either from a practical point of view, as being directly related to their work, or simply from the point of view of keeping informed of thinking in the various related fields which range from psychiatry to economics which deal with social (and antisocial) behaviour.

This journal is New Society. However, perhaps even more significant and interesting than the articles in any particular issue are the job vacancies which are advertised in a volume which surely must be any social worker’s dream.

For as unemployment in Britain climbs towards the million mark, the demand for social workers seems to be climbing even more rapidly — all of them being comparatively well paid, secure, and of course a good deal higher in the social scale than the people many of them like to refer to as their clients.

This seems to be an ineluctable law of social development — that to increase “social welfare” in any materially visible sense it seems to be necessary to make greater and greater handouts not to the poor, and underprivileged, but to those who don’t need any help at all.

Thus in the latest issue of New Society there are 24 pages of advertisements for people variously described as youth and community worker, hospital social worker, group work officer, community and neighbourhood worker, secretary to community health council, fostering officer, occupational therapist, social facilities officer, team leader, psycho-geriatric social worker, housing adviser, field liaison officer, intermediate treatment officer, residential child-care officer (non-resident), and so on and on. There are even a few advertisements for just plain social workers.

The salary range is vast, running from around £2,000 a year for trainees to well over £15,000 for some key posts in major local government areas.

The mushroom growth of social workers in Britain springs from the decision of the British Labour Government in 1969 to implement the Seebohm report, which recommended an enormous expansion of spending on social welfare, which it equated in effect with spending on social workers. The sudden expansion in demand, with many positions being advertised at then salaries of up to £10,000 a year, inevitably led to many mistaken and inferior appointments.

There simply were not sufficient trained social workers of any administrative ability, or who would have been able to command salaries like that in any other occupation. But it is these appointees who are now presiding over the further recruitment and training of this vast new class of beneficiaries of poverty.

Many of the thousands of new officially employed social workers will, of course, be worthy people, and some of them will be performing what are these days considered to be essential functions, which the voluntary and religious bodies no longer, if they ever did, have the capacity to deal with.

But it is also true that, social work being the kind of activity it is and attractive to people of a particular cast of mind, many of them will be interfering and patronising busybodies who far from relieving the sufferings of the outcasts and failures of society will harass them and chivvy them beyond endurance.

Typical of such attitudes is the very strong opposition expressed within the Australian Department of Social Security to Bill Hayden’s move to limit the access of outside people to departmental records concerning benefit recipients. The professionals concerned just could not comprehend that even an alcoholic invalid pensioner, for example, has the right to have his privacy respected. Instead of setting about solving the problem of protection of privacy and nevertheless coping with the occasional need to acquire information without consent (when for example a patient is unconscious in hospital), some officials adopted a course of deliberate obstructionism, designed to make the minister’s ruling break down.

Attitudes like this, combined with an excessive love for bureaucratic forms, and empire-building are found both in the voluntary and governmental welfare areas, in Britain and Australia.

Nevertheless the expansion of the numbers of social workers, horrifying as it is to contemplate in the aggregate, has certainly led to an influx of sympathetic and non-interfering younger people into the field. This has gone a considerable way in Britain, and the very fact that there are so many genuinely committed and unpatronising workers in the field has created new problems.

Chief of these is a clear division of the social work profession into two main schools of thought. There are the no-nonsense professionals, who conceive of their duty as informing possible beneficiaries of how they can be helped, and trying to soften the worst effects of poverty and deprivation such as adolescent crime (and, of course, the medical social workers who actually perform part of what used to be thought of as the practice of medicines at very much lower salaries than the doctors).

But there is an increasingly large number of social workers who despair of any hope of a gradual amelioration of poverty within the present social system, and decide that the best they can do for the people whom they are dealing with is to stir them up politically to act against the system.

In this, though sincere, they are really acting very much like the officious do-gooders of yore, and really solacing their own middle class consciences while enjoying comfortable salaries and security. For if there is one result that social surveys have pretty universally shown up in most developed countries it is that the lower income groups while they would like a bit more money do not see any need for major institutional or social change, or even any substantial increase in welfare facilities. (On the controversial subject of child care, for example, a recent French survey showed an overwhelming majority of French women did not feel that any increase in child care facilities was necessary).

All the two different strands among the social workers in Britain really have in common is a deep suspicion, which is often privately admitted to be a certainty, that social workers except in certain very specialised areas which are usually other fields like ancillary medical services, are no use at all.

In short, it would be nice to think, though there has been no evidence so far, that the Australian poverty enquiry and the social welfare commission were actively involved in trying to find out whether the enormous increase in spending on social workers will have any social return at all, and will contribute anything at all to making the Australian poor a bit better off.

***
2.
P. P. McGuinness, “The poor and the social workers are always with us,” The Australian Financial Review, September 16, 1975, pp. 3, 6.

It is one of the achievements of the present Government, even if one which has been expensively purchased by the proliferation of ill-considered welfare spending measures, to have produced a degree of public discussion on the means of alleviating the social evil of poverty, unimaginable in the complacent climate of a decade ago.

The realisation of the fact that poverty is a major failing of the economy of the “lucky country,” of course, dates back further than this.

Although there is an honourable concern dating back for quite a few years among various social welfare voluntary groupings, and the intellectual formulation of the problem owes a lot to the work of the Melbourne University Institute of Applied Economic and Social Research, as is often the case in Australia it needed the importation of the idea from overseas for the facts before us to become visible.

Thus it was very largely the publicity given to the degree of poverty existing in the United States (especially by such popular writers as Michael Harrington) which led Australian intellectuals to begin looking for, and finding, similar evidence here.

And it was this movement which eventually led to the McMahon Government’s decision to appoint Professor Ronald Henderson, of the Melbourne Institute, to inquire into the dimensions of the problem.

Also imported from abroad was the notion which has since gained considerable influence of remedying poverty chiefly by means of a simple in-conception scheme involving the payment of a guaranteed minimum income, or a negative income tax (or tax credit); these variations on the same essential idea, that the poor should be assisted mainly or wholly in cash rather than by a host of patronising welfare measures outside the scope of market mechanisms, can be chiefly sourced to the American economist, Milton Friedman.

Essentially, a minimum income guarantee would be designed to replace most existing welfare benefits by a single scheme designed to ensure that no-one in the community would fall below a certain cash income and because of the inadequate coverage and administrative confusion of most existing benefits, that this should be achieved by a “negative” income tax, or tax credit, to be paid to everyone so that below a certain total income the poor would receive payments from the Taxation Commissioner.

The number of bodies supporting some variation of a guaranteed minimum income scheme, or at least discussing it as a serious option for welfare policy in Australia is now impressive.

The Treasury Department devoted one of the Taxation Papers (No 8) which it submitted to the Asprey Taxation Review Committee to “Negative income tax and tax credit schemes.”

The Asprey Committee dealt with such schemes in its report, the Henderson Poverty Inquiry came out in support of a guaranteed minimum income scheme, as did the Priorities Review Staff in its report on Possibilities for Social Welfare in Australia.

The idea has also been endorsed with reservations by the Social Welfare Commission and the Australian Council of Social Service.

However, these latter two bodies, in part because they are dominated by welfare workers, are concerned to stress, in the words of ACOSS in its comments on the Henderson report, that:

“Services will always be necessary to counterbalance an imperfect market system. People will need assistance in how best to use their resources and there will always be special circumstances or times of need.”

In other words, as well as the poor, the social workers we shall have always with us.

The intellectual popularity of a general guaranteed minimum income scheme, however, is due to the fact that to the believers in a free market economy, such a scheme would minimise the scope for interference by government agencies and subsidies in the operation of the market system.

Also that it would allow the poor to choose whatever mix of goods and services they choose in accordance with the degree of cash assistance they receive, rather than have some superior authority decide for them what they should consume.

It is also the case that the priorities of assistance to the poor have in the past been very much distorted by political considerations, so that funds spent on the various kinds of assistance have not been used in the most efficient fashion possible to alleviate poverty, but have often gone to the better off.

An extreme would be the superphosphate bounty, which whatever its benefits to farm productivity, helps the wealthy farms using large quantities of fertiliser much more than it does the poor, struggling small farmer. As a welfare measure it is extremely inefficient.

Another, much more important example was adduced by the Priorities Review Staff in its report on housing policy tabled in Parliament last week.

The report pointed out that the exemption of imputed rent on owner-occupied houses from tax, the income tax deductibility of rates, and mortgage interest deductibility between them cost upwards of $750 million a year, not to speak of various other subsidies to home ownership.

But to point this out is to point to the very weakness of the argument for efficient spending of welfare money.

Efficiency means putting the money in the direction of the greatest poverty, while our political system works so as to give the middle-income groups a disproportionate political influence.

It is much cheaper for the high-income taxpayers to buy off the relatively small number of swinging voters than to achieve a real and substantial degree of assistance to the poor.

The obsession of the Australian community with house-ownership, too, means that people who by no stretch of the imagination could in terms of their disposable income be considered poor, often commit so large a proportion of that to house purchase that they in fact feel themselves poor, even though they are in the process of acquiring a large and valuable, virtually tax-free asset.

So although in intellectual terms the guaranteed minimum income concept seems to have won the day, it will yet be necessary for the enormous political gap to practical implementation of such a scheme to be bridged.

This gap makes the various difficulties of implementation of the scheme in administrative and constitutional terms, such as the definition of a family unit, look trivial.

***
3.
P. P. McGuinness, “Prayers from a Marxist litany,”
The National Times, week ending March 24, 1979, p. 54.

If there is one method for curing unemployment which is guaranteed not to work, it is praying over it. Yet all too often earnest prayer, ecclesiastical or secular, is considered an adequate substitute for serious analysis of the causes and possible cures of unemployment.

Apart from the latest Papal encyclical, a recent example of this kind of thing, closer to home and more procaic, is a book just published by Penguin, Keith Windschuttle’s Unemployment.

This is in many respects a good book. It sets out in a series of chapters various aspects of the unemployment problem — how unemployment is evil in its effects, how it destroys the health and mental stability of the unemployed, and how it leads otherwise decent people into orgies of hatred of “dole bludgers,” who are persecuted and maltreated as if they were to blame for the fact that our economy is simply not growing fast enough to provide employment for everybody.

It is an extended and feeling indictment of the way the unemployed are treated, and an excellent documentation of the reasons why we should be indignant about the fact of unemployment, and why it should be considered the most important social, political and economic problem of the Australian economy. A system which produces and tolerates unemployment of the kind we are experiencing now cannot be considered morally acceptable.

But when this is said, it still does not go far enough. For once we accept this moral judgment, it is still necessary to investigate the reasons why unemployment exists, the actual nature of the “system” which produces unemployment, and then work out what can be done about it.

To stop at the point of moral indignation is satisfactory, perhaps, for those who do not pretend to analysis and prescription. I feel very strongly about the misery which is inflicted upon human beings by cancer, for example; but I leave it to qualified medical practitioners and researchers to deal with the matter of causes and cures.

To get into the business of treatment without having undergone serious training and study, and indeed extended training, with the acquisition of acknowledged expertise, is virtually certain to guarantee that the remedies offered, and the analysis of causes, are likely to add to the sum total of human misery.

To carry the analogy a little further, nor does it matter that the medical profession is rife with rogues, tax dodgers and thieves; what is important is the professional skills, not the characters of the people involved. I would opt for expert treatment instead of prayer or faith-healing any day.

And here is where books like Windschuttle’s have an actually pernicious influence, and can be said to be a contributory factor to the continuation of unemployment. For the peddle phony analyses, political nostrums, and faith-healing in place of real analysis.

For in place of any serious examination of the causes of unemployment, Windschuttle gives a little bit of crude Marxism; and in place of any serious prescription for overcoming unemployment we are simply told that the problem cannot be solved under capitalism, and that some other unspecified economic system named socialism (not to be confused with the USSR or any other actual economy masquerading under that label) will make unemployment non-existent.

For as is very common these days, religious Marxism has replaced religious Christianity as the vehicle for expression moral indignation and promising pie in the sky, while absolving its practitioners from doing anything very much about this vale of tears in which we find ourselves here and now.

Praying over unemployment, using the Marxist litany, is a comfortable way for a middle-class intellectual to absolve himself or herself from feeling any guilt about the contrast between secure, superannuated employment and the fact of unemployment.

It is also a convenient way of expressing solidarity with the “working class,” meaning selected and approved scrubbed up representatives of the unions. For if it can be asserted with the fervour of faith that the unions are not part of the system which produces unemployment, and that nothing they do has any connection with it, then of course the right kind of ideological purity can be maintained.

And it is also very useful to be able to identify the causes of unemployment with a relatively small number of people, whose “class interest” requires them to act in such a way as to create unemployment, instead of going a little bit further and considering just how the real interests of the vast majority of the Australian population are tied up with the continuation of unemployment.

The prevalance of the irrational hatred of the unemployed among the vast majority of the Australian population is not a creation of the “media” as Mr Windschuttle would have it.

The popular newspapers do indeed often behave in pretty shabby ways, but this is very largely a reflection of the audience to which they pander. Most people in Australia would be quite happy to see unemployment disappear, provided it cost them nothing; and as long as they realise that there would be a real cost involved, they will think of reasons why the unemployed themselves are at fault.

The actual causes of unemployment are complex, and the historical experience of the past few years has meant that many of these causes have operated to create a situation which continues, even when the causes have ceased to operate.

Thus the upsurge in real wages in 1973-74, which just preceded the onset of a worldwide recession, was a major contributory factor to the current high level of unemployment.

It was not the only factor, nor would a cut in real wages by itself contribute much to a rapid return to full employment. The adjustment processes which were set in motion by the initial upsurge have produced virtually irreversible changes in the employment structure.

This has, indeed, been a result of the manner in which the capitalist system works. A reduction in profits relative to wages discourages new investment, and leads employers to seek ways of reducing their labour force. In the absence of any effective measures to compensate for the loss of profit, or to create new jobs, directly or indirectly by expansion of government spending, the only way in which unemployment can decline is by means of a reduction in real wages — and even then, the decline in unemployment would be slow and painful.

It is, incidentally, worth noting that the real Marxist economists, such as Ernest Mandel, as distinct from the religious Marxists tend to agree with this proposition.

It may well be that there is no way, in a capitalist economy, that it will be possible to persuade capitalists to act irrationally and employ labour when it is not profitable.

And it may also be the case that it will not be possible to persuade the mass of employees that, in that case, the only cure for unemployment is to make the employment of labour profitable — for example, by way of high income earners subsidising the employment of those whom it is not at present profitable to employ.

But if it is difficult to persuade the employed that their wages and enjoyments are partially bought at the cost of unemployment under the present system, how is it going to be possible to persuade them that a system which ensured that they did subsidise those who are at present unemployed, call it socialism if you like, will be any better for them?

Books like Windschuttle’s may help to achieve this, in which case it will be of great value. But at the same time, compassion and faith in the possibility of Utopia do not help the unemployed here and now. Religion is not a substitute for economics.

Not that religion as such is to be condemned. As Karl Marx himself, a man of great compassion, once wrote (and it is a remark often abridged by those who wish to distort Marx’s views): “Religion is the sigh of the oppressed creature, the feelings of a heartless world, just as it is the spirit of unspiritual conditions. It is the opium of the people.”

It took an eminent economist, Joan Robinson, to add the tart comment: “Marxism is the opium of the Marxists.”

***
4.
Padraic P. McGuinness, “Providing proper child-care facilities is the major issue,” The Sun-Herald, June 5, 1988, p. 32.

Women in the workforce have a hard time when they decide it is time to have children.

Then they have to make a decision a man never has to, to actually bare a child, and a decision a man rarely has to, to make the choice between staying at home and bringing up the baby, or going back to work at some point after the birth.

For some women it is no problem. They want to be mothers, and they see staying at home raising children in a traditional one-income family with a husband as the best choice. But not all women want to make this decision.

They are human beings, and they want to have the same kind of opportunities as a man has, to get a good education, to have a job, and to advance in that job. Genuine equality between men and women has to mean women having the right to make any career choices they like, or indeed none at all until they have travelled, mucked about a bit, or whatever.

But the great difference between men and women is that women generally have to take the primary responsibility for child-care, as well as actually bearing the children. This difference in itself is no reason for compensation to women with children — apart from some support for women with children so that the children are not brought up in poverty.

Some women, unfortunately, become fixated in the notion that it is an injustice that they are not men. As long as they do not choose to have children, there is no point whatsoever in taking any notice of the fact. There is no earthly reason why a childless woman should not do whatever she wants that a man of similar capacities can do.

The real problem comes with the fact that women are child-bearers. Sentiment apart, this means that the general preference of women as to what they want to do with their lives becomes important — and when women have the choice between having children or not, as they do in a modern society, then we are going to have a real problem.

This is how to persuade women to have children in the first place, and how to make sure that neither they nor their children suffer when the choice is made. Whether we like it or not, the greater number of women in our society these days expect to work, or are going to have to work to achieve the kind of living standard they and their families want.

There is a case for a social contribution being made to this, there is a danger that there will not be enough children. The form that this contribution now is increasingly taking is in providing child-care facilities, so that a woman can spend whole or part of each day in a job.

The real problem is what is the best way that this child-care can be provided, so that it is available for all income groups, and is in the best form from the point of view of the child.

It would be nice to say that all women are entitled to child-care facilities, regardless of cost. But the cost is very great even now. What form should child-care take, and to whom should it be available?

So it is pretty clear that if women are to have the right to work on equal terms with men, as they should, and also are to produce the children which the community needs, some special provision needs to be made.

It is a criminal waste of the intelligence and talent of a large proportion of the potential workforce if women are to be excluded, or discriminated against, or financially penalised, because they have, or may have, children.

This raises many difficult problems for governments. For a start, a working woman should, in all fairness, have a right to set off against her tax the cost of child-care.

But one of the great current issues is not whether they should be tax deductibility, but whether the government should provide child-care on a free or subsidised basis.

One unpleasant fact about child-care is that it is much more expensive when provided by the government than privately — usually by small care centres, or by mothers with their own children and the willingness to take responsibility for the care of others.

This is partly because the workers involved are less flexible, and the staffing provision is higher. Moreover, there is an increasing tendency among the social welfare industry to require educational credentials which have no greater use than to increase the status and salaries of the professionals concerned.

Most women are fairly well equipped naturally as child-care workers. There is a good case for providing some additional training. But the government child-care industry is demanding that only women with the qualifications they design should be allowed to look after children.

This is nonsense. But a lot of the argument is about this issue.

The central issue is whether child-care provided for working women is a right, and if so how it should be provided. There is strong pressure coming from the industry, which is government-sector dominated, to provide more child-care designed to benefit well-paid women in full-time jobs most.

Most women would like more choice, and more flexibility.

The code for the middle-class demand is “funded child-care”. This was recently discovered to be beneficial to the economy, but mainly because the resulting increased competition for jobs by mothers would lower their average wages.

It is, however, far more important that ordinary women should have their choice and freedom increased, while high-income earning women should not be penalised.

The best way is to forget about government child-care, and allow women to spend their own money as they like, with some tax offset. Nobody needs a degree to look after a child — and to allow private initiative means that many women can share the loving care which at the moment they have to lavish on their own children alone, without the chance of earning an income at the same time.

***
5.
Padraic P. McGuinness, “How to create more jobs,”
The Australian Financial Review, July 15, 1988, pp. 84-83.

The current debate on child care has raised many issues, some of them emotive, some ideological and some factual. There are many complex problems involved, including the very basic question of how, and at what cost, do we want our society to reproduce itself. Who pays the cost of bearing and bringing up children?

The standard argument can only be raised by a calm and logical discussion of the matter, despite the fact that it engages basic emotions, not least of which is the guilt of working mothers who would like to spend more time with their children, but also want to be able to engage in their occupations or professions as equals with men.

One of the central issues in the debate is clearly the question of whether child care should be provided by the State, or by private institutions or individuals, and how it should be funded. This is not the same as the issue of whether child care should be provided by people with formal training and certification, or whether any reasonably competent adult (or adolescent) is fit to look after children.

The two issues are related, since there is a clear ideological commitment in some parts of the child-care lobby to the notion that child care should be mainly provided by government, and that only those who have been trained in a government-approved system should be employed.

This line should be clearly separated from the much more important issue of the facilities and concessions available to working mothers. It has many similarities to the private versus public schools debate — in principle it would seem sensible to allow some form of tax deductibility of child-care costs to women who want to work. It is, after all, a necessary expenditure if they are to be able to participate fully in the workforce.

There is no reason apart from ideology why child care should be provided only by State-funded, controlled, and staffed centres. Indeed, in terms of freedom of individual choice there is every reason why both systems should exist in parallel, and people should have the right to decide which one they prefer, without excessive financial penalty — the point of the “voucher” proposal.

However, there is an even wider issue involved which ought to be taken seriously.

This is that in principle all personal services bought by households, whether child care, cleaning, cooking, or even valeting, should in principle be tax-deductible.

It is a totally anomalous situation whereby my company pays a cleaner to clean my office, and this wage is offset against taxable profits, and yet if I pay someone to clean my house it is not considered deductible.

After all, both activities are comparable, and both involve the creation of employment, especially for the relatively unskilled sector of the labour force. It is surprising that in all the discussion of the problems of employment for the unskilled the benefits of allowing the wages of domestic labour to be set off against the incomes of their employers have not been examined.

The reason is, of course, obvious. There is a strong prejudice in our society against the employment of servants which is buttressed with a folklore of horror stories and a generally justifiable dislike of the pretensions of many who do employ servants.

But there is no need for this. Gradually, Australians are learning how to deal with waiters in restaurants with neither awe nor contempt. Waiters are, at their best, trained professionals who deserve respect. Yet they are servants — as are, despite their dislike for the concept, doctors, nurses, lawyers, air hostesses, and all the others who deliver personal services. A doctor is no more than a specialised plumber — and no less: for his or her competence, training and expertise deserve respect. The same is true of child carers, teachers and, indeed, plumbers.

The absurdity is, however, the different way in which the various providers of personal services are treated, traditionally, legally and by the Taxation Office. The inevitable result when it comes to household services is the growth of a black economy, with all its attendant problems of inability to check the credentials and employment history of a potential employee.

Consider the cost of employing a child-carer for my hypothetical brood of pre-school children. The standard wage for a trained professional is about $15,000 a year. On the tax-scales for the financial year just elapsed, she (for I would still probably employ a woman, although I am aware that there are suitable men) would receive a net income (ignoring deductions) of $12,504.

But in order to pay that wage, I would have to earn (at the marginal tax rate of 49 cents in the dollar) over $30,000. What an absurd discrepancy! To pay someone a net income of about $240 a week, I have to earn nearly $600 a week.

This is clearly a major contributory factor in unemployment, especially at the unskilled and part-time ends of the labour market.

It would be sensible for families with two income earners to be able sensibly and honestly to employ domestic labour. The result obviously would be a rise in total GDP by any measurement, as well as the removal of one of the major areas of the black economy.

The effective tax rate on the employment of my hypothetical child-carer (God save us from the terrible word “Nanny”) is on these figures almost exactly 240 per cent — a far higher tax rate than even the worst examples produced by the well-known “poverty trap” which bedevils the welfare system.

There is no wonder, therefore, that virtually every family gets an early training in dodging tax, and employing people on the black — cleaners, baby-sitters, gardeners, plumbers, builders, and so on — and every student or housewife who wants to make a few bucks to supplement their resources has to do so illegally.

And, of course, the actual wages paid to the marginal workers who are employed on the black are lower than they would be in a system in which the cost of paying the wage to the employer is so high. To employ a child-carer at $300 a week on a tax deductible basis would cost me just about the same — so I am clearly likely to worry less about paying a few dollars more. And the Tax Office would, of course, receive the taxes of the employee.

Moreover, the many marginal workers who at present make up the black economy and provide the major resource of domestic labour (who does not know someone who pays a cleaner or a child-minder in cash? I even know some tax officials in Canberra who do) would be given a higher, more secure, legal status.

***
6.
Padraic P. McGuinness, “The irresponsible buyer,”
The Australian Financial Review, September 20, 1988, pp. 76-75.

The Australian Law Reform Commission has recently issued a discussion paper on product liability — the issue of compensation to those who purchase goods which are inferior, defective or unsafe.

The inquiry is, of course, intimately related to the commission’s proposals with respect to class actions. In effect, the other shoe has been dropped.

Together, the two changes in the law and its procedures would open up a huge new field of action by dissatisfied or disgruntled individuals, and large, loosely defined classes of individuals (most of whom would be unknowingly joined in the action) against manufacturers, importers and retailers.

At the same time, they would effectively remove any liability on a claimant for damages to prove negligence on the part of the supplier.

All this is, of course, nothing new coming from the commission. What is new, however, is that it has for the first time decided to seek some expert research from a non-lawyer. A Macquarie University economist has been commissioned to “conduct a detailed economic study which should provide more information about the incidence and costs associated with loss and damage caused by goods and the costs of avoiding such losses”.

Among other things, the consultant has been asked to investigate “the likely impact of various possibilities for changes in the law on insurance premium charges and the consequent impact of such charges on pricing policies in particular industries”.

How seriously the commission will take this study in preparing its final report remains to be seen. But it is typical of the Law Reform Commission that its discussion paper contains detailed suggestions for changes which have been subjected hitherto to no costing or other economic evaluation. Like the class actions proposal.

Effectively, what the discussion paper proposes is that the principle of caveat emptor (let the buyer beware) should be totally abandoned in considerations of product quality and performance. That is, they are proposing to relieve consumers of any responsibility for exercising choice and judgement, and any liability for their own mistakes or failures of care in buying.

There are two major issues involved: quality and performance of goods on the one hand, and safety of goods on the other.

It would be nice to be able to believe that the commission’s final report will take into account the results of the economic study. But the fact that the proposals of the discussion paper appear already pretty well cut and dried are not a cause for optimism.

This is especially the case since the paper expresses scepticism about any cost-benefit assessment.

“The costs and benefits of any set of legal rules cannot be completely assessed until they are in operation… These comments about the difficulties involved in obtaining empirical evidence of costs apply equally to the benefits flowing from changes in the law. In any event, benefits of this kind are more difficult to quantify appropriately than costs.”

This seems a pretty clear pre-judgement of the consultant’s work. The basic message is that we cannot know how much harm the proposals will do until they are actually imposed on us, and this is a reason for going ahead with them.

At the very least, a proper examination of the costs and benefits of changes along these lines already introduced, especially in the United States, is called for before we are subjected to similar experiments here.

But the dangers of the quality and performance aspects of product liability are quite clear enough. While there may be a case for tightening up on some aspects of the law, the commission typically ignores the major force for establishing quality and performance, namely free competition in the market.

It also skates over an important aspect of variation in quality, too, which is the existence of price differentials. A cheap blank video tape has a much lower implied quality and performance than an expensive one. To the extent that this is not immediately obvious to a purchaser, organisations like the Australian Consumers’ Association have a valuable role to play (when they are not indulging in political rhetoric).

A more effective law enforcing competition and improving the dissemination of product information is far more sensible than a stricter product liability law in this respect.

Much more objectionable, however, is the paper’s discussion of safety considerations and negligence.

Let us take the obvious example, that of tobacco. The first question is, is it true that tobacco is harmful to health? Most people would agree that it is, and much work is being done by medical researchers to establish the causal connections. But in the meantime, the commission is prepared to accept “a probable causal connection”.

Second, it would seem relevant to ask whether the producers and sellers of cigarettes or other tobacco products are or were aware that they were unsafe in any sense. If they were not aware in the past, then it is absurd to suggest that they should be held retrospectively liable — unless, perhaps, it could be established that they were negligent in remaining unaware.

Thus tobacco companies may be made retrospectively liable for a harm they did not know they were doing. There is no possible way of insuring against such future risks. The aim is, of course, clear — to drive such companies out of business as punishment for profiting from noxious products.

However, consumer liability needs to be taken into account. At present, cigarette packets carry a message that “smoking reduces your fitness”. Arguably, this is too weak — I would prefer something along the lines that “smoking is a filthy anti-social habit which indulged in excess will reduce your life expectancy and may cause cancer and other diseases”.

This, of course, leaves undefined “excess”. And that is the nub of the matter. For it is the consumer, not the producer, who decides how much he or she consumes. Safety has to be evaluated in that context. Again, the real issue is one of negligence and consumer choice.

The basic issue with respect to product safety is that a supplier should not make or sell anything which he knows to be unsafe in any respect (except as inevitable — knives are always unsafe) and should exercise a great deal of care in ensuring that this is the case, any failure of care being negligence. But the sale of a product which a producer has no means of knowing is unsafe (or which the consumer knows also is unsafe), and which is believed to be safe, ought not to be grounds for liability.

This is, of course, the essence of existing product liability law. There are many aspects of procedure under this law which could be improved, but the Law Reform’s Commission’s case for radical change rests on mere assertion, not on any evidence of need.

***
7.
Padraic P. McGuinness, “Housing the poorest,”
The Australian Financial Review, November 30, 1988, pp. 92-91.

Homelessness is a problem which is difficult for those with comfortable and established lives to think about. But it is clearly a problem which is growing in all the major cities of Australia.

Typically of such social problems, however, many of the most vocal members of the welfare industry have nothing to contribute to the solution. They much prefer to abuse governments, “rapacious landlords” and the operation of economic policy.

This is not altogether surprising, since a good deal of the problem springs directly from the activities of the people who are most committed to the complaints of the welfare lobby. These people are, of course, not the same as those who through voluntary bodies do an enormous amount of good work in relieving the most urgent problems of the homeless.

It is perfectly clear that the major factor leading to the decline in availability of housing for low-income people in the inner cities has been the takeover of much of that housing by higher income groups, and the exploitation of public housing by those well able to afford to rent or buy in the private market. The example of NSW Senator Irina Dunn has been widely cited.

Not surprisingly, the welfare lobby greeted the report commissioned by the NSW Minister for Housing on the problem with claims that the report was written in the interests of landlords. The fact that the committee which prepared the report was headed by Mr Max Raine, of the well-known estate agency, encouraged many commentators to dismiss it in these terms.

But having read the report it is clear to me that it is a competent and well-informed discussion of the issues, which offers a number of measures that would clearly improve the plight of the homeless and those on low incomes.

It suggests that the most useful way to increase the supply of low-income housing is to cease penalising landlords who provide it, prevent local government from enforcing regulations that seek to exclude such accommodation from their areas and adopt policies that would allow new private investment in basic-level accommodation to take place in the expectation of reasonably secure and adequate returns.

Given the high cost of construction of public housing, and the proportion of it that tends to be occupied by tenants who are in no way in genuine need, such development of the private sector is urgent if the supply of low-income accommodation is to increase.

The committee also made the perfectly sensible, but much-ridiculed, suggestion that at least some of the estimated 60,000 unoccupied rooms in owner-occupied housing in Sydney and surrounding suburbs could help in the solution of the problem. Incentives to this end could include the exemption of income derived from renting such rooms from the income affecting a pensioner’s rights. This last is a classic example how different aspects of the welfare system can exacerbate social problems.

The report estimates that the most visible aspect of the problem, those who sleep out, is not large — those who actually fail to find a bed for the night in inner Sydney number no more than about 250. (Some of these are voluntary — like the harmless squatter in Jones Street, opposite Fairfax’s Sydney headquarters.)

The homeless who are not bed-less probably number about 3,000. This number is definitely on the increase, especially as a result of policies with regard to those with some form of psychiatric disability or mental illness. If the previous NSW Government’s policy of turning the psychiatric hospitals into salubrious premises for health administrators and educationists had been continued, the problem would be much worse.

The number of homeless, while far too many, ought not to present an insurmountable problem. Much of it is in the process of being solved, for example by the St Vincent de Paul society’s development of the old Lewisham Hospital in inner suburban Sydney. Typically, this also has met with obstruction from the local council.

But it is clear that more facilities made available to supplement the work of this society and similar bodies, like the Sydney City Mission, could go a long way towards overcoming the worst of genuine homelessness (the provision of “proclaimed places”, like the Matthew Talbot hostel in Woolloomooloo, is already considered adequate in inner Sydney).

But there remains a shortage of low-cost housing for those on low incomes. Part of this problem is the maladministration of public housing, in areas like the Glebe Estate and elsewhere. Not just the NSW Department of Housing is involved.

The Commonwealth Defence Services Authority, for example, is also at fault, leaving accommodation empty for three years or more. In the housing committee’s report, Max Raine makes a personal comment (the other members of the committee being involved) on the maladministration of the Miller’s Point Urban Renewal project, which is a scandal. So, too, is the case of a block of flats in excellent condition in Balmain, owned by “a State department”, which has been vacant for several years.

Clearly, the whole scope of publicly owned housing needs greatly improved administration, directed towards rapid allocation to those in need. One of the problems here, of course, is the tendency of middle-class “squatters” to jump housing queues.

There has been a steady conversion of boarding-house type accommodation, which can play a very important social role, either into other forms of accommodation (eg, backpackers’ hostels, which now proliferate in the Kings Cross area), into private houses for high-income earners, or into strata-titled residences. Quite a lot has been turned over to other purposes by restoration of big old houses as public facilities. Moreover, the progressive disappearance — because of excessive State Government taxation or through tarting-up — of city and inner-suburban hotels has decreased a major source of accommodation for older single men.

At the same time, the penalties on landlords, local government regulation and the activities of self-appointed tenants’ defence groups with their own ideological agenda have provided a disincentive to the building or maintenance of low-income accommodation. In addition to the Department of Housing’s tenancy service, the NSW Government spends $2.4 million funding the confrontationist “community-based” groups, “a complete waste of Rental Bond Board financial resources”, which would be better devoted to helping the poor.

With the population of Sydney expected to increase by one million between now and 2011, we really have to forget about the welfare lobby and get on with policies that will encourage a large increase in private sector housing for all segments of the market, but especially for the poorest.

***
8.
Padraic P. McGuinness, “Homeless used as cannon fodder,”
The Australian, March 2, 1989, pp. 1-2.

Just what the Human Rights and Equal Opportunity Commission thought it was doing with its report on homeless young people is a mystery.

Of course it hoped to make a stir, and it did so.

Anything which draws attention to the plight of kids on the streets — kids without families, kids falling into drugs and prostitution — must cause concern and has some merit.

But just what determined the commission to go for this issue in the way it did and at the time it did?

It may be that it is just working its way through a list of good causes.

Given all the various international conventions on the rights of women, children, minorities, the disabled, the elderly, the victims of discrimination and so on, there is a long life ahead of it — since it clearly sees itself as having a brief to initiate, without a reference to government, a series of inquiries into anyone whose “rights”, by any definition, might be in the process of violation.

In the case of the homeless children, the commission managed to violate quite a few “rights” also.

It ignored their right to be the subject of serious social and economic analysis; it ignored their right to be left alone; it ignored their right not to be used as cannon fodder in the cause of the self-righteous.

For, with all its aping of a proper inquiry or royal commission, the Human Rights Commission has produced an unforgivably sloppy piece of work which can do absolutely no good to the victims whose sufferings it wallows in.

For a start, it did not, as far as I could discover, think it necessary to carry out any serious economic analysis of the problem.

One economist was engaged — Daryl Dixon, an expert in taxation and social welfare economics.

But the commission did not ask him to look at the overall problem. Instead, it got him to write a report on the costs of homelessness.

Now, everyone knows that the human and social cost of homeless youth is incalculably large, and the economic costs in terms of human capital wasted and future support and crime-control costs are very large.

So Dixon said some sensible things about this, but did not analyse the whole problem.

The commission also engaged a sociologist to work out that the figures for homeless youth which can be derived from the Australian Bureau of Statistics are not very useful, since both the census and sample surveys, not surprisingly, tend not to include people who don’t want to be counted and are difficult to pin down.

But it is not very helpful to blur deliberately and magnify the issue of suggesting that young people living with others to whom they are not directly related (“detachment from family”) are in some way homeless or at risk — a large proportion of students would be in this category.

When dealing with one of the major issues concerning homelessness and lack of employment of young people, the commission dodges the central issue of the causes of youth unemployment.

It refers glancingly to the Bureau of Labour Market Research report on the subject a few years ago, but never discusses its main finding.

This is that the level of youth and apprentice wages insisted upon by unions and the Arbitration Commission is a major contributory factor to youth unemployment.

The artificially high level of youth wages, together with the entry of women into the unskilled and part-time labour force on a large scale, has greatly reduced the employment opportunities for young people — and hence their ability to obtain and hold accommodation.

This is not, of course, to say that women should be forced out of the labour force. But it is to say that massive social and economic changes are involved.

The same is true of the even more heart-rending and serious issue of children as young as 10 or 11 who are homeless. This, too, is a massive social problem and cannot be adequately analysed without taking account of the breakdown in traditional family relationships over the past 25 years.

It is a red herring to say that there have always been problems without families: girls thrown on the streets for becoming pregnant, sexual abuse within the family and so on.

Of course they are no more a new social phenomenon than murder.

But there is clearly something very wrong with a society in which parents can throw their very young children out in the streets, or in which the community feels no special responsibility for these children.

Whether, however, this is a justification for setting up a whole new layer of social workers and welfare institutions when the existing ones have not the slightest idea what to do about the problem is another matter.

It is strange, too, that the Human Rights Commission does not seem to have made any very serious investigation of the facilities actually available and the policies in place.

It listened to a long list of horror stories from voluntary welfare workers and others.

But, as the NSW Minister for Family and Community Services, Virginia Chadwick, has complained, the commission did not feel it necessary to consult her and her department on the issue.

This is, to say the least, a little odd.

Could it be that the commission has a few political axes to grind?

Indeed, the main criticism that has to be made of the commission’s work is that it has adopted what might best be called a pharisaical approach.

Those who have read the Bible — not something much encouraged these days, even though it is impossible to understand our history or our literature without doing so — will remember the story of the man who stood up front of the temple and boasted of his good works and virtue.

This is the stance which has become only too common among professional do-gooders these days. Their hearts are in the right place, while their hands are in the public pocket and their snouts in the public trough.

Just what the main factors are in the problem of family breakdown and homeless children and youth the report never really bothers to try to analyse.

This is difficult — and it is a disgraceful dereliction of duty to approach such a serious matter so superficially.

If the family has broken down, what, if anything, can we do about it?

You cannot force people to be moral or responsible. That is a matter of fundamental social attitudes which no government, no church, no political party, and certainly no gaggle of lawyers and social workers can change.

The increase of social tolerance of the last 25 years is surely desirable. No pregnant girl should be forced out of her home for shame, or made to labour in institutions like the old Salvation Army Home for Fallen Women.

But there is undeniable evidence that the present system of support for single mothers is part of the problem.

The commission did not bother to look at this: except, indeed, to note that children of single-parent families are much more likely to end up homeless.

***
9.
Padraic P. McGuinness, “What price marital sex?,”
The Australian, February 27, 1990, p. 13.

What are a wife’s sexual services worth to her husband? What are they worth to the community? While such questions are both objectionable and absurd, it is an issue raised by the latest venture of the Australian Bureau of Statistics (ABS) into the measurement of unpaid household work.

For quite a while now there has been a section of the women’s movement which has claimed that the fact that women’s work in the household is not paid, and is not counted in the estimates of national income, or gross domestic product (GDP), for the Australian economy as a whole is either misleading as to the value of such work or, worse, is a plot by the male economists and statisticians to undermine the value of women.

The latter line is taken by a former National Party member of Parliament in New Zealand, Marilyn Waring, who has a full-blown conspiracy theory about the nature of national accounts. The real reason why household work is not included in the GDP estimates is, of course, that such figures can be collected with reasonable accuracy only for the market sector of the economy; it has been known from the beginning that the value of non-market work, as for example in subsistence agriculture in poor countries, has always been inadequately taken into account.

It is true, too, that women’s work in even developed industrial economies has a real economic value in that activities like food preparation or child raising contribute to real living standards and the creation of wealth. Moreover, as more and more women move into and out of the workforce (in the conventional sense), artificial fluctuations in measured output take place even though it is just a matter of substituting one kind of work for another. And, increasingly, activities like food preparation and child care can be a matter of payment rather than internal household matters.

The bureau has begun to study this problem on the basis of a pilot survey of the use of household time in Sydney. It has looked at the amount of time women devote to activities like cooking, cleaning, child care, shopping and so on, and estimated on the basis of what they could have earned if they had been paid at normal wages for these activities what the value of the work was.

Extrapolating a small sample to the whole population, the ABS has estimated that in 1986-87 the value of work done without pay in the household was nearly $163 billion, of which 65 per cent, or $106 billion, was done by women. (This is the highest of the overall figures resulting from different methodologies.)

The total value of unpaid household work was equal to 62 per cent of measured GDP in that year, and the value of unpaid women’s work was about $106 billion, or just over 40 per cent of GDP. This is a very large sum, and if divided up appropriately indicates that on average, a housewife not otherwise employed is contributing unpaid work (other than volunteer community work) to the household worth $22,645 a year, or nearly $435 a week — $912 an hour for a nearly 48 hour week. (Employed married men were contributing unpaid work to the household valued at just under $166 a week.)

So treating equal amounts of unpaid work as a fair exchange, you might say that on average housewives not otherwise employed should be paid about $270 a week by their husbands.

Provided, of course, that these figures mean anything. But they do not. First of all, why count any household work as equivalent to paid work? Does the woman get nothing in exchange? Is there nothing special about work contributed to a family? There is a world of difference between care bestowed on a child by the mother and that by a non-related person — they are simply not the same thing. How is household work defined anyway?

An American definition of household work cited by the ABS defines it as “non-market uses of household time that result in the production of a good or service that could be purchased on the market”. Which brings us back to sex.

Clearly sex can be bought — should housewives’ sexual services to their husband therefore be counted as part of GDP? Prostitutes sell sex (and they pay tax on the income, which as far as it can be estimated is included in GDP) — are wives on a par with them? Some of the really loony feminists who think that all men are rapists and all women exploited sexual victims would say yes.

The point is, however, that most household work is an expression of love and/or family solidarity, like sex between husband and wife, and it is absurd to put a price on it. Some husbands may be lazy bastards, but that is hardly the basis for a new economic theory.

In any case, even if the arbitrary exclusion of sex from the unpaid productive activities of women in the household is accepted, the ABS approach has many other, purely economic, defects. It is totally inappropriate to use award wages or average wages ruling in the market for the valuation of work at present not entering the market. For if all the women at present not being paid for household work were to enter the labour market, either the wages of such work would fall catastrophically or there would be mass unemployment of domestic workers. So we would end up pretty much where we started.

There is, too, the question of the intensity and efficiency with which housework is done. Many housewives work hard and continuously — but I have always been impressed at the speed and despatch with which a domestic worker hired by the hour can get through routine housework. And how many domestic workers do in fact earn $9.12 an hour for a 40-hour week, or $365?

Such problems of valuation apart, would it be appropriate for husbands to pay their wives wages for their (non-sexual) work? Maybe — provided it were to take into account wages already paid, in money or kind. How much does it cost to support a wife? Confining ourselves for the moment to single-income families where only the husband is on a wage, there is the cost of rent and food and clothing for the wife.

There is the security and leisure involved in not having to find a job in the labour market. There is the whole complex of services which the lawyers call “consortium”, but since these are mutually provided by each partner there is no point in doing more than considering them mutually offset.

So, basically, since the husband’s money income pays for the expenses of the household, one would have to calculate a net wage for the wife after costing her clothes, her share of the house, her share of the bed, her share of the meals, her share of hot water for personal washing, of electricity for reading and watching television, and so on.

For a family on average weekly earnings, all this could well add up to $150 a week or more. Which leaves us with maybe $120 which the housewife should be paid — if the husband had it.

Clearly no ordinary family could work on this basis. The assumptions made by the ABS about the market value of the unpaid wife’s work are unwarranted, since the money demand for such services would not be forthcoming.

In the case of families in which both husband and wife work, things become a bit more complicated. To the extent that the wife contributes to the family money income and expenses, it is clear that if she does more housework than a husband on the same rate of pay, she is getting a raw deal. Even here, however, it might be said that since wives are in general younger and longer-lived than their husbands, they are getting a bigger share of the family house considered as a life-time asset.

***
10.
Padraic P. McGuinness, “Just what is a woman worth?,”
The Australian, January 9, 1991, p. 11.

It is true that young people, especially young men, have been displaced from many occupations and even displaced from the labour force, over the past 15 years by adult women, especially married women, entering the workplace.

This fact was established by the now-defunct Bureau of Labour Market Research is an important piece of labour market analysis. In the true spirit of tolerance for free scientific investigation, the Hawke Government abolished the bureau for its trouble. This last thing the Government wanted was anybody telling the truth about the labour market. Furthermore, it upset that influential group in Canberra whom Senator Peter Walsh refers to politely as the “hairy-legged Stalinists”.

But it was the analysis of the bureau which was important if anyone had seriously wanted to deal with the problem of youth unemployment. For it pointed to the fact that the rapid increase in the relative wages of young people through the ’70s, largely as a result of government policy, led to a substitution of adult women for inexperienced and over-priced young people. Moreover, this was sufficient, along with the deliberate policy of recruiting women into the Public Service, to swamp and so hide the adverse employment impact of the rising incomes of adult females relative to adult males. The young of both sexes bore the brunt of the overall adjustment of the labour market.

However, this does not at all mean that women, especially married women, should be excluded from the workforce. What it means is that all those campaigns to erode the differential between youth wages and adult wages, especially in the absence of any improvement in training, did enormous harm to the young. It does not follow at all that women should be prevented from entering the workforce.

Although there are many who are nostalgic for the traditional one-income family with wife at home looking after the kids, there is little change of this model ever returning. And there are good reasons why it should not.

For the feminists have one very good point in their analysis of the role of women. This is that in traditional families it is very often the case that women have been deprived of power, treated as inferiors, and prevented from developing their own personalities and talents. The virtue of working outside the home is that it gives women a degree of economic power which enhances the value placed upon them in the home, as well as ensuring that they are not simply subordinated to the interests of the family.

Now, in the best of families of the ideal traditional kind this need not happen. A woman, often well-educated, can devote her prime adult years to the bearing and rearing of children in the home, and when the children are grown lead a full and satisfying life. Unfortunately, the reality is often enough that the woman is borne down by household duties, lives a life devoid of intellectual stimulation, and at menopause finds herself superfluous, with few interests or friends outside the home and its immediate circle, no social role and nothing to do. Often enough this creates the figure of the interfering mother-in-law; few people stop to think that such women are the victims of the narrowness of family life.

In our society it rarely emerges that women are actually physically harmed and destroyed by their role as full-time home-makers, whatever adverse psychological effects they may suffer. But it is not always so in the rest of the world.

In a recent issue of the New York Review of Books (December 20) the economist, Amartya Sen, one of the world’s leading authorities on poverty, famine, income distribution and related ethical problems, has a fascinating piece about the ratio of women to men in the world population. He starts from the well-known fact that while there is a higher ratio of boy-babies to girl-babies born (about 105 boys to 100 girls, everywhere in the world), girls are tougher than boys, and, other things being equal, females survive better than males.

It is a well-known fact that as a result of the greater longevity of women (and the fact that over this century wars have killed many men) there are more women than men. Or is it a fact? Well, it is true that in Europe and North America there are 105 or 106 women for every 100 men; in parts of Asia, including China, there are fewer women — 94 or less for every 100 men. In Australia there is only a slight excess of females over males — about 100.3 for every 100 men.

Why the difference? Sen’s rather horrifying answer is that there are many societies where women are held to be of such small value that they are systematically deprived of medical care and of food by comparison with men, and hence have a much higher death rate than is appropriate on biological grounds.

As a result, he argues, there is a huge “deficit” of women in the world; many more than 100 million women are missing who should be alive today. It is obvious that this is a matter which needs analysis. Sen goes on to establish that it is not just a matter of developed countries versus undeveloped, of rich countries with high health standards versus poor countries with primitive health standards.

For as between countries of quite similar levels of health provision, wealth and economic development there are very clear differences in female survival rates. And even within a country like India there are marked contrasts. What is important is the differences in the role of women and their status in the family.

Essentially, Sen argues, the most important factor is the contribution made by women to the total household income, not just in real terms (this is considerable in all societies) but in terms of outside earnings. That is, women’s status within the family seems to be directly related to what they can command in the market outside the family.

Or, in more complex terms, “The division of a family’s joint benefits is likely to be less unfavourable to women if: (1) they can earn an outside income; (2) their work is recognised as productive (this is easier to achieve with work done outside the home); (3) they own some economic resources and have some rights to fall back on; and (4) there is a clear-headed understanding of the ways in which women are deprived and a recognition of the possibilities of changing this situation.”

No one believes that in a country like Australia women are deprived of health care or nutrition relative to men (although there is an arguable case that the allocation of research effort and public health expenditures to specifically female problems, especially subsequent to the child-bearing period, like the menopause, is much less than it should be); but it may well be that women’s psychological problems which derive directly from the undervaluation of their contribution to the family are analogous to the deprivation of women in poor societies where they contribute no outside income to the family.

What is clear is that women who feel a sense of self-esteem deriving from their own worth in society as measured by the market are much more likely to be happy, healthy and long-lived than those who have been treated as contributors to the domestic scene alone, with a catastrophic decline in the esteem in which their work is held once the children are no longer dependent. This is why the development of the two-income family, despite the lack of flexibility of many work situations in relation to childcare, is an unmitigated benefit to our society.

***
11.
Padraic P. McGuinness, “Economic arteries hardening,”
The Weekend Australian, August 24-25, 1991, p. 2.

Malcolm Fraser always used to say that it was his ambition to get politics off the front pages of the newspapers. It is true that he only really achieved this by way of his accidental adventure in Memphis, Tennessee, but it was a praiseworthy objective.

For the great events in the Soviet Union this week should remind us how lucky we are that the kind of politics we get on our front pages is usually more or less silly speculation about early elections or leadership challenges in the parliamentary Labor Party.

In Moscow, the issue was really whether there would ever be a democratic election at all for the Soviet Union, and whether the first democratically elected leader of Russia in its thousand years of existence would be crushed by tanks.

Indeed, for a while it looked as if the struggle for legality in the Soviet Union (democracy is still to come) would even push the Commonwealth Budget off the front pages.

It did not; but it certainly seems to have distracted everybody’s attention sufficiently to have meant that every newspaper, with the exception of The Australian, took a day or so to realise that the big issue of the Budget was not the size of the deficit, or what it might mean for interest rates, but its introduction of a new and universal compulsory superannuation scheme.

Although it is sensible to encourage superannuation on as widespread a basis as possible, and it is indeed clear that with the ageing of the population the pension system simply cannot continue to be funded as at present from tax revenue without a revolt of the working-age population, the way in which the Government has gone about introducing national superannuation is likely to do considerable harm to the economy and especially to the poor.

In particular, it will hit small business especially hard. To the training guarantee levy already imposed on all but the smallest of small businesses, there is now to be added a superannuation guarantee levy, which will add 3 per cent to small-business wage bills from next July, and 5 per cent to all other wage bills.

These will converge over a couple of years, and it is proposed by the end of the decade to have all businesses paying a 9 per cent superannuation levy for every employee. This is on top of whatever wage and salary increases are awarded through the arbitration system or by collective bargaining.

Now the implication of this is terrifying for those who are unemployed — soon to be one in 10 of the workforce. It means that even when economic recovery comes next year, and it is likely to be a pretty weak recovery, employers facing a tax on employment which is guaranteed to rise over time will be very hesitant about taking on new workers. This means that high levels of unemployment will persist for years.

All this is in the name of the wages Accord between the Government and the ACTU.

The Accord certainly played a role in the great recovery of employment in the first years of the Hawke Government. Just how much of a role it played is uncertain — international comparisons indicate that the lesson of wage restraint learned in 1982-83, when a wage explosion produced the last recession, had more to do with union restraint and employment recovery than did the Accord. But it may have helped to reduce the strike rate.

However, whatever the value of the Accord in the first two or three years of the Hawke Government, it soon began to escalate in cost. That is, the cost of buying off the ACTU rose, while the benefits, if any, of the Accord rapidly diminished.

Nevertheless, the Government became more and more firmly locked into the Accord, to the extent that the ACTU effectively became an arm of the Government and even began to dominate government policy in economic and industrial relations matters.

Paul Keating, in particular, became a slave of the Accord and by abandoning fiscal responsibility by way of wage-tax trade-offs he was forced to rely on monetary policy to try to control the balance of payments deficit — hence the high interest rates and the recession we are now enjoying.

The importance of this is not just the allocation of blame. It is clear that the ACTU is now so obsessed with accumulating and reinforcing its own power that it is sacrificing the interests of the workforce as a whole and of its own union members.

(The NSW Labor Council has begun to realise this and is expressing more and more discontent about ACTU policy.)

Thus the reason for the present high rate of unemployment is the cost of maintaining the Accord. The new superannuation policy, introduced at the behest of the ACTU, will ensure that unemployment stays high much longer than it need — unemployed people seeking work will simply be priced out of the market.

Chronically high unemployment is being built into the system. Rather than the labour market becoming more flexible, it is becoming less flexible.

There is a name for this process. It is well known in Europe, where labour markets have been increasingly tied up in complex social legislation and employer-financed social insurance and superannuation schemes.

The name is Euro-sclerosis, the seizing up and hardening of the arteries of economic life, so that high levels of unemployment and poverty are built into the employment system, and those lucky enough to have jobs do well, while a substantial minority, usually those from underprivileged groups and immigrant communities, are condemned to the underclass for life.

This is the system that the Government and the ACTU between them are imposing on the Australian people.

The reason given for this is that a system of compulsory superannuation, a form of compulsory savings, will both lift the proportion of national income saved instead of spent on present consumption and ensure a lower burden on the workforce in the future. But this is almost certainly not true.

First of all, the weight of economic evidence is that imposing compulsory savings on individuals does not increase total savings. It simply causes people to save less of their residual income, their take-home pay.

They also know that they are being forced to provide for their old age and simply make less effort to prepare for it themselves. It can be argued that the system of universal old-age pensions has already had some effect in this regard — it is well known that there is a thriving industry advising people how to dispose of their lump-sum super payments so that they will not miss out on a penny of pension payments or entitlements. If all else fails, you can blow it all on an overseas trip.

The universal superannuation scheme in New Zealand, with extraordinarily generous benefits, is being modified by the New Zealand Government, but not before the scheme produced large-scale emigration and — along with the other forms of middle-class welfare rife in that country — nearly bought its economy to a standstill.

The hard truth is that people will only increase their savings if they know they are going to need to provide for their future.

There is every reason for retaining a safety net for those who, through no fault of their own — such as being victims of the ACTU — do not build up adequate superannuation entitlements.

No one should have to live in poverty. But there is a difference between a safety net and the moral hazard of future certainty of subsidy and income maintenance.

All compulsory savings schemes fall to the ground on the probability that they will not increase total savings.

***
12.
Padraic P. McGuinness, “Why welfare is of poor benefit,”
The Australian, October 8, 1991, p. 13.

When he criticised the welfare lobby at the Australian Council of Social Services annual conference recently, the Leader of the Opposition, John Hewson, was, of course, entirely justified. The welfare lobby has become a political movement with its own ideology and is far more interested in pursuing this than in relieving poverty and helping the poor.

However, there are two important qualifications which need to be made to such a statement. First, there are very many people working in both government and non-government welfare organisations who do an enormous amount of good and useful work with the best of motives. At the grassroots especially, bodies such as the Salvation Army, the St Vincent de Paul Society or the Brotherhood of St Laurence, and many others, act effectively to relieve misery and to save the rejects of society and the blameless casualties of a selfish world.

Second, even the most politically and ideologically driven of the welfare lobby leaders usually act out of the best of motives. But too often they are unwilling to consider the compatibility of their passionately-held conviction that poverty is a curable evil, with the programs and analyses they put forward to achieve that aim. Quite frequently they end up combining a deep and sincere hatred of poverty and inequality with the espousal of policies which make it worse.

Dr Hewson, as an economist (whatever his deficiencies as a politician), knows perfectly well that there is a huge and growing body of evidence which shows not only that many of the policies supported by the welfare lobby do not work, but that they do actual harm to the people they are supposed to help while benefiting people who do not need or deserve help, as well as the welfare bureaucracies, government and non-government.

To point this out is, of course, to be categorised immediately as an “economic rationalist”, a label which means nothing but that the person using it understands little or no economics. There is nothing new in this kind of term of abuse; the great British socialist politician Nye Bevan threw at Hugh Gaitskell, the leader of the Labour Party and a highly qualified economist, the accusation that he was a “desiccated calculating machine”. Subsequent British historians have shown that Gaitskell was by far the more honest, compassionate and practically humane of the two.

The conclusions of economic analysis have always been unpalatable to those who would like to leave their assumptions, ideological preconceptions and policies unexamined, hidden from the light of day, so that they can indulge in orgies of emotion and sentimentality and plunge their snouts in the public trough in the name of culture, welfare, equality or justice. Not all benefit in material terms — indeed, some of the most irrational advocates of unanalysed policies are personally abstemious and enjoy little material reward. Power has always been a non-economic benefit.

There is plenty of evidence about the causes of poverty and unemployment. A study by a group of economists led by Richard Layard at London School of Economics has recently been reported (The Economist, September 28) which produces yet more material justifying two basic propositions: that successful union efforts to raise wages are a leading cause of unemployment, and that unconditional welfare payments to the unemployed tend to make them permanently unemployed. It is important to realise that these economists are not of the “New Right” but come from the Keynesian Left. In the past, Layard has resisted such conclusions.

It seems to me that anyone who was sincerely interested in reducing poverty would, however reluctantly, take such conclusions into account in formulating policy. If wages are set by unions and arbitration authorities too high to allow many would-be workers to find employment, it is not sufficient merely to parrot out that such workers are entitled to a decent standard of living. Yes, they are — but the policy issue is how to achieve that without condemning a proportion of the workforce to become a permanent under-class.

Moreover, if it is true that unconditional welfare payments with no time limit actually tend to discourage people from seeking work, and higher real levels of such payments encourage them to become permanently dependent, then it is clear that one of the most important effects of the welfare system is to produce such a permanent under-class.

Although few would be cynical enough to consciously wish for a such a result, such a class produces a secure basis for the incomes and careers of government, and some non-government, employees in the welfare industry.

It is no use ACOSS and other such bodies attacking Dr Hewson for saying what he did. Rather, they need to have regard for the beam in their own eye — the basic truth that they have often in the past been selective in their choice of what they want to believe when it comes to economic research. And while the economic spokesman for ACOSS, Julian Disney, is a distinguished academic lawyer, his economic expertise is not well-established.

If the welfare lobby really does want to overcome poverty, it has to give up the notion that because of its good intentions, it has a monopoly of truth and a monopoly of goodwill. Most economists who come to analyse the problems of poverty and unemployment do so because, for the best of non-economic reasons, they sincerely want to find out how to overcome these problems. But the first step to making good policy is to understand the problems. If you really want to cure unemployment, you can not do it by means which create unemployment.

If wages are too low by any humane standard, it is not enough to increase them by decree. This simply means that the living standard of the employed is maintained by the misery of those who cannot get jobs. The really hard problem is how to raise the living standards for the poorest while not at the same time pricing them out of work or destroying their incentive, as well as their suitability, for work.

This must require a complex of policies, perhaps including wage subsidies as well as compulsory retraining. It will also involve increasing taxes on high- and middle-income earners (either through income tax or through a goods and services tax, or some mix of these) in order to ensure employment for the poor.

Simply to call for higher welfare benefits without considering how these will affect the behaviour of recipients, or higher minimum wages without considering how this will affect opportunities for employment is irresponsible in the extreme. Yet this is the common theme of most of the welfare lobbies.

It is true that ACOSS and some others are becoming rather more discerning in their policy pronouncements and the kind of policy advice they commission. Dr Hewson is nevertheless perfectly correct in identifying a political bias against the kind of policies which he, as an economist, tends to favour.

There is a long of nostrums advanced by the welfare lobbies which are known to be positively damaging to the poor, or more beneficial to well-off groups of claimants.

Rent control is a classic case: it hurts the poor by raising the rents for uncontrolled property and by making landlords reluctant to rent housing at all without key money. Subsidies on housing mortgage interest is another: this benefits the middle-income earners far more than the poor. Public housing is another: it creates a privileged class of occupants, undermines the private rental market and usually creates widespread corruption. It is ACOSS which needs to apologise, not Dr Hewson.

***
13.
Padraic P. McGuinness, “We need to make people want to work,”
The Australian, February 28, 1992, p. 13.

One of the most disturbing aspects of the economic scenario underlying the Prime Minister’s One Nation statement is that it indicates very clearly that we will not become “one nation” as far as poverty and unemployment are concerned.

Even with the inevitable recovery and the additional stimulus to economic activity coming from the package, unemployment will decline only slowly, still being as high as 7.75 per cent in 1995-96. Moreover, the experience of the ’80s served to show how intractable is the problem of poverty among the unemployed and other disadvantaged sectors of the community.

Paul Keating subscribes to the view that economic growth is in itself the cure for poverty. Recent experience in developed economies does not support this view. Nor is it possible, it seems, to reduce unemployment levels to the low rates of Keating’s youth without risking accelerating inflation. What has happened and why?

The latest issue of the Brookings Papers on Economic Activity, published by the Democrat-inclined Washington think-tank, the Brookings Institution, has a couple of extremely interesting detailed studies of these issues. Their conclusions are, of course, of considerable importance if you really care about solving the problems of poverty and unemployment as distinct from emotionalising about them as is usual among the professional bleeding hearts of the welfare industry.

The conclusions are not all that palatable. On the causes of the increase in the “natural” rate of unemployment (there is, of course, nothing natural about it) it emerges that, first, the rise in the rate of unemployment which is “basic” over the past 20 or 30 years seems to be related to the changing demand for labour — there is a shift in favour of demand for skilled and educated workers against those with few skills of any kind. (This is not dissimilar to the phenomenon described some years ago, inaccurately, as “de-industrialisation”.)

Second, there is the problem that a greater proportion of the potential workforce now prefers either to be unemployed or to withdraw from the workforce altogether rather than accept wages and conditions which it considers too low. What are the reasons for this? One is clearly that there is a genuine alternative to being in the workforce, namely living off unemployment or similar welfare benefits. It also seems that more and more of the workforce demands wages and working conditions of a kind beyond their actual value in the labour market.

A classic example of this is the way in which the children of immigrants assimilate the culture and work attitudes of their receiving country rather than those of their parents. One of the contributors to the Brookings discussions suggested that television might have a lot to do with this problem, in that kids are brought up believing that work is about the relatively glossy models presented in advertising and soap operas rather than the reality. It still comes as a surprise to me to talk to young people who feel that they are exploited if they feel tired after a day’s work.

It emerges from the American studies that there is a clear relationship between lack of skills and welfare, or transfer, payments to those who otherwise would feel compelled either to accept low-paid work or to remain in the workforce actively looking for work. To treat these two groups together is useful, since it avoids the statistical problem of distinguishing between the unemployed according to standard definitions and those who have dropped out of the workforce, permanently or temporarily.

The evidence on poverty is that it is true, despite the fact that income distribution figures do not always reflect the true standard of consumption of the poor, that in relative terms the poorer groups have dropped back despite continued economic growth. Part of the problem here is to distinguish between absolute poverty and relative poverty. In relative terms economic growth can produce greater inequality while at the same time the consumption standard of the bottom group is rising. However relative standards cannot be dismissed — there is no doubt that the television set which was a luxury 30 years ago is a necessity now.

So it emerges that there has been a genuine erosion of the position of the poorest groups in the US over the ’80s, and a lot of the blame has to be laid on the reduction of transfer payments — welfare and so on.

These studies are the nearest thing we have to hard information as to what is happening to the causes of both unemployment and poverty. But they are very difficult as a guide to social policy. For the implication is that the rate of non-employment (unemployed plus dropouts from participation in the workforce) is directly related to the standard of welfare payments. This is also confirmed by the work of Richard Layard and others in the most important recent comparative study, Unemployment (Oxford University Press).

In harsh terms, it suggests that the most effective way to reduce the “natural” rate of unemployment is to force people back into the workforce — either by reducing their welfare payments or by some other means. This evidence is what the Opposition has in mind when it proposes to shorten eligibility periods and toughen up the conditions for receiving the dole. In other words, people have to be starved back into the workforce for their own good.

The alternatives are even harsher — that is, work-for-dole schemes or other forms of coercion, like insisting that people receiving welfare payments undertake some kind of training, reskilling or perhaps social service employment like helping out in hospitals. (The trouble is that the more dignified the alternative, the more determined are the unions to prevent it.)

However, to insist on making people look harder for work, and participate in the active workforce, by cutting welfare payments, increases poverty, especially in the most vulnerable group, the single-mother families.

In earlier times, there was a culture of work among the poor which was, in effect, a form of moral coercion. You felt bad if you did not have a job, and so looked hard for work and accepted any kind of menial work (or, in the case of women, resorted to prostitution) — and welfare payments were usually administered on an ad hoc basis by religious organisations which were very disapproving of what they saw as laziness. This kind of moral sanction is no longer so easily available, especially as regards the children of the middle classes.

So what to do about poverty and unemployment? The lessons of the analysis are reasonably clear, and to the great credit of Paul Keating and his advisers have obviously fed into the education proposals of the One Nation statement — which are by far the best part of the statement.

These are that the alternative to starving or coercing the poor into employment is to increase their employability. You can do this by spending money and effort on upgrading their workforce skills when they are young — this is the point of the great emphasis on post-school vocational training and TAFE education — coercing them in a reasonably gentle way into retraining or workforce re-entry education when they are not so young, and making welfare payments conditional on some co-operation in these matters. It would also help to improve the performance of teachers and schools.

It is not the fault of those who have become unemployed as a result of past economic policies that their employability, or inclination to work, has deteriorated or that they have willy-nilly discovered alternative, even sometimes criminal, ways of maintaining their living standards and self-respect.

What we have to solve is the problem of making people want to work, giving them the skills, educational and social, to do so, and ensuring that they will not be forced into poverty in the interim. At least the Keating statement indicates that there are some people in the Government who understand the problem.

***
14.
Padraic P. McGuinness, “A poor show when private welfare stays in the shadows,” The Australian, May 22, 1992, p. 19.

A usually sensible professor of economics said to me recently that those on the political Left care more about the welfare of the poor, and do much more in practical terms, than those he considered to be on the political Right.

Of course it ought not need to be said that the meaning of Left and Right is pretty hard to determine these says; what he meant was that he considered those who make most noise about welfare and demanded more and more government welfare funding were on the Left. But in these terms there is a distinct clash with what were once Left values, of equality of opportunity, freedom, self-respect and the dignity of the poor.

Moreover, I am not at all sure that bodies like the Salvation Army and the St Vincent de Paul Society, along with many others who do an enormous amount of practical welfare work, would care to be described as left wing. Certainly few people perceive the Sallies in these terms. In other words, he was talking nonsense.

Compassion, concern for the poor and the weak, and practical measures to alleviate their problems, have a lot longer history than the political debates of the 19th century — and the voluntary welfare organisations which have sprung up to deal with these issues have at least as long a history as government welfare. But private welfare, as distinct from public welfare, gets very little attention these days. This is partly the fault of the private welfare sector itself.

The various non-government welfare organisations have formed co-operative bodies, on both State and Commonwealth levels, to deal with governments — the peak body at the federal level being the Australian Council of Social Services. But as has happened with the non-government organisations concerned with foreign aid, they have become highly politicised and in effect betray the voluntary nature of their members by meddling in politics and policy.

Far from concentrating on their brief of offering help to the poor and disadvantaged, bodies like ACOSS convey the impression that they are little more than lobby groups demanding more and more public money to be spent on public welfare and on the maintenance of an army of welfare workers who have their own political and social agenda. (Interfering between parents and children on mere suspicion might well prove to be part of this, as it has in other countries.)

This is not, fortunately, what the private welfare sector is all about; the Salvos get on with practical work more than politicking, as do many of the others. And to do this they depend greatly on private donations. They might well do a bit of hard thinking about whether ACOSS and its State equivalents are serving them or the poor, homeless, disadvantaged, handicapped, etc, well — or are doing them a positive disservice.

The role of private welfare in the overall welfare system is examined in a recent monograph, Private Welfare by James Cox, published by the Centre for Independent Studies in Sydney ((02) 438 4377). Cox is an economist who has worked on welfare issues for years, and since 1989 has been a consultant to the NSW Cabinet Office.

He argues that there is an imbalance between governmental and private welfare which has important economic, social and moral implications. The most important of the moral and social implications are that on the one hand the poor have been made increasingly dependent on government welfare, and have developed an “entitlements” mentality which has clearly done them harm, while on the other hand the rest of the community has become relatively indifferent both to giving direct assistance to the poor and to provision for their own possible future needs. Private welfare has been increasingly “crowded out” by public welfare.

This has serious implications for social cohesion and ordinary standards of behaviour — we have seen the failures of public welfare demonstrated graphically in Los Angeles. Private donations and voluntary welfare work are important to social morality since it involves direct concern — whether the motives be compassion, religion or no matter what. There is genuine virtue involved in the giving of direct aid which does not attach to the paying of taxes under protest, which then to many people absolves them of any further responsibility. (It is clear that the many people dying of AIDS depend much more on private compassion and care than on the public welfare system.)

There are also adverse economic effects of the crowding out of private welfare by public welfare. Clearly it acts to reduce savings ratios and lessen the provision for their own old age or incapacity of people who are at present able and employed. This is the problem which the government is acting clumsily and ill-advisedly to remedy by superannuation.

Public welfare is, too, often much less efficiently delivered and well targeted than private welfare delivered by voluntary organisations which are much closer to the recipients of aid, and can judge its necessity and efficacy much more accurately than the public bureaucracies which have to be much more concerned with procedural justice as well as following rule books.

It is still the case, as Cox points out, that private welfare is more important, and probably much more important, than government welfare. For this reason, especially when government budgets are tight, it is important that the private welfare sector not be further crowded out, and the social indifference on a private and personal level to helping the disadvantaged should not be further encouraged. Moreover, it is desirable that the system should not be structured so as to divert voluntary and community effort to lobbying, like ACOSS, for more and more government subsidies. (Perhaps I should add that the author makes no reference to ACOSS.)

Cox does not argue against public welfare. He strongly supports the existence of a universal safety net provided by government. But he is concerned about the efficiency of the delivery of welfare, and its effect on its recipients, and argues that all the evidence shows that much of the final delivery of welfare can be better achieved by private welfare organisations, as well as by depending on family and social networks when these are available.

Many institutions which once played an important welfare role have virtually disappeared. In their early days, trade unions and related friendly societies contributed greatly both to welfare and to social solidarity. For the most part, the unions have abandoned this role. Health insurance, co-operative housing societies, even funeral benefits societies, also once had an important role which has since been lost. And the decline of the family has led to more and more dependence on public welfare. (It is only recently, for example, that single mothers’ benefits have begun to be matched by requirements for maintenance payments by natural fathers.)

The reasons for the decline of the family and of private welfare are complex, and it is not useful to set up a simplistic cause-effect relationship between public welfare and social disintegration. Nevertheless, it is clear that there is an inter-relationship. Cox’s monograph goes on to discuss various measures by which the delivery of welfare services can be exposed to greater competitive pressures for efficiency and efficacy, and the dead hand of government and bureaucratic social workers lifted.

***
15.
Padraic P. McGuinness, “Vested interests leaving young out in the cold,” The Australian, July 7, 1992, p. 13.

As an economist, John Hewson must surely be aware that there are a number of serious defects in his proposal to reduce youth unemployment by reducing the minimum wages of young workers. But he deserves credit for bring the issue of unemployment, and possible remedies for it, once more to the forefront of public debate.

The first thing that needs to be said is that economists (that is, those with real training in economics, derogatorily called rational economists) do know what to do about unemployment. What they do not know is what to do about the complex of vested interests, progressives, romantic conservatives, unionists, religious moralists and human failings that make the implementation of policies against unemployment so difficult.

There is some irony in the fact that the Liberal Party and the Labor Party have reversed their traditional roles in this as in other respects. The Labor Party, in one of its first acts in office, abolished the Bureau of Labour Market Economics — which was telling the truth about the causes of unemployment — and has become the party of defence of vested interests, of the well-off against the poor and disadvantaged. Thus it has perpetrated a superannuation scheme that benefits the high-income against the low-income, the middle-aged against the young. Its labour-market policies similarly benefit the securely employed against the marginal employees, the experienced against the young, the powerful unionists against the weak unemployed.

The Liberals are now the true radicals. But they must realise that while reduction in minimum wage youth wages is a necessary condition if youth unemployment is to fall, it is far from being a sufficient condition. The whole problem of unemployment is far too complicated for that.

In the case of youth unemployment alone, it is not just a matter of reducing the price to the employer of young workers. There is a demand side and a supply side. On the supply side of labour, every textbook tells you that reducing the price to the supplier will usually reduce the amount supplied. Young people, many of whom are already reluctant to work at existing rates of pay, especially full-time, will see low-income leisure as a more attractive alternative. If low-paid work is to become attractive, the alternatives will have to be made even less attractive. The main alternatives are living on the dole or living on Austudy (disguised unemployment for many).

One way to make the dole less attractive is to reduce it. But unless there is some guarantee of employment, this is a harsh, starvation policy. Another way is to make it less attractive by introducing an element of coercion, in terms of compulsory training, work-for-dole and “labour battalion” approaches.

(A way of making Austudy less attractive is to link it to performance in study: that is, those who pass their — independently assessed — exams get Austudy; those who do not get thrown out of tertiary or further education.)

A recent novel, appropriately titled Praise, since it has been greatly overpraised by the literary establishment, is a useful point of reference on all this. Written by Andrew McGahan, this is a particularly unsavoury account of aimless sex, drink and drugs among the children of the baby-boomers. (There will, therefore, be a concerted push to have it put on the school syllabus, so that it might contribute to the destruction of another generation.)

What this social document (selective, unrepresentative, etc) makes clear is what everybody knows — that there is among some of the young a culture of chronic unemployment and dependence on the dole, interspersed by spells of part-time or casual unskilled work, with permanent employment hardly contemplated as a worthwhile option. The search for excitement and oblivion inevitably leads to the use of hard drugs as well as excessive drinking; sex becomes an unpleasant compulsion and drug in itself, affectless and promiscuous. Sexually transmitted diseases are an inevitability.

The kinds of young people depicted by McGahan (and who does not know someone like this?) are in a state worse than being simply unemployed. They have become addicted to unemployment and hopelessness (critics of rational economics will be delighted to learn that there is an economic theory of “rational addiction”) such that even secure employment at anything like normal wages is unattractive, and the more so is any work beyond the minimum necessary to obtain additional pleasures like the occasional drug score.

In such a state, it is easy to blame others — older people, “society”, capitalism or whatever — for your problems, and persist in a chronic state of low-level dependency, which ends up as in inescapable vicious circle. Clearly it is difficult, both psychologically and practically, to break out of this state. When secure employment is monopolised by unions and similar groups of “core” workers, and limited by macro-economic policy in an attempt to control the inflationary depredations of unions, the sense of hopelessness has some justification.

Thus there are powerful factors operating on the supply side of the young labour market which ensure that, especially after a longish period of high youth unemployment, there will hardly be an eager supply of young workers who will snap up any new jobs that become available as a result of lower wage costs to employers.

To put it bluntly, an element of pressure, of coercion, is going to be needed if the harm done already to these people is to be overcome. Repugnant as this is, could it be any worse than the present situation?

Then there is the problem of demand for young workers, even at lower wages. In current economic circumstances, it is clear that even a substantial reduction in labour costs is not going to lead to a surge in employment. To confuse the terminology, there is a supply problem as far as new jobs are concerned, also. Shortage of demand for goods and services (Keynesian effective demand) can easily be overcome — and there is no evidence, judging by our current account deficit, that this is the main problem.

What we have to overcome is shortage of supply of additional jobs — and this is a matter of the structural rigidities of the labour market, of the barriers to new entrepreneurs, of taxation, environmental, interest-rate and other policies that make job creation difficult. Otherwise, getting some unemployed people into jobs will simply displace others.

As the point is expressed in the most authoritative study of the causes and remedies for the problem, Unemployment, by Richard Layard and others (Oxford University Press), a monumental study which ought to be compulsory reading for anyone who pretends to talk seriously about this subject: “Discussions of displacement normally involve a profound misconception. They assume that demand is limited, so that if someone gets a job there is one less job for others. If demand is limited, that is of course true, and there would be no point in having any labour market policies. However, in fact demand can easily be changed. What puts a limit on feasible demand is feasible supply. Labour market policy works only if it affects the economy’s supply potential. And if it does that it cannot fail to have an effect, since in the long run the supply side rules.”

Not only do we have to deal with the legacy of our past economic and social policies as they have harmed our young, as well as the chronically unemployed older workers, we have to deal with the invincible selfishness and the vested interests of those who have done and are doing very nicely. And no economist knows the solution to that.

***
16.
Padraic P. McGuinness, “Older but no wiser on jobless,”
The Australian, July 8, 1992, p. 15.

While youth unemployment is a problem that, through sensible wages policy and policies of training, education and rehabilitation, offers hope of remedy, what are we to do with the increasing numbers of long-term middle-aged unemployed?

Professor Judith Sloan, head of the National Institute of Labour Studies at Flinders University, has argued (at the recent Liberal Party unemployment summit) that the plight of those who are unemployed at 45 or older is worse than that of the youth because the numbers of genuinely unemployed young people can be exaggerated and, more importantly, because the older unemployed have little hope of ever rejoining the full-time labour force.

The awful truth is that the numbers of long-term (meaning more than a year) unemployed are growing, that on less optimistic scenarios they will number in 1995 as many as half a million, and that most of these are in the older age group who for all practical purposes are already in compulsory retirement.

But they have no automatic entitlement to the pension and they are obliged to sign on for the dole and make the motions of job hunting when they know, and we know, that with existing wage levels and the shortage of unskilled jobs they have little chance of full-time permanent employment.

While it is necessary to restructure the economy to overcome the burden of past over-manning and inefficiencies, it is a heart-breaking matter to contemplate the effect on men who have assumed they had secure employment until retirement age of being thrown out on to the streets.

Much of the blame should, of course, be attached to the union leaders and others who lied to their members for so long about the prospects of ripping off into the indefinite future the rest of the public, especially in industries such as telecommunications, railways, electricity generation and others in the public sector.

But allocation of blame is not terribly useful. In any case, it needs to be spread more widely among the rest of the community, who effectively connived at these practices.

The ideal way to overcome unemployment, both young and aged, would, of course, be to lift the rate of growth of the economy, and remove barriers to transfer of employment and new employment so that the surplus labour would be reabsorbed at the margins of existing employment. That is, a combination of an expanding economy and a lower minimum wage would go a long way to solving the problem.

To this, however, must be added, in terms of a particularly obnoxious piece of economists’ jargon, the problem of hysteresis. This is a particularly silly adaptation of a term from electrical engineering to substitute for the crashingly obvious notion that unemployment is bad for people.

All “hysteresis” means in economics is that if you throw someone out of work for a substantial period of time, he or she will suffer from loss of skills and motivation. However, to it must be added a moral problem — that an unending horizon of benefits means that after a while people give up looking for work. All the evidence supports the fact that when unemployment benefits have a limited duration, the unemployment rate tends to be lower. That is, people are forced to find work.

But this is a harsh truth, and very unfair to the unemployed when union monopolies and legal minimum wages effectively make re-entry into the employed workforce very difficult indeed for those whose value as workers has been rendered questionable by long periods out of the workforce.

As with youth unemployment, we are faced with a terrible dilemma when dealing with the long-term middle-aged unemployed — if we are too kind, we are encouraging them in an addiction to unemployment and dependency. But to force them back into the workforce by inflicting poverty on them should be unacceptable to a civilised society, especially one as rich as ours.

So what do we do? Job creation has to be part of the answer. But the record of public sector job creation (filling in holes in the ground, landscaping university grounds for the children of the middle classes, and so on) is not very reassuring.

The greatest obstacle to job creation is the unions, which see any creation of useful work as an infringement of their monopolies, and demand award wages for people who are out of work precisely because they cannot get work at award wages.

Here the main cost is that of providing supervisory roles — if there are no qualified supervisors, job creation is very difficult and expensive. Then there is the problem of instant tenure — once you get someone on the public payroll, it is extremely difficult to get him or her off again.

What is needed is some way of providing useful and non-humiliating work for those who are unable to obtain it after a reasonable period of job search, and to facilitate transfer from this type of work into ordinary private sector jobs as they become available during economic expansion.

Unhappily, one of the major obstacles to smooth is that as soon as unemployment rates begin to fall, wage demands by the regularly employed begin to pick up, and, to control accelerating inflation, restrictive monetary and fiscal policy is called into play yet again.

If it were possible to guarantee a longish moratorium on wage increases other than by way of individual bids for scarce and skilled labour of all kinds, there would be a chance of bringing the long-term unemployment rate down in the process of sustained recovery.

This also is the path to generally rising living standards — the best way to distribute the gains from productivity growth is through falling real prices (any comparison of money wages to money prices of manufactured goods shows that there has been a long-term fall in real prices) rather than money wage increases.

But as long as we cannot rely on restraint in union wage demands at rates of unemployment much lower than our present level of more than 10 per cent of the workforce, with a rising proportion of long-term unemployed, there is no job-creation path to solving the unemployment problem.

Let us be perfectly clear on this point — we have nearly a million unemployed and about 300,000 who have not worked for more than a year because the union movement wants it that way.

Given that restraint, what can we do about the unemployed, other than leave them to rot on the dole? Not much at all. For any improvement in their lot, through additional payments, special training and job-start programs, job creation outside the sectors of the labour market monopolised by the unions, or special make-work employment schemes of any kind, will have to be paid for out of the public purse — that is, through taxes.

Where are those taxes going to come from? From you and me, the relatively secure and well-paid wage and salary earners. There is no solution in deficit financing (we have enough of demands on capital markets already); nor can the money come from the business profits that generate employment. If we are to help the unemployed, we have to pay higher taxes.

***
17.
Padraic P. McGuinness, “Ideology burdens the state of welfare,”
The Australian, July 9, 1992, p. 17.

The uproar, especially from the cynical propagandists, about the Opposition’s “heartless” proposals for lower minimum youth and adult wages as a means of getting people back into work is having some impact only because the Liberals have not joined their proposals to a comprehensive welfare policy.

Not that the Liberals do not have a welfare policy. What they have failed to do, however, is to successfully join it in the public mind to their employment policy. This is partly because they quite justifiably believe that private welfare, delivered through voluntary welfare organisations, the family and self-help (saving and insurance by those in work against the possibility of unemployment and sickness) is to be preferred to a centrally administered, all-embracing social security system.

They are on good grounds in this, since the experience of the welfare State over the past 50 years is that it creates dependency, destroys incentive and motivation and creates insoluble problems for responsible democratic government.

However, this is not enough. It is clear that the breakdown of traditional family life and the expectations of family support have progressed to such an extent that this system of welfare no longer works on a general basis, if it ever did.

The voluntary welfare agencies have surrendered an increasing proportion of their independence to government, and their central co-ordinating agency, ACOSS, has degenerated into little more than a lobby group whining for more government handouts. Private provision for sickness, medical treatment, unemployment and old age has been fatally undermined by government provision and regulation.

So the Liberals, and others concerned with real solutions to unemployment and poverty, need to consider what welfare system is compatible with both humane treatment of the unfortunate and avoidance of chronic dependency and unemployment.

The best starting point is probably the proposal put forward years ago by that guru of free markets, Milton Friedman — a guaranteed minimum income. Thus young people cannot really be expected to live on a $3 an hour minimum wage — but if they are not worth more than this to employers, then it is appropriate either for their wage to be subsidised to a higher level by government or for it to be supplemented through the welfare system. Similarly, the old and the sick ought to be guaranteed a minimum income, as also the unemployed.

The twin problems surrounding this (as well as many technical though not insurmountable problems) are the level of a GMI (guaranteed minimum income) and the means of paying it so that it does not destroy work and savings incentives and create long-term dependency. The calculation for many years of the “poverty line” by the Melbourne Institute of Economic and Social Research has poisoned this concept, since it is defined in such a way as to ensure that as average wages rise more people supposedly will be in poverty. So for a start we need a realistic concept of poverty.

The other problem is, of course, that of preventing addiction to dependency. Proposals put forward by the Liberals and others (like the Centre for Independent Studies in Sydney) for some privatisation of the welfare system over time might provide a partial solution. But in the end there has to be a degree of compulsion. No welfare payment, except for those genuinely unable to work, should be unconditional; and the welfare payments have to be set at a really austere level. There is a good case for devolving the management of such welfare on to voluntary organisations mainly staffed by people of genuine compassion rather than those making a bureaucratic career out of welfare spending.

There is also a case for some compulsion in welfare contributions. Thus fathers are at last being required to contribute to the support of their natural children, whether they live with the mother; in the same way parents ought to be held financially responsible for their children (and punished for the obscenity of simply throwing kids out on the streets), working adults for their aged parents, and so on.

If the financial capacity is not there, community service is an excellent substitute. That is, if for good or bad reasons a person enters into a family relationship, that relationship should not be terminable simply by divorce or renunciation.

But the starting point for a policy on unemployment which will both work and be compassionate is to combine substantial reductions in minimum wages with a form of GMI, however administered. I am sure that the Liberals have something like this in mind, but it suits many commentators and supposedly objective reporters to pretend that the intention is simply to drive the young into poverty. It is necessary, if the policy of reducing labour costs to employers of marginal workers is to be sold to the public, to couple it always with the welfare compensation proposed.

Interestingly enough, this fits in well with the goods and services tax proposal. The GST already is to be coupled with compensation for welfare recipients so that it will not penalise the really poor whose main forms of expenditure are on goods and services not already taxed, or lightly taxed (although under the present system the impact of tariff and quota protection as well as sales taxes on shoes and clothing hits the poor very hard). A guaranteed minimum income coupled with a universal single-rate value-added tax, that is the GST, is the most equitable taxation system ever devised.

If it is desired to compensate for inequalities in society, to this can be added an income tax with a degree of progressiveness, wealth taxes and inheritance taxes. Ultimately, it has to be remembered that all taxes are taxes on individual incomes, and the appropriate place to levy a tax is at the final point of consumption or enjoyment.

There are many practical difficulties in reducing labour costs to employers by subsidy, so as to promote increased employment. Such systems can be abused, as when some employers simply replace unsubsidised workers with subsidised workers, or replace those employed during a training period with a new set of “trainees” after the initial period expires. Although it is inevitable that abuses and exploitation will take place, it need not be widespread. It will certainly not be the rule among large employers of young labour who cannot afford to get such a bad reputation in the labour market that they cannot get willing workers.

And it is true that any subsidised group will tend to replace members of an unsubsidised group, with cheaper young labour replacing marginal adult labour.

This is probably why the best approach to getting people back into the labour market is simply to reduce minimum wages, as proposed, rather than subsidise them, and to supplement low wages through the welfare system.

In the long run, of course, we have to find out how to run a welfare system which does not harm the recipients. Increasing privatisation and use of voluntary welfare organisations to distribute welfare payments has to be an aspect of this.

The fundamental issue is that we know that under the existing welfare system there is no solution to mass unemployment and the corruption of the poor into chronic dependency. Solutions which will work require less ideology and more serious piecemeal experimentation.

***
18.
Padraic P. McGuinness, “Unemployed plight the shame of mindless militancy,” The Australian, July 10, 1992, p. 13.

It is not surprising that the secretary of the Australian Council of Trade Unions, Bill Kelty, has been almost invisible in recent weeks. For if he were visible he would have to be seen hanging his head in shame.

This is not because of his role on the board of the Reserve Bank of Australia — the Opposition attack on this is misconceived — but because of the huge contribution he has made to unemployment, which yesterday reach a post World War II high of 11.1 per cent.

While one union, the airline pilots, has been ruthlessly destroyed by the Government with ACTU support, others which have done and are doing far more damage to the Australian economy and employment are allowed to carry on. The pilots made the mistake of staying outside the umbrella of ACTU protection.

The railway workers did not make that mistake. So, although it is now more than four months since Keating announced significant increases in infrastructure spending in his “One Nation” statement last February, the railways unions are still arguing about the conditions under which they will accept such spending.

How can the Government set about creating employment and stimulating economic activity by increased spending, when the unions are going to argue the toss about the modalities of such spending, and insist that none of their “hard-won gains” should be affected? It is clear that the unions are not particularly interested in employment creation. The same applies to other unions which are still playing the old games of obstruction to new employment.

We recently saw an unedifying confrontation between APPM and its unions in Burnie in Tasmania. Ham-fisted as were the tactics of the company, the overall message is clear — unions are still determined to defend their own privileges at the expense of the community.

And we have just seen yet another disruption to air services by the refuellers — bought off instead of sacked. One of the issues which brought them out was the notion they should not be permitted to strike in this matter with impunity. Why are they not sacked and replaced with people who want to work? Because the ACTU would not permit it.

This is going to be the most important issue facing the Government as it makes its final decisions about the shape of the 1992-93 August Budget over the next freezing weeks in Canberra. How can the Government possibly hope to stimulate the economy sufficiently, and reduce the rate of unemployment, without laying the basis for another inflationary surge in prices and wages, unless it can direct spending towards the unemployed without the well-paid employed insisting on their cut? In other words, the unions are acting once again as gatekeepers and toll-collectors on any measures designed to relieve the plight of the unemployed.

As the Access Economics group points out in its latest Economic Monitor, there is little hope of a recovery in business investment in the immediate future. As is well known, as long as the “animal spirits” of the business community are depressed, cuts in interest rates will have little effect on investment and hence employment growth.

“Private investment,” Access says, “has collapsed in Australia. No early recovery in business investment is in sight. Business is not investing, it is not hiring, it will not build up stocks rapidly. It is having to cut costs rather than raise prices. Firms are repairing balance sheets. Improved cash flow is being used to reduce debt, rather than to increase investment.”

Most rational householders with mortgages will not go out and spend whatever benefit they receive from interest-rate cuts. They will use the savings to reduce their indebtedness. Those households who are not recipients of interest income (like older age groups) will find their incomes reduced as a result of the fall in interest rates, and will cut back spending. And banks, which have never since the last Depression been held in greater suspicion, are not going to find a lot of willing borrowers for useful investment.

Handouts, like the $317 million already forgotten one-off payment on April 2 to families with children, might increase the level of demand but, as that damp squib showed, without much effect. The only way to get a really rapid and substantial surge in spending would be to make much greater increases in welfare payouts. And, of course, with the imposition of a new tax on jobs by way of the superannuation guarantee levy from this month, unemployment is likely to rise further.

This is what the Government is going be tempted to do in the August Budget. Tax cuts to come into force immediately, together with social security payouts, will offer the only hope of persuading the electorate that things are improving, and producing visible evidence of that improvement before the general election will probably be expected next May.

In the meantime, of course, the nation will have been treated to the spectacle of a Labor debacle in Victoria, where the only argument is about the size of the loss Mrs Kirner’s Government will suffer. It will also witness an outbreak of mindless militancy from Victorian unions, under the leadership of the Trades Hall Council, as they try to intimidate a Kennett government into soft-pedalling its plans for industrial relations reform. It is obvious that the best thing that could happen to the Liberals federally is to have the Victorians go full tilt into such reform.

All this simply serves to underline the point that Commonwealth expenditure programs for job creation which may be announced in the August Budget will be largely fictitious. They cannot be implemented without not so much union co-operation as union permission, and this will not be forthcoming for any sensibly designed scheme which would pay wages below current awards and promise only temporary employment.

The Commonwealth cannot implement an employment creation scheme, as with railways infrastructure program, without the nihil obstat of Pope Kelty. And that will not be forthcoming. So much for his vaunted concern for the poor.

However, the Keating Government is becoming increasingly desperate. Along with a lot of nonsense about republicanism and the flag, meant to keep the silly Left of the Labor Party happy while unemployment climbs towards the million mark. It is going to be irresistibly tempted to go for broke. That is, it will abandon any sense of responsibility and try to hand out money on such a scale over the next six months that there will be a palpable impact by next May.

The result will, of course, be a resurgence of inflation, a balance of payments crisis in 1993, and renewed increases in unemployment. If the electorate swallows the short-term bribe, Mr Keating will have three more years to play with his levers. If it does not, the Coalition will come to power with only three years to clean up the mess. Either way, the prospects for both the middle-aged unemployed and the young are not bright.

There is an alternative for the Keating Government — to take on the power of the ACTU and the unions for the sake of the unemployed. But its concern for the poor and disadvantaged is mere cant.

***
19.
Padraic P. McGuinness, “Sacrifices vital to overcoming unemployment,” The Weekend Australian, July 11-12, 1992, p. 2.

Even ratbags get things right occasionally, so just because a proposal comes from the Australian Democrats should not cause it to be rejected out of hand. In proposing a tax levy, like the Medicare levy, as an approach to the unemployment problem, the Democrats have for once got hold of the right end of the stick.

The reality of unemployment in our society is that it is the result of a number of factors, of which the most important is the fact that minimum wages enforced through awards are too high to allow full employment. The marginal workers, the long-term unemployed and the young are priced out of the highly regulated and rigid labour market created by our industrial relations system. Those in jobs are maintaining their living standards at the expense of the unemployed.

Reducing the minimum wage for both young and adult workers would be a significant contribution to overcoming the unemployment problem.

There are a number of problems with this, however, as I have been discussing in a series of columns during the week. One of them is that given the way our welfare system is designed, many people have become locked into a vicious circle of dependency, and simply are not willing to work at the wages which they are worth in the market. Another is that, quite rightly, it is seen as objectionable to lower wages to starvation levels.

The dole (which now goes under fancy names like Job Search Allowance and Newstart) is not a solution to the problem. To get people back into work, we have to spend money on them — by way of subsidising wages, by way of job creation, by way of training and retraining, and above all by removing the alternative of living in idleness on the dole (or its equivalent for many, Austudy).

It is proper that all such programs, which especially in their initial stages will be expensive, should be financed by those lucky enough to have work and incomes. Soaking the rich is no answer — apart from the counterproductive effects of taxing business and the tiny number of very high income earners to produce work (it would destroy employment), the sums involved are too large. Only a general redistribution of income through the taxation system from all but the lowest income groups could effect the changed needed.

Those taken off the dole by such means will not save their incomes — they will be spending every penny. Thus even if the whole program were financed by a tax levy, spending in the community will rise. Moreover, as is well known as the unemployed come back into the workforce, their spending will generate more employment. They will also be paying tax, so some part of the expenditure will be clawed back.

It is well known that the cost of unemployment even in financial terms to the government is high — not to mention the human cost and the economic loss. In a paper just published by the Brotherhood of St Laurence, economist Daryl Dixon estimates the cost to the government of a person with a dependent spouse normally on an income of $30,000 a year — less than average weekly earnings. Adding together unemployment benefits and the tax loss to the Government, the net cost to the Government of this couple doing nothing is $18,581, or 61.9 per cent of the income before job loss. He further estimates that the total direct cost to the government of unemployment as of March 1992 would have been $10 billion to $18 billion a year.

On top of this you would have to add in the cost of all the additional services supplied to the unemployed, the social costs of a proportion of the unemployed turning to crime, and the loss in output of goods and services resulting from their idleness.

There are many obstacles to mounting massive wage subsidy and job creation schemes, most of them erected by the union movement, which demands that such workers be paid award wages when the essence of the problem is that they are not worth award wages, and granted tenure instead of employment on a special, temporary basis. Any government which wants to reduce unemployment quickly will face union resistance and disruption.

Nor are there any cheap and easy solutions which do not involve a cost to existing workers. Deficit financing destroys as many jobs as it creates, imposes costs on business and in our situation would precipitate a balance of payments and exchange rate crisis with inflationary results. Tariffs and other import barriers do not create jobs, they destroy them as a result of their effect of raising costs to export industries. Work sharing involves throwing away output instead of increasing it.

It would be sensible for workers in an existing plant to share income, not work, by accepting temporary wage cuts in a recession, as the SPC cannery workers did in Shepparton (after bitter resistance from the union movement) when their employment was at threat.

Rather than demanding wage increases, as, incredibly, the employed unionists are still proposing to do in the next national wage case, the union movement, if it really did care about the unemployed, would be proposing an across-the-board wage cut. Pigs might fly.

It would in any case be more equitable and more efficacious in the short-term for a tax levy on the employed to be used to finance a program of wage subsidies and employment creation which could be phased out as the economy picked up, as it would rapidly enough as a result of such a non-inflationary approach.

The biggest problem with work-creation schemes is that they tend to become permanent. Thus subsidised jobs and public works-type programs should not pay award wages, and should not be treated as eligible for the conditions attaching to economically viable jobs in the private sector.

The worst effect of unemployment on people is that it creates dependency in them. For this reason, the dole should be paid unconditionally only to those who are for health reasons unable to work.

It makes sense to allow a period after job loss for job-search, which is what properly designed unemployment insurance does. It is well established, however, that there is a direct relationship between the period of eligibility for unconditional support and the rate of unemployment — the longer the period allowed on the dole, the higher the rate of unemployment.

It is not fair on people who are unemployed in current circumstances, however, to expect them to keep on applying for jobs. This wastes their time, and the time of potential employers: it is demoralising and depressing. But there is every reason to insist that work of some kind be a condition of the dole.

Community service schemes, at the local government level or through other agencies, are a partial solution to this. Essentially, it has to be made a condition of financial support that the unemployed do some kind of work, turn up regularly and on time, and preferably undergo training and education.

It is not doing anyone a favour to make idleness and chronic boredom a way of life — especially not the young. That is a recipe for destroying their lives, and making them unemployable forever. Nor should welfare payments ever become an acceptable alternative to work.

In the long run, the solution to unemployment is a matter of removing the obstacles to employment, whether excessively high minimum wages, overregulation of labour markets, unnecessary administrative burdens on small business, taxes on work such as training levies and superannuation guarantee levies as well as payroll taxes, tariffs and other devices, which increase the cost of viable business or the active prevention of enterprise by those who think unemployment is the path to some kind of environmental nirvana.

***
20.
Padraic P. McGuinness, “Childcare figures reveal zealots behind statistics,” The Weekend Australian, July 18-19, 1992, p. 2.

It would be a great pity if the Australian Bureau of Statistics were to become politicised.

The bureau, which has a proud tradition of producing some of the best quality and most useful social and economic statistics in the world and which has a high reputation for care, high standards, maintenance of confidentiality and absolute integrity, is one of the branches of the Federal Government that is usually beyond criticism.

And yet, I am beginning to wonder. Other sections of the federal bureaucracy have been invaded by zealots — could this be happening also to the bureau? I am not talking about party politics, but those biases and views of the world, typified by the extremely biased Australian Broadcasting Corporation, which are best summed up in the terms “politically correct” or “ideologically sound”.

Thus the bureau has begun dabbling in forms of statistics which, important as they are, often seem to have ideological agenda lurking behind them.

For example, a couple of years ago it produced some estimates of the value of women’s work in the home, suggesting that this should be counted as part of the estimates of national income. There are arguments for this, and also arguments against it. (One of them being the distinction between work done for love and work which should be valued according to market criteria — are all married women to be treated as prostitutes and have their sexual services counted as part of the national income? Is ironing a shirt an act of love or an unpaid economic service? It all depends.) But it was clear that the impetus for all this comes from some of the less sane fringes of the feminist movement.

Similarly, a couple of months ago the bureau produced an extremely useful volume of environmental statistics that was, however, marred by an acceptance of a good deal of questionable propaganda emanating from the green lobby.

And how it has produced another valuable publication providing statistics on childcare in Australia (Catalogue No. 4402.0), which appears to have been designed in part to provide ammunition for the lobbyists for more taxpayer-financed, government-regulated childcare delivered by “qualified” providers.

For the material is presented in such a way as to suggest that there is a need for more government provision of childcare at public expense. (Of course, it might just be yet another government exercise in overcharging for information which it collects compulsorily and without payment to the providers: the price of the report is $25, an unconscionable rip-off.)

Far from being obvious, this is a matter of considerable political controversy. The childcare “professionals” are in general in favour of government provision rather than privately provided childcare — they try to establish control over the type of childcare which can be offered by setting up training courses, qualification and award wage structures which provide secure jobs for people like themselves, and there is considerable evidence that the major beneficiaries are relatively well-off educated women in search of more handouts from government.

Thus the central proposition of the publication, which is intended to attract publicity, is that there is an “unmet need” for more childcare facilities.

I have no doubt there are unmet needs. But in fact this demand turns out to be simply what the people interviewed state as what they would like to have. There was no attempt to ask them under what conditions they would like these extra facilities, or what they would be prepared to pay for them.

But from “demand” — that is, what the sample interviewees say they would like — we slide over to “need”. Indeed, following the terminology we even slide further into phrases like “those children who have a demand” or who “have a requirement” for care. The truth is that the children are expressing no preferences — the people interviewed have preferences.

There is no analysis of the sample. But I trust the ABS, which is pretty good about such things, to have produced a reasonably representative sample. That is, I hope that it has not been designed to produce a “demand” for childcare which has nothing to do with genuine need.

So when we are told, as the most popularly disseminated statistic from the publication tells us, that there is a shortage of “childcare”, we have to keep in mind that this is a “need” expressed by people regardless of income, work obligations, leisure tastes or indeed family situation. In other words, it is not a “need” at all.

So we are told that there is an “unmet” demand, or need, for “formal” (that is, regulated and controlled) childcare services for half a million children under 12 years of age, or 17 per cent of the total number of children in this category. This assertion is pure nonsense.

For the people surveyed were not asked under what conditions or at what price they “demanded” this service. What, however, does come out from the very useful statistics produced by the ABS is that there is a considerable “demand” or “need” for unpriced formal services expressed by high-income families.

There is no attempt to sort out how much of this demand is directed, or might be directed, to services provided by the public sector or the private sector.

And of course it emerges that a large proportion of childcare services actually used to come from the “informal” sector — that is relatives, friends or local child or adult carers. In other words, babysitters and child-minders of no professional qualifications who are doing what has been done from time immemorial — looking after kids when their parents cannot do so.

The survey provides a lot of interesting detail. However, some of the detail is not interesting — as when the income of the parents who “demand” extra childcare services is concerned. Thus we find that when the use of childcare is surveyed by income groups, 21.7% of families who are using formal, 39.7% of families who are using informal (babysitters, and so on) and 46.9% of those who are neither (that is, who are not telling) are people who “don’t know” their incomes. On further inquiry, I found that this means mainly people who are not willing to tell their interviewer their incomes.

These proportions are of sufficient magnitude to make any conclusion about the income distribution of “demand” or “unmet need” for childcare meaningless.

But an additional clue about the significance of these figures can be found down the back of the report. This comes from the information about “demand” for childcare from those families who are non-MESC and non-Australian-born.

MESC means mainly English-speaking countries. Not surprisingly, the people who have different attitudes to the family to middle class Anglo women do not have a childcare problem. They either share their responsibility with relatives and friends or look after their children in traditional ways.

There is a need for adequate childcare facilities; there is a need for provision for working mothers. This has been met for years and will be met by babysitters and the young. What we do not need is a new industry of professional childcarers who think they know better than mothers, basing their claims on a survey which is a misrepresentation of the true situation.

***
21.
Padraic P. McGuinness, “Domestic work holds the key to unemployment,” The Weekend Australian, May 22-23, 1993, p. 2.

All sides of politics now agree unemployment is going to stay high, in the region of 10 per cent of the workforce during the next couple of years. Even the most optimistic scenarios, like the Business Council’s 2010 scenario, envisage the best possible outcome by the end of the century to be a fall of the unemployment rate to 5 per cent.

What can we do to improve this situation, and to overcome the immense social problems which it creates?

One thing we can do, of course, is to contribute to those effective social welfare organisations which directly help the poor and unemployed, like the Salvation Army — which is conducting its latest Red Shield appeal this weekend. You might start by ensuring you actually have cash on you in readiness. Last Christmas when the Salvos came to my local to collect, the army of public servants enjoying a good meal at public expense — the bosses arrived in a chauffeur-driven car — in the posh restaurant upstairs refused to contribute because, they said, they only carried credit cards.

But social welfare, whether organised by the non-governmental sector or dispensed by public servants in between tea breaks, is not a solution to the problem of unemployment. Jobs are. Where these are to come from, how they are to be created, and how people are to be encouraged to take new jobs when they have suffered the demoralisation of long-term unemployment is the most difficult of all economic problems.

It is made even more difficult when there are so many people in employment who for ideological or other reasons, often sheer prejudice, are opposed to removing barriers to employment. One form of this is the determined opposition of the trade unions to changes in pay rates and organisation of work which would allow more people to enter employment.

Another, and very important, barrier to employment is the prejudice against domestic work. With the large proportion of families these days in which both parents (or the single parent) are in full-time employment, everybody knows the market for domestic help, whether childcare, cleaning or other kinds of work about the house, is booming. How many two-income families are there, especially white-collar, who do not at least have a casual cleaner come in once or twice a week?

As more and more women enter the workforce, and rise to more responsible and highly paid positions in the workforce, and as more of these try to combine careers with motherhood, there is going to be a growing potential market for domestic labour. There is already a huge black or grey economy of casual domestic workers, especially cleaners, who are outside the tax system, outside the protection of any labour laws and outside the purview of the union and industrial relations system.

One of the main problems in talking about this issue is that Australians have a knee-jerk dislike of the idea of domestic servants. Much of this is formed by irrelevant images formed by television series like Upstairs, Downstairs. Anyone who suggests that maybe domestic service could be in the future once again (as it was in previous eras) an important avenue of employment will inevitably be subject to suggestions that he wants 19th century master-servant relationships, with all the abuses of Victorian households, to return. This is simply nonsense.

We all employ some forms of direct personal service whether it be service in pubs, cafes, restaurants, hotels or shops. One of the pleasures of being an Australian is that both the provider and recipient of such services can treat each other on a basis of equality and friendly interchange, without obsequiousness or subservience. Indeed, most people actively dislike service like this.

There is no reason why domestic service should be any different. For privacy reasons I might not want, even if I could afford it, live-in servants; but some people have no problem with this, and indeed the servants become part of the family. It is not an area in which it is sensible to make general judgments.

The point of this is that domestic work is the most heavily taxed form of work in our society. Rather than encouraging people to seek employment in the most rapidly expanding sector of the economy, they are heavily taxed for doing so.

To employ a full-time cleaner/housekeeper that is someone who works a standard 36-hour week and lives in their own home, is an impossibly expensive business. A salary at award levels is likely to be at least $300 a week, and to this has to be added all the on-costs of workers compensation insurance, other forms of contributory payments including superannuation, probably PAYE tax deductions for the wage paid to the employee might add as much as $50 a week to this, and in addition there is the burden of bookkeeping and administration. That is, the total cost of employing a full-time housekeeper/cleaner might be approaching $20,000 a year.

In order to pay this kind of wage, a prospective employer, probably a professional, would have to earn nearly $40,000 a year at current top rates of personal income tax — that is, he or she would have to clear an additional $40,000 before tax in order to pay a full-time domestic worker. For a woman holding down a time-consuming and demanding job this is clearly unjust — it means that, in order to work, if she is on her own, she has to end up on a payscale lower than many unskilled labourers. When there are children involved the cost of paying for help is crippling.

The tax burden of domestic work does not stop there, of course. Not only does the employer have to pay tax on the wage, but so does the employee. Thus the money is doubly taxed, which makes creation of work by this kind of employment prohibitively expensive. There is as a result large numbers of people working as servants, cleaners, child-carers, and so on who do not declare their employment for tax purposes. Effectively, they take a lower wage in cash, thus lowering the tax rate which the employer has to pay on that part of his or her income which is passed on to the domestic worker.

This works very well for huge numbers of such people, as well as other providers of services from plumbers to Telecom servicemen, but it does put the person who relies entirely on this source of income in a weak position. They may not even be covered by workers compensation insurance, and they certainly are not protected by legislation or by unions. There are a myriad examples of the potential abuse to which domestic employees who have no legal status can be subjected. (It has also to be remembered that employers have to place what is often great trust in such workers where there is no way in which they can check on previous employment.)

So the practical result is that only the rich can employ reasonably paid domestic help on a full-time basis (and those high-income earners who do so without already being rich will as a result certainly never become so). A very large area of potential employment is closed off, and what remains is on the margins of legality and hence is a fertile field for exploitation.

If we really want to increase employment rapidly, why not simply make the employment of domestic help, live-in, live-out, cleaners, cooks, childcarers, washers, ironers and so on tax deductible for the employer? After all hotels can deduct their employees’ wages against their incomes — why not a hard-working productive family or single person?

***
22.
Padraic P. McGuinness, “No-nonsense charity converts a nation,” The Australian, January 26, 1994, p. 9.

In all the growing euphoria about economic recovery, it will be easy to forget about the recession, forget about the victims who will remain among the long-term unemployed and forget about the social problems that have been bequeathed by the past few years of economic policy.

There are extensive governmental provisions for the unemployed, the poor and the disadvantaged. But it is still the case that the real victims, those who have as a result of long-term unemployment or other factors lost the capacity to control their own lives and who have given up or sought refuge in alcoholism, drugs, or whatever and who escape the social safety nets, are best looked after not by the cold charity of officialdom but by the private, voluntary welfare organisations.

And of these in many ways the best is the Salvation Army. That organisation is not alone in the field — there are many others, such as the St Vincent de Paul Society (and especially its subsidiary, the Matthew Talbot Hostel), Sydney City Mission, the Smith Family, the Brotherhood of St Laurence, and others. But, of all of them, the Salvos have achieved a special importance, and a degree of affection, that is remarkable.

And it is something of which all Australians can be proud that an Australian woman, Eva Burrows, for seven years until her retirement last July served as the general of the worldwide Army, the highest religious position to which any woman has risen in the modern world.

The Salvos insist on retaining much of the symbolism of the 19th-century British milieu in which they arose. The military titles and organisation, the low-church protestantism, the quaint uniforms (rather modified from the old bonnets for the women, the brass bands and the tambourines, the wooden collection boxes, the peddling of their paper, The War Cry (which still runs, slightly bowdlerised, what used to be called “this week’s tip for the race of life”, by which some punters swear, as well as the notices announcing who has been recently “promoted to glory”); all this has, rather than making them irrelevant, endeared them to the people whom they try to help.

Of all the religious and charitable organisations, only the Salvos do not draw their skirts aside from the sinners, the boozers, the gamblers and the derros whom it is their mission to help (it should here be said that groups like the Matthew Talbot cannot be criticised — but they wait and receive rather than publicly recruit). The Salvos go out into the pubs on Friday nights, set up their bands and walk into the bars to rattle the box and sell The War Cry. And they are always received with tolerance and affection. Their retired officers sit in the streets in full uniform collecting everywhere.

The uniform has a lot to do with their acceptance. They do not hide behind pretentiously casual dress or wear suits and ties like junior executives as so many religious do these days, as if they were ashamed of themselves, but proudly declare their role and faith in their dress. When priests and parsons are invisible and nuns look like waitresses or nurses, the Salvos are instantly identifiable. And to their clientele they are, as a result, far more recognisable and trustworthy.

Above all, they are apolitical and non-partisan. While there are among them undoubtedly people who believe there are political or ideological solutions to poverty, the Salvos in general are “reactionary” — they do not set themselves up to bring about the kingdom of God on Earth, but to alleviate the condition of the poor or distressed. They are practical and kind. (In the recent bushfires, who was first to turn up with tea and biscuits for the firefighters?)

Their religion is a plain, sinewy and simple Christianity, of a very old-fashioned flavour. It is tolerant in that, more than almost any other Christian denomination, the Salvos demonstrate daily the capacity to hate the sin and love the sinner. But they are not silly and sentimental. They know how corrupting poverty, drink and gambling can be — and they put up with little nonsense from those they help. When they can, they demand something — work, attendance, even prayer — in exchange. They have understood from the beginning that unconditional handouts, as of “right”, which encourage welfare dependency, are not the stuff of true Christian charity.

They are tolerant in a way that is also unfashionable these days. That is, they do not resile from their own doctrines or discipline. But they have never been racist, never class-ridden, never exclusive, never unforgiving of past dissipations. And, of course, as Eva Burrows among many, many others has demonstrated, never foolish enough to put women into subordinate positions for silly, sexist reasons.

There are many active militants in the Salvation Army who are reformed alcoholics or the like. They become teetotallers, non-smokers, non-gamblers, non-drug users who continue to move among the kind of people from whom they came. They disapprove of ordinary drinkers, smokers, and even more of prostitutes, criminals, etc, but they do not nag them — instead they look for those who have become desperate enough to need help.

In the period of recession from which we are emerging, the Salvos, as much as or more than any other organisation, have been prepared to offer practical, non-moralistic (but highly moral) help to the genuine victims. More than any other organisation they have been willing to do this without any ideological, political or religious strings. The willingness to give help without requiring gratification, conformity or lip-service in exchange is the quintessence of charity, Christian or not, in its true sense.

They know that even as the crisis of growing unemployment has passed, there will remain a permanent residue of the socially crippled and the unemployable who will have to be given unmoralistic help, not just income support but the continued reassurance that they are worthwhile human beings who retain the capacity for self-regeneration.

This is something that official welfare and governmental programs can never provide. It can only come from those people who, through bodies like the Salvation Army, can go further than functioning as careerist bureaucrats who themselves cannot ever, by the nature of bureaucracy, recruit directly into their ranks some of the people whom they have saved.

There are good people from all religions, Christian and non-Christian, and from no religion, who perform some of the functions the Salvation Army performs. Few are quite as near the margin of society where the most desperate need is. Few are as high-profile and as willing to face ridicule as the Salvos in order to do their job — the military image of the Salvos as the frontline troops continues to have resonance.

Until we are able to overcome the problems of poverty and social alienation — and we are further from that than ever — there will be a need for a private welfare sector that can offer practical help to the marginalised in a way official welfare cannot.

If the recession and the mass unemployment of the past few years is not to permanently scar and disfigure our society, it is the Salvation Army and bodies like it we will have to thank. Forget about the airy-fairy do-gooders, the ideologically sound and politically correct, the preachers and the social theorists, the liberation theologists or whatever is the current nonsense. Practical, hard-headed charity is far more important to the real victims of society.

***
23.
Padraic P. McGuinness, “Poor show when homeless at mercy of politics and yuppies,” The Australian, April 28, 1994, p. 11.

So the Salvation Army is going to be allowed to go ahead with the development of a new hostel for homeless people in Sydney’s Surry Hills, despite the objections of recent blow-ins who have bought houses in the area and want it gentrified, with all the human “scum” (their residents’ action group phrase) forced to go elsewhere.

This is one of those fascinating stories of our humane and compassionate society. The drunks, the long-term unemployed, the homeless, the psychiatrically disturbed, the bag-ladies and the range of human casualties who haunt the inner-city fringes of Sydney have become more numerous in recent years.

The welfare organisations, which have always had a presence in Surry Hills and nearby areas that have always attracted a floating population of no-hopers, have quite sensibly located facilities where there is the most need for them.

There is nothing new about this. Central Station is nearby, and many bus routes terminate there. Surry Hills itself has, for many years, been one of the poorest suburbs, and before World War II was, notoriously, the home of many pubs, brothels, and sly grog joints, as well as criminals.

It is the location of Sydney’s most famous drum. Years before it had been a bit more respectable, but the decline of the region around Central dates from the completion of the railway station. Cheap hotels and doss-houses abound.

The poorest and most hopeless Aboriginal residents of La Perouse always gathered around Surry Hills, since the bus ran from the “reserve” to Central; it is close to the Whitlam-government-created Aboriginal ghetto of Redfern, and of course the country-dwellers arrive there first by train and bus.

So not surprisingly property is cheap. There has always been a high incidence of break and enter, there are a few pretty scungy early-openers, there are winos scattered around the doorsteps. And with the worst recession in 60 years, the numbers have increased substantially.

A new source of supply was added when it became a fashionable element of social policy to throw the residents of the psychiatric institutions out on the streets. Of course, they were supposed to be accommodated in halfway houses, but there was never any serious provision of such facilities. Naturally, they congregated in areas where help was offered by the private welfare organisations.

The character of Surry Hills has been changing. For many years, of course, it has housed a population of media types, clustering round the Journalists Club, the offices of News Limited, and those of the Readers Digest. It is the centre of the Sydney rag trade, and pieceworkers come in from all over Sydney to work there.

There is a fascinating mix of coexisting Muslim and Jewish workers in the trade. It now has a Korean presence of some importance; it houses the Chinese Consulate-General, and there is a spillover of Chinese from the nearby Chinatown.

Since it is so close to the CBD, inevitably there has been an influx of yuppies who like the idea of being able to buy cheap houses, do them up, and walk to work. But as with yuppies everywhere, they have decided that they do not like the derelicts and drunks whose natural stamping ground the area is, and see the path to happiness and prosperity in demanding that they be forcibly moved out. Where? The yuppies don’t care — I suspect that they would prefer concentration camps with nice high walls somewhere far away.

Surry Hills is divided between two incompetent councils — the Sydney City Council and the South Sydney Council. Both have an interest in fostering a yuppie vote, and in actively discouraging the traditional activities of the area. Derros don’t vote; business will not vote Labor or Yuppie; pubs and cafes cater mostly to the floating working population who have no vote in the area; hotels which cater to backpackers and men without families are harassed by stupid fire regulations and accommodation of this kind is being deliberately priced out of the market.

The situation has been worsened both by the huge increase in long-term unemployed over the past 10 years, and by the chronically bewildered, who have been thrown out of the psychiatric institutions. There are two of these close to the city, Callan Park in Rozelle and the Gladesville Hospital. Both have large, pleasant grounds and border on the Parramatta River.

Callan Park, especially, was given to the people of NSW for the care of the psychiatrically disturbed. It has been stolen from them, in breach of the trust, by another set of yuppies. It is now a pleasant park, open to the people of Rozelle and Balmain to stroll in. Its buildings having been either closed (the old sandstone wards) or occupied, along with new buildings, by public servants who appreciate the views which they clearly believe are far too good for the bewildered. One of the old buildings is now a writers’ centre for mediocrities.

So one set of yuppies has moved the helpless and hopeless on to the streets, and another set now wants to move them on again. Where could they go? Seek the answer in German history of the 30s and 40s.

The independent welfare organisations are doing their best to fight the encroaching bureaucracies with, on the one hand, the combination of government economic policies and welfare policies making the “clients” more and more numerous and difficult; and, on the other, local government bureaucracies responding to demands of the tiny, noisy minorities who have bought in to the afflicted areas and want to enhance the value of their properties.

So the Sydney City Council has joined the yuppies in putting pressure on the “welfare ghetto” of Surry Hills — it has attached 47 conditions to the planning permission granted the Salvation Army to provide a new kind of care (the old system of sending people out on to the streets in the morning is no longer appropriate, if it ever was) and forcing them to close down other facilities.

It is a classic demonstration of the inappropriateness of local government in dealing with welfare issues. In the days of the Old Poor Law in England, local government authorities were always trying to shovel their welfare problems off on to neighbouring areas. The Sydney City Council and the yuppies and reviving the worst abuses of the Poor Laws.

There will be no solution to these problems as long as local government is allowed to meddle in wide social and economic issues. The powers to grant development authorities and impose zoning requirements are tailor-made for abuse by the new rich, and need to be taken out of their hands and those of local residents, who buy into an area and then try to drive out the people and institutions which made the property cheap.

***
24.
Padraic P. McGuinness, “Workplace welfare costs poor their jobs,” The Australian, August 12, 1994, p. 23.

Wouldn’t it be nice if the Industrial Relations Commission gave everybody six months holiday a year and awarded everybody indefinite paid leave to look after their children, their grannies, their mistresses, their boyfriends, their Thursday afternoon assignation partners and anyone else nice when they felt sick and lonely?

Why not? This, after all, is the direction in which the current ACTU application for paid family leave is tending.

The ACTU is arguing the cost of granting its present application would be only about $500 million a year. The employers are saying the cost would be more like $2.3 billion a year. The Government is saying that at this early stage of the economic recovery, the addition to wage costs that would flow from the ACTU application would be a threat to continued employment growth.

The ACTU says the additional cost of incorporating paid family leave into award wages would be negligible.

This is rather akin to the old promise: “I’ll only put it in a little way and, if it hurts, I’ll take it out again.” The consequences of such a promise were often disastrous.

There should be no concession whatsoever made to the ACTU on this issue — now or later — no matter how strongly the economy eventually grows. For, as has happened in Western Europe, the confusion that such a proposal involves between the wages and industrial relations system on the one hand and the welfare system on the other is extremely harmful both to the labour force and the welfare system.

This is a confusion that has a long history in Australia, ever since the days when the much-praised Justice Higgins, that proto-fascist whose own domestic economy was mainly noted for its surpassing meanness (as the letters of his brother-in-law, “Chinese” Morrison attest), decided wages should be related to the needs of a family rather than to the value of work.

Ever since there has been a widespread belief in Australia that wage levels should somehow relate to social criteria and that the burden of maintaining living standards and redistributing disposable income should be partially a function of the wage-setting authorities.

The trouble with this, of course, is that it only works for those who have jobs. Those who are not worth the cost to their employer of the welfare component of their total wages package will find themselves frequently unemployed and often hopelessly unemployable.

It seemed the fundamental incompatibility of the wages system and welfare payments was finally getting through a little while ago, when it was being suggested that the “parenting allowance”, which it is proposed to pay to women, would be financed through the welfare system rather than imposed on employers. But it is clear most of the ACTU bureaucracy have still not understood that to make employers the direct source of welfare payments is likely to diminish greatly the availability of paid employment for the poor who are supposed to benefit.

Perhaps this is not surprising, since it is clear most “welfare” measures proposed by female union bureaucrats these days are designed to benefit fairly well-off, middle-class, two-income families. The really poor are somebody else’s responsibility. So the real thrust of the current ACTU claim is to push yet more of the actual and potential workforce down into the permanent underclass while making those fortunate enough to hold on to their jobs still better off.

This was also the thrust of the job-security provisions built into the Industrial Relations Reform Act — if you can guarantee your own job and those of the people who already have votes in union ballots, why give a damn about the underclass?

The principle is the same as that underlying demands for minimum wages for adult and young employees — somehow, it is believed it is sensible to design a complex and all-embracing welfare system and then, in addition, to run a wages system that will duplicate that structure but also add to the costs of employing labour.

It is true there is some research in the United States that suggests there is benefit in legislated minimum wages, so long as they are not too high. This is a complex argument, which has a lot to do with the history of the workforce and the efficacy of existing welfare provisions, as well as the disincentive effects of generous welfare benefits that are not joined to some form of coercion to re-enter the workforce.

But not even the most sanguine supporters of legal minimum wages ever argue that the minimum wage can be raised indefinitely and arbitrarily above conventional levels.

But this is what the ACTU is trying to do — to continually screw up the conventional minimum in the belief that somehow the increase will go unnoticed and that it will have no ill-effects on those employees who are only worth to the employer something just about the current minimum wage at which they are being employed.

The ACTU application makes nonsense also of the whole thrust of industrial relations reform as allegedly agreed between the Government and the ACTU.

There are many cases in which family leave, paid or unpaid, is desirable. Clearly a worker who is honest in his or her approach will be happier and better in the job if, when necessary, it is possible to stay at home to nurse a sick child or spouse for a few days. That is, in case of normal bouts of flu or suchlike. And more than that and it becomes a potentially expensive welfare problem.

In cases of normal problems, flexibility of working arrangements is everything. This includes tolerance on the part of employers and of other employees, as well as honesty on the part of the person requiring leave. All these are perfectly possible in terms of a workplace agreement — there are few people who will not happily share the burden of, say, a mother who has to care for a sick child for a couple of days. That is, flexibility allows other employees and the employer to co-operate in sharing the burden.

But as soon as such entitlements are built into industry or economy-wide awards, they cease to become part of flexible enterprise arrangements and are treated as part of the welfare system and rights to be claimed without consideration of where the burden falls.

Nowhere is this kind of thing more abused than in the public service, where additional costs are shifted on to the taxpayer, who is expected uncomplainingly to support his or her betters (otherwise known as public servants) in the style to which they are accustomed. Already most public servants can claim accumulated unneeded sick leave entitlements — why not, next, accumulated family leave entitlements?

After all, as the dopiest Communist Party agitators of the past, now made into heroes and saints by their children in the ABC, used to say: “Nothing is too good for the workers.” If there are any left.

***
25.
Padraic P. McGuinness, “Women and work,”
The Sydney Morning Herald, November 23, 1994, p. 20.

Why on earth do we need a “national approach” to the family? Yet this is a central theme in the latest of the many meaningless reports which the Federal Government has commissioned or had offered to it in the International Year of the Family (whose international year?), and which will be officially launched, or sunk, by the Minister for Family Services, Senator Dr Rosemary Crowley, in Adelaide today.

The family, it has been discovered as a result of a lot of extensive and expensive academic research, is a robust institution. The survival of the family through any number of social and economic revolutions, and through any amount of social experimentation, would seem obvious evidence of the robustness of the institution. Indeed, as would-be totalitarian societies have discovered, the family is in effect quite subversive. It tends to persist as a tie between people, parents and children, as well as wider groupings than the “nuclear” family, and to set at naught all the efforts of the social reformers.

Or so one would hope. In the developed English-speaking world in particular, though the phenomenon has been apparent in all societies affected by the English-speaking fashions of the last 30 years, we have seen a fragmentation of the traditional family. The causes of this are not easily explained, nor does it make much sense merely to appeal to the cliche of lost “family values” as if they could somehow be restored, to the extent that they ever existed, by decree.

It does not take much historical knowledge to point to the Fact that the family was never a simple concept, and has taken quite protean forms over the ages. Yet to pretend that the family was ever anything but a heterosexual alliance, and has its origins in the nurturing of children in an ongoing reproductive pattern, is a distortion only the relics of the baby-boom ideologists of the ’60s could ever maintain for a moment. While people can with the best intentions, and often good results, imitate the heterosexual family in various forms and can live together in harmony, this is no good reason to suggest that there is any good reason For pretending that artificial families formed on homosexual alliances are anything other than marginal glosses on the central reality of the family.

What we have seen as a result of the well-intentioned social experiments of the last generation is, however, a new element in the relation between the state and the family, which is quite well summed up in the call for a “national approach” to family policy. It is the deliberate, or perhaps occasionally unintentional, erection of a system of social security and welfare support which is designed to provide incentives for the breakdown of family structures wherever they are weak enough to be threatened. The motives behind most of this were often enough for the best. Thus when the original supporting mother’s benefit was introduced by the Whitlam Government its proponents had in mind the suffering of single or deserted mothers. The presumption was that by preference most such women would prefer to be in a nuclear, heterosexual relationship.

Since then, however, the evolution of the benefit system has, for the generally justifiable reason that women are entitled to autonomy, been built into a structure which penalises traditional families. The structure of social security now is largely biased against even a family in which both father and mother are working, and even more against the now minority-pattern family in which the woman participates only marginally if at all in the workforce. Rather than promoting social and sexual equality, this pattern has produced both “poverty traps” which make the cost of transition from child-rearing into work prohibitively expensive for single mothers or those who have dropped out of the workforce into traditional child-rearing practices, and a whole class of permanent welfare dependants.

It is senseless to believe that the old pattern of the single-income home, with a male breadwinner, could ever be restored. It is in any case a pattern which is not typical of the family as a unit in most societies, where women in the intervals (and often enough without intervals) between child-bearing were always integral economic elements of the family.

Certainly in rural families, which retain some of the old peasant pattern, women are as essential, if not more so, as income earners and economic units within the family, as men. And there have always been families — though few and generally hidden — which have been formed by a couple of women raising their children. That is, lesbian or quasi-lesbian families have a real historical basis, unlike pairs of male homosexuals, who rarely have had an economic role in child-rearing.

But these are still relatively unimportant aspects of the family. The essence and ongoing nature of the family are as a heterosexual unit. What has changed irrevocably (and difficult as the problems in adapting to it may be) is the family in a society where women can no longer be considered not just in the 19th century role of subordinate dependants in the home, nor as components of a rural family production unit, but as totally equal participants in a competitive labour market.

The great revolution of our time is in fact the re-entrance of women living in nuclear families into the workforce. This single economic change overshadows most other social and economic developments — indeed, it is more momentous than the technological developments of the same period It has raised enormous social problems along with it, since the structures of child care, education, and the labour market — especially the restrictions on female participation and advancement imposed by trade unions and old-fashioned male attitudes — have still not adapted.

One good reason why they have not adapted is the way in which the ideologues and propagandists on the irrational wing of the women’s movement have confused the issues. Thus it ought to be clear that a fair go for an educated married woman would involve the tax deductibility of child care at marginal rates of taxation, however high her income. Instead, there has been a conscious effort to design the tax and child-care systems so as to force such women out of nuclear families. It ought also to be clear that there are very many women who prefer to be part-time or occasional participants in the workforce, while giving primacy to their families.

But there is still a determination on the part of many of the ideological feminists to destroy what they perceive of as the oppressive, “patriarchal”, structure of the nuclear family, instead of removing the penalties which are imposed upon it by rigid labour-market arrangements and welfare policies designed to disrupt family structures. By all means, let us have “flexible families” — as if they were ever otherwise. Flexible labour markets, too.

***
26.
Padraic P. McGuinness, “Machinations of the system,”
The Sydney Morning Herald, June 21, 1995, p. 14.

We have gone a long way in the direction of co-operative federalism in the last few years, so that Australia is working better than ever as an economic union, but now we are witnessing an outbreak of competitive federalism which is producing a great deal of gnashing of teeth from some State governments.

The two most recent examples have been the move by Queensland to attract the processing business of the Australian Stock Exchange by cutting stamp duty on share transactions and the bidding away from NSW to South Australia of the new Westpac national loan centre by offering tax concessions and cost guarantees.

Other examples are numerous, including the capture of a speed car race from Adelaide by Melbourne and the attraction of the Foxtel headquarters for customer service from Sydney to Melbourne. Currently there is bidding under way to determine the location of American Express’s regional headquarters.

All this has produced a great deal of heat between the State premiers, and appeals to some kind of co-ordinating process through the Council of Australian Governments (COAG), but there is really little that can be done about the process. What we are witnessing is the inevitable result of the mobility of capital as well as labour, and the continued operation of the pernicious centralising and uniformity of standards which has become the obsession of so many unions and politicians.

There is of course nothing new about the competitive bidding for both residents and industry between the States. Queensland promoted the migration of retired people to warmer climes by beginning the abolition of death duties, and effectively closed off that form of taxation as a source of State revenue. Various forms of subsidy in the past were offered to manufacturing industries to locate in particular States. Now that the growth sectors are in tertiary industry, the States are in the same kind of competition. However, as capital becomes more mobile, partly thanks to the power of telecommunications, it is becoming increasingly difficult to tax industries which can so easily transfer their operations to other States.

This means there is no way in the long run in which individual States can continue to rely on business taxes as an important part of their tax base. NSW is the best positioned since Sydney is the economic and financial capital of Australia, but even Sydney cannot rely on maintaining possession of processing and back-office operations when other States can offer cheaper office space and compensation for the tax on competitiveness imposed by our wages system. The arbitration system virtually destroyed the South Australian economy by deliberately eroding the advantage of lower labour costs it originally possessed. Just why unions believe that wage rates should be the same for an occupational classification regardless of the economic health of a region or the local cost of living has always been difficult to fathom. Now it seems the dinosaurs of the Victorian Employment Relations Commission are determined to destroy the professional base of Victoria by a minimum wages system which will require newly qualified lawyers and accountants to go to Sydney or Brisbane to seek their employment and training.

Effectively what the South Australian Government has done in the Westpac case is to offer to compensate that company out of general tax revenue for the unjustifiably high wages in Adelaide, imposed by the award system, so as to restore some competitive advantage. The wage earners of the State as a result will pay in higher taxes or lower levels of service and provision of infrastructure for what they are getting in wages above what is justified by their true economic situation. Of course some State governments in the past, Victoria under Cain and Kirner being the classic example, have forced both business and residents to other States by botching their policies.

This kind of competitive federalism always leads to demands for co-ordination — that is, the States are supposed to gang up on business and residents (and consumers of alcohol and tobacco) by agreeing on uniform rates so that there will be no escape. However, this is a stupid response to a genuine demand that the burden of taxation by lessened. Indeed, competitive federalism thanks to COAG and the improved standard of public administration in the States and the trend to competition policy and privatisation has gone far beyond this. What Adelaide and Brisbane have gone in for is a sensible approach to regional policy which happens to be painful at this stage for NSW.

Rather than leading to calls for further centralisation of the taxation system and government in general, this should lead to a rationalisation of the system, and in particular correction of the vertical fiscal imbalance which is the main characteristic of Australian federalism. The larger States are also perfectly correct in pointing to the inappropriateness of the antique model of fiscal equalisation as between the States through the Grants Commission.

It is time this body was abolished. It belongs to an era when per capita expenditure was considered a useful indicator of services provided by the States.

Not that there is much point in co-ordination of tax levels between the States through COAG or the even more useful Leaders’ Forum which came into existence in February 1994, which is COAG without the bullying which is the main role of the Commonwealth under the present Prime Minister. For the increasing globalisation of the world economy and the mobility of capital means that even countries with unitary systems of government are encountering the problem of competitive bidding down of business taxes. The reason why we are getting so many large international financial and service institutions like American Express wanting to establish their regional headquarters here is that we can offer a stable political climate, a reasonably well-educated workforce, and low white-collar wages relative to those elsewhere. That is, we are becoming the back-office of the region.

To impose additional taxes on business will only induce our own companies which have expanded beyond their Australian base to contemplate relocating their own back-office work (perhaps to New Zealand) and discourage the further immigration of jobs. Much as the regulators dislike this, it is as much a fact of life as our inability to control trade and investment flows and to control our own exchange rate, making international ratings agencies the arbiters of State financial responsibility.

Internationalism is not just a matter of signing treaties to increase the powers of the Federal Government to coerce the States. It is typical of modern double-think that the defenders of international co-operation and the free immigration of people are so unhappy about international competition and the free immigration of capital.

***
27.
Padraic P. McGuinness, “Bleeding hearts with tight fists,”
The Sydney Morning Herald, August 31, 1996, p. 33.

Public generosity and private stinginess. That is the real story of Australians’ attitude to the voluntary welfare sector. It is all too easy when we are fed continual stories of hardship and misery, at home and abroad, to call on the Government to do something about it, especially when it is expected that it will be other people’s taxes which will salve our consciences.

In its 1995 report on charitable organisations in Australia, the product of a great deal of work but prior censorship by exclusion of potential critics from the inquiry, the Industry Commission paints what is in fact a picture of an almost totally atrophied charitable impulse. The 50 largest charitable organisations (excluding aged care) got only about 10 per cent of their funding from donations, while 45 per cent came from governments. Since personal donations are tax-deductible, a fair proportion of the funds donated by the public in effect came from the Government. Americans are much more generous than Australians — fund-raising by charities (an unfashionable terms these days — the IC called them Community Social Welfare Organisations) amounted to $583 a head in the US, as against $99 in Australia. Lest it be said that this simply reflected higher US incomes, these figures correspond to 2.17 per cent of GDP in the US and 0.49 per cent in Australia. Even the British are more generous than we are, giving 0.88 per cent of GDP to charities.

Admittedly, in that country anything which involves dogs or distressed gentlefolk sells. Thus the richest US charity is that training guide dogs for the blind, a diminishing market since diabetic blindness is being brought under control. The British welfare system is even more comprehensive than ours, yet they are more generous. In fact the meanness of Australians is partly disguised even by these figures, since in the US 83 per cent of donations are given by individuals, but only 50 per cent in Australia. Business charity is just another way we kid ourselves that we are generous.

So it is not surprising that the whole business of charity and welfare in this country should be so totally politicised. Charities regularly make appeals to the public, at varying ratios of expenses to funds collected, but this is more a matter of enthusing volunteers and convincing governments of their continuing influence. Welfare distribution is often better handled by voluntary organisations, so long as their prime purpose is helping the poor, unemployed and disadvantaged rather than making propaganda.

Often the good intentions of the voluntary welfare sector lead them into the peddling of what can only be called quackery. The overseas aid organisations which pretend to be helping the poor of the world are in fact preaching economic nostrums to them which encourage and perpetuate poverty. While there is certainly a case for offering assistance in cases of natural disaster, it is very doubtful whether any useful purpose is served by most overseas aid. In some cases, the only real solution to the horrors inflicted on people by their own governments would be to invade them and install a better government. But when there is popular support for genocide this is a difficult business.

The heart-wrenching images shown on television or in fund-raising advertisements really represent the cynical exploitation of human misery. The purpose of this exploitation is to enlist political support for pressure on government to allocate more funds to the organisations.

What we have developed in Australia is a peculiar mindset among those who are, for whatever reason, concerned with the expenditure of public funds for social welfare or other public purposes of a cultural or artistic nature. It has been at the basis of recent demonstrations, especially those by students. It is essentially the phenomenon of the spoiled child. Dr Spock has a lot to answer for. The spoiled child has gone long beyond feeling any appreciation for the presents and parental love showered on him or her and treats all this as a natural right, an entitlement. When the money does not flow as expected, the reaction is fury and a violent sense of injustice.

Thus middle-class students are convinced that they have a right to free education and generous living allowances, even if they are not doing anything useful. They are, after all, their parents’ children. Wheelchair users demand the building of ramps everywhere as a right, the deaf feel they have a natural right to special telephone equipment, the untalented feel they have a right to become mediocre artists on public funds, the Friends of the ABC think they have a right to have their political and social prejudices stroked at public expense.

There are good arguments in favour of all these kinds of public expenditure, but they are rarely made. Instead, it all becomes a matter of demands and tantrums when the demands are not met or there simply is not enough money. Leading the tantrums in welfare matters are the peak councils, the main political arm of the welfare lobbies. Nothing that is said by the Australian Council of Social Services or the Australian Council For Overseas Aid can be construed as other than self-promoting and designed to cater for the entitlement mentality which they have cultivated for years.

There is a simple solution available to those who protest most bitterly about the ill effects of the last Budget, which has undoubtedly inflicted pain on many welfare recipients, and especially on the unemployed. If you think that the poor and needy have been dudded, give more money — indeed the tax increases you have advocated — to the poor, directly or through a body such as the Salvation Army or St Vincent de Paul.

***
28.
Padraic P. McGuinness, “Old-style families at a financial loss,”
The Sydney Morning Herald, September 21, 1996, p. 34.

Perhaps there should be a special tax levy on alternative or flexible families which depart from the traditional non-serial nuclear model. For the evidence is mounting that the breakdown of the traditional family, and in particular the increasing proportion of single-parent and mixed serially monogamous families, is the main cause of increasing rates of crime and drug use.

There are those who would deny this. And it is not true that all single-parent families are dysfunctional, or that all step-fathers are likely to sexually abuse their partner’s children from previous relationships.

There are many happy and healthy children brought up in all circumstances and I know of homosexual couples who would make good, stable parents. It is also true that plenty of criminals have been brought up in apparently happy, stable homes.

But the overwhelming weight of evidence from many studies is that children brought up in the traditional family structure, especially where the mother engages in paid work only part-time or for restricted periods, are statistically much less likely to be either delinquent or disturbed.

That is, the breakdown of the traditional family over the past 25 years in particular has imposed immense social and economic costs on society.

This is true of all the liberal democracies, certainly the United States, Britain and Australia. In the US the situation is much worse because of the general collapse of black families.

The evidence is summarised in a paper by Barry Maley, director of a project called Taking Children Seriously in one of the better independent think tanks, the Centre for Independent Studies (phone 02 9438 4377). In this paper, Wedlock & Wellbeing, Maley argues the familiar position, advanced as prejudice by Pauline Hanson in Parliament, that the Murphy Family Law Act, with its fundamental principle of no-fault divorce, is at the heart of the decline of the family in Australia. But this does not accord with the fact that the same is happening elsewhere.

Rather, it seems that over the past generation there has been a dramatic change in the value which most of the community places on marital fidelity, on the desirability of maintaining even not very good marriages or on the primary importance to be given to children.

It is clear that marriage itself remains highly valued, as a public commitment which engages the rest of the community, or at least a section of it, in underwriting its importance. That is why people have wedding receptions. What is no longer so highly valued is the notion of permanence in marriage. The reasons for this immense change in social attitudes, with its desirable concomitant of the disappearance of the stigma of illegitimacy, remains obscure.

Perhaps the visiting biologist, the great expositor of evolution theory, Richard Dawkins, might have some useful comments in terms of his ideas of “memes”, ideas which penetrate whole communities, mutating and evolving, or social “viruses” such as religion which can infect and corrupt a whole community like a computer virus.

The ideal community perhaps would be one in which the vast majority of people accepted the old idea of marriage as a lifetime contract for the benefit of a couple and above all their children, only dissoluble at high social and financial cost, with some allocation of relative blame. This has nothing to do with the morality of the unmarried — a considerable amount of sexual experimentation, even promiscuity, before marriage is probably a good thing. However, once such a common social attitude is no longer prevalent it is unlikely that it can be restored by analysis, by tax measures or by coercion. Nor can irresponsible production of children be prohibited by law.

There might be a case, as Maley argues, for making divorce difficult and expensive again? In fact, this is the present direction of development of family law in Australia, not explicitly in terms of requirements of proof of transgression or fault, but through the burgeoning importance of property settlement and division.

The reasonable presumption is no-fault divorce of a 50-50 division of property is now changing so that a woman can sometimes get a lot more by claiming a history of domestic violence. That is, fault has re-entered the divorce courts.

Custody of children is also argued on the basis of fault — again, domestic violence, sexual abuse of children, habitual drunkenness, etc. So far adultery has not come into it, but it cannot be far down the track. You can’t keep a good lawyer down and out of other people’s bedrooms. You can read some of the resulting dirt on the Internet.

Maley, and many other conservative moralists, would argue that this is a desirable development and that we should return to a marriage contract which could be broken only on grounds of fault. However, when there is no general social consensus, such an approach will give rise to perceptions of injustice and unfairness, as is happening in relation to custody and property settlements. And the lawyers are certainly making hay out of divorce settlements, just as much as they ever did in the bad old days of fault and orders for restitution of conjugal rights.

Where social policy could be directed is towards restoring the balance of financial incentives in favour of the traditional family. At present there are real financial penalties in marriage compared with single-parenthood.

The supporting mother’s benefit, when it was introduced by Bill Hayden in the early halcyon days of the Whitlam Government, was a good idea but always had the potential to develop into a tax on marriage. These days, social security assistance is designed as if it were intended to encourage and reward marital and social dysfunction.

***
29.
Padraic P. McGuinness, “Young people are the losers,”
The Sydney Morning Herald, December 14, 1996, p. 34.

We all know that the biggest single social problem facing Australia is unemployment. Yet despite occasional lip service, it is not at the top of anyone’s agenda for practical action, and when programs have been designed in the past to deal with some of its aspects, they have usually been hijacked by interests which are not those of the unemployed.

There should be no real controversy about the causes of unemployment, either in general or in its worst manifestations. Among expert economists there is a consensus on the factors which need to be addressed, insofar as they are within the specialist competence of economists. But it is clear that there are many important non-economic factors in the high levels of unemployment which are virtually universal in developed industrial economies these days.

An excellent statement of the facts about youth unemployment and the kinds of policies which are needed to address it has just been published by the Centre for Independent Studies in Sydney. This is Working Youth, by Graeme S. Dorrance and Helen Hughes. Dorrance is a Canadian economist who worked for many years at the International Monetary Fund, and Hughes an Australian economist who worked for many years with the World Bank and spent the last decade before her official retirement as professor of economics and head of the National Centre for Development Studies at the Australian National University. She is now actively engaged in research on unemployment.

Dorrance and Hughes do not pretend to be saying anything especially new, but they summarise the situation with admirable clarity. The basic problem of youth unemployment, which is much more severe than adult unemployment, is that young people in many cases are insufficiently educated, inadequately socialised for the workplace, and hedged about with a myriad of controls, regulations and union rules which greatly limit their ability to find work even when it is available. Moreover, the highest rates of youth unemployment are in the most depressed socio-economic areas where there are few opportunities. While on the one hand it is true that no-one can live adequately on low wage rates, it is on the other undoubtedly true that high rates of pay for young people, especially accompanied by heavy on-costs and restrictions on rights of dismissal are a major factor in youth unemployment.

The problem is one of ensuring that the living standards of the young can be maintained while not deterring employers, and ensuring that the young are both employable and want to work. There is no evidence that there is a general disinclination among the young to work, although that can be conditioned into them by the example of long-term unemployed parents and their own disappointments. A mixture of labour market reform, improvement in the performance of the education system (especially in the direction of functional literacy and numeracy) and a certain amount of gentle social coercion are all part of the necessary solutions.

In purely economic terms, we know that the present trade union system and labour market inflexibility, along with too-low rates of investment and economic growth, are the main cause of high unemployment.

So why do we expect unemployment to be at least 8 per cent still at the end of the century, and youth unemployment to be perhaps double that? Simply because, as Treasury head Ted Evans has said, we choose our high rate of unemployment. The reality is that a complex of vested interests, institutional rigidities, legislation and regulation, and beneficiaries of unemployment all have much greater collective power than the unemployed. They are the sacrificial lambs which we make a burnt offering on the altar of our own smug certainties, political prejudices, cosy lifestyles and comfortable practices.

The worst offender in all this is what might be described as the compassion industry. They are the priests and moralists who wring their hands over the immense social and moral problem of unemployment, dwelling with almost gloating joy on the misery involved, while absolutely refusing to think rationally about the problem or to weigh carefully the advice of those who have seriously studied the economics of unemployment. It is understandable enough that union officials should prefer to see many young people destroyed by unemployment and drugs rather than risk their own power and the protected incomes of those of their members who are fortunate enough to cling to employment — but why do the churches and the welfare lobbies share their preferences?

And why do so many untrained “experts” spend so much of their time decrying the supposed inability of economists to see the reality of the world around us, nit-picking at analysis which seems to be inapplicable in special cases when it can easily deal with them, and refusing to accept that any approach to curing unemployment which does not amount to quackery is possible? Ignorance and malice?

The case of the minimum wage is one example. Of course, one can find situations in which raising minimum wages does not cause labour-shedding. There are always many factors operating which can be strong enough to make a wage increase of trivial significance. But does anyone seriously believe that if we doubled minimum wages tomorrow there would not be a resulting sharp drop in employment? Oh, they say, we are only talking about a 12 or 15 per cent increase. Why so mean? At bottom, of course, everybody knows that there is some trade-off between wage increases and jobs, which can only be overcome by rising productivity and economic growth.

The reason we have high rates of unemployment and scandalous rates of youth unemployment is simply that the vested interests in our community want it that way.

***
30.
Padraic P. McGuinness, “Rights-based view of welfare is wrong,” The Age, June 23, 1997, p. A15.

It is often difficult to understand the motives for opposition to such proposals as work-for-the-dole schemes, the common youth allowance now proposed by the Federal Government, and the requirement that young people who are normally dependent on their parents not be paid such an allowance unless they are prepared to undertake education or training when unemployed.

There is of course an element of coercion in such schemes, as there are in many of the usual practices of bringing up children; who has not insisted that their children go to school except when they are really unwell, give a hand with housework and (occasionally) clean up their bedrooms? As a child grows up, it takes a greater degree of responsibility for its own actions, and a corresponding acceptance of conditionality — the family is about mutual relationships, not something for nothing.

To ask a young person to accept some reciprocal responsibility to the community when receiving monetary support from it seems little more than an extension of the ordinary care and guidance ideally given by parents; to require that in return for the dole young people should occupy themselves with education or training in order to better equip themselves for future employment is surely both reasonable and loving.

Not all young people can see clearly where their future welfare lies. Nor is there much case for the state providing money to young people because their parents neglect their parental duty to exercise pressure, including financial pressure, on their children to make an effort to improve their work skills. When the parents are too poor, or are otherwise unavailable, it is another matter.

So where do the objections come from? There may indeed be objections founded on real defects or problems foreseen in the schemes. Thus to insist that a young person over 16 who clearly dislikes, and is receiving no benefit from, normal schooling go back to school is unfair.

To lay down conditions for the dole implies the obligation to offer reasonable opportunities for training, in the form of sufficient TAFE places; perhaps to these should be added special remedial courses in literacy and basic workplace behaviour, which seem to be inadequately provided to many school students at present.

The Government says it is providing additional funding to deal with these issues. The adequacy and delivery of the additional services, not the scheme itself, should be the target of the criticism. But where is the injustice in requiring a 17-year-old to do something that will add to his or her self-respect rather than watch television all day at public expense?

However, the knee-jerk opposition to the proposals from the various religious and welfare organisations is clearly based on something much more fundamental than concern for their workability and fairness.

I received a pretty clear indication of this recently when addressing a meeting of one of the peak social welfare councils. The notion of “rights-based” welfare has taken deep hold of them, such that the older notion of requiring some reciprocation in exchange for social-welfare benefits, when such reciprocation is possible as in the case of an able and healthy unemployed young person, has been forgotten.

The idea of rights-based welfare is old: few people have difficulty with the belief that in our society everybody has a claim to minimum standards of health, education, housing and nutrition. This is expressed as a “safety net”. But the implication of this phrase — that use of the net is the result of accident or misfortune — has been lost.

Instead it is increasingly the case that claims on other people’s money are made in loud and peevish tones as if the claimants had some kind of natural, human right to be provided for unconditionally; while each special group of welfare recipients believes that they are victims or somehow the sufferers of deliberate human injustice unless they are compensated for their misfortunes.

A good example is wheelchair users. While I know I would suffer terribly if I could move about only with a wheelchair, and I believe society should make generous provision to remove obstacles to wheelchair users, there has to be some limit to the total of social expenditure on modifying buildings, especially those built long ago, to provide easier access for a tiny minority.

Welfare organisations’ protests about the changes in dole arrangements for the young and able unemployed begin from the premise that everyone has a natural right to “a real job” of their own choosing, and at a wage set by trade unions that exceeds the value to employers of unskilled and perhaps unwilling workers, and that everyone has a right to a minimum standard of living provided by the rest of the community without having any reciprocal obligations — sometimes, not even the obligation of refraining from damaging public housing provided to them for free.

Clearly, the great majority of the community does not accept this rights-based model of welfare, while accepting the need and desirability of a social safety net. The Government in this case is far more aware of the real purposes of welfare than the welfare lobbies.

***
31.
Padraic P. McGuinness, “Why raddled old feminists are wrong on parenting,” The Sydney Morning Herald, August 29, 1998, p. 41.

The terms Right and Left, or conservative and progressive, are now almost totally meaningless as political categories; their main use is as self-identifiers by people who subscribe to what the writer Doris Lessing in her autobiography calls “the Package”, a set of beliefs which are taken together whether consistent or not.

It seems to upset some people when they encounter others to whom they would like to apply the dichotomous identifiers but who in fact subscribe to no “package”. This applies equally to those who think of themselves as conservatives or progressives, and it is clearly influencing the debate about tax policy in irrelevant ways. Thus conservatives believe in traditional families and that women should be encouraged by fiscal incentives to stay at home to look after their children; while progressives are attached to the ’60s model of sexual liberation and feminism, believing that women should not just have the right to work but are better women for doing so.

But in fact there is nothing necessarily political about either preference — and there is every reason to argue for one decision or the other on evidence as to which is better for women, children, men, and the community generally. Clearly every case is special in itself and, depending on the people involved, any family structure or pattern of work and care for children can produce good results or bad results. But the self-styled feminist progressives are committed to an ideological position which they desperately try to bolster with studies which supposedly show that children raised by single mothers who work full-time need not suffer at all relative to those brought up more traditionally.

But the growing weight of evidence is that this is not so. The incidence of criminality or social dysfunction among children of broken families or single mothers is higher than that for more traditionally raised children.

There are numerous factors involved in this, and it may be that the children who suffer do so for reasons other than family structure — if marriages break up or mothers prefer to remain single for good reasons there may be actual benefits. But the statistical position is such that traditional marriage is in most cases better for children.

Bettina Arndt, who has argued strongly in the Herald and elsewhere that divorce is bad for children and traditional marriage is better for them, that children especially in their earlier years benefit from more maternal care than is compatible with the mother being in the full-time workforce, is often attacked. Most recently she has been ridiculed for the apparent inconsistency of her youthful activity as an advocate of sexual liberation and counselling with her present position. Why changing one’s views with deeper understanding and maturity is to be condemned it is difficult to comprehend. But why is there any necessary inconsistency?

It is perfectly sensible to believe that sexual experimentation among the young does little if any harm, provided it does not lead to unwanted children; but that when it comes to having children people should do so with a long-term commitment to the partnership that parents the children and to the welfare of the children. It is equally sensible to believe that abortion, especially in the last six months of pregnancy, is a serious social or moral issue, and while it should be legal it should also be avoided wherever possible. The best kind of avoidance, of course, is prevention — either refraining from sexual activity (which is more than you can fairly ask of any young person) or efficient contraception.

Germaine Greer, who has a great talent for mixing lunacy with penetrating insight, has suggested that young men should at an early age be made to store a substantial amount of semen and then vasectomised, with access to the semen thereafter only when they are judged stable and responsible enough for marriage and parenthood. It is an impossible remedy, but it makes a good point.

It would also mean that women would have access to insemination only by responsible men and not get pregnant casually or accidentally, or even as some lesbians want to do by artificial insemination. Hating men is not a particularly good beginning for parenthood, which is still best achieved by the usual method.

So it is perfectly possible for someone who even retained all the “package” of the ’60s culture to nevertheless be persuaded by the evidence that this culture is not a good one in which to raise children. It is, after all, a culture of irresponsibility, self-indulgence and lack of concern for social cohesion. Nevertheless, many middle-aged feminists still insist that unless a person accepts the whole package she must be a conservative. Surely it is more conservative to hang on to beliefs and practices that have been shown to have bad results?

The young, meaning those roughly in the 18-24 age group, whatever they are taught do not really accept the package any more. There is a trend away from promiscuity and towards a belief in stable, heterosexual relationships with children. To live together without marriage is of no significance where there are no children, but increasingly people, when they are satisfied with the stability of a relationship, do go on to make it official. The young are no longer silly enough to think that sleeping around is a formula for life — while it might be fun and indeed educational for a few years.

And young women, tired of being preached at by raddled old feminists, assert their right to work on equal terms with men or to combine part-time work with child-raising according to any pattern that suits them.

This not heavily subsidised and regimented child care is what the feminists ought to be working towards.

***
32.
Padraic P. McGuinness, “What price the housewife on the open market?,” The Sydney Morning Herald, October 19, 2000, p. 12.

Statisticians, in trying to assign values for home duties such as child care, are being plain silly, writes Padraic P. McGuinness.

It is always sad to see a once great institution abandon its self-respect and its claims to public respect as a result of the degeneration of its internal standards. There are quite a few such institutions in our society, the university (as an ideal) among them. But to anyone who has had a long professional interest in social statistics, there is a special sadness in the decline of the Australian Bureau of Statistics (ABS), formerly known as the Bureau of Census and Statistics.

The organ of the bureaucracy springs from one of the finest long-term traditions of Australia, going back for much more than a century. This was the tradition of compilation of population and other social and economic statistics in which a great deal of reliance could be placed — indeed, for years the ABS was considered one of the finest governmental statistical agencies in the world. But it deserves that status no longer.

Like many other institutions of our society it has become a victim of what used to be called the “long march through the institutions”. This is not of course a conspiracy, but rather the inevitable succession of baby boomers, stuck in the naive beliefs of their youth and subsequent fashions, to the peaks of power. They in their turn will be replaced by the current crop of young people who are not convinced that the baby boomers are any more than lazy old farts wallowing in nostalgia; the young do not hold to current fashions and the values of the ’60s as articles of faith.

In the meantime, consider the impact of the zealots on the ABS. This is exemplified in the latest ABS publication on “Unpaid Work and the Australian Economy”, which is the highest achievement of the dogmatic feminism at the bureau. There is a certain irony in that some of the people who would denounce the dominance of the market are determined to insist that housework should be valued as if it were part of the market, rather than something that is outside the market. Thus, while the services of prostitutes are certainly part of market production, and can be included in the total value of gross domestic product, it is simply inappropriate to regard voluntary acts of love within a relationship as market products.

Yet the zealous feminists argue that any services performed within the household and not paid for in cash should be added in some sense to the GDP. This is intended to be the basis for claims both for payments by right to women for household work and claims made in the Family Court when marriages are dissolved.

The statisticians identify a number of work activities within the household. These run through activities like food and drink preparation and clean-up, pet care, home maintenance, child care and purchasing. Sexual services are not mentioned, though — but no justification is given, even though such services can, like housework, be provided for payment. What they do not want to admit is that services performed within marriage or its equivalent are part of the relationship and therefore should not be considered as marketable outside that relationship.

They are intellectually dishonest, too, when it comes to the estimation of market rates of pay for housework. When they look to valuation of household work, they use market rates of pay for housekeeping at current rates. But in order to exaggerate their findings further they suggest a “hybrid” approach that uses a mixture of unskilled rates for tasks such as cleaning and skilled rates for child care. Throughout human history child care has been mainly an “unskilled” (although far from unimportant) task undertaken by the majority of women. Only the baby-boomer feminists have tried to denigrate the work of their married sisters by pretending that paid professional child care is better than home child care.

The ABS people have decided that the appropriate concept of valuing household work is the “net opportunity cost wage rate”, derived by “subtracting from the average ordinary time earnings, the relevant taxes and levies payable and work-related expenses, and adding to the result the imputed employer on-costs relating to superannuation and fringe benefits and then converting the result to an hourly wage rate”. This sounds terribly scientific, but is nonsense.

To demonstrate this, let us suppose that all marriages are dissolved tomorrow and every housewife (full- or part-time) goes looking for a job providing household services for payment. The result would be a catastrophic decline in the rates of pay for housework. Similarly, let us suppose that the supply of computer programmers were doubled overnight. We know that the pay rates for programmers would plummet. This phenomenon of declining wage rates due to oversupply is visible in most occupations.

Moreover, there would be mass unemployment among many presently happily married women. Only a tiny proportion of women (and men) are good cooks. If they are going to demand wages, they are going to have to compete with trained cooks; as laundresses they are going to have to compete with shirt services; as drivers they are going to have to compete with taxis; and so on. And as lovers they are going to have to compete with prostitutes and the army of amateurs who do it for fun. A late 19th-century English socialist, Ernest Belfort Bax, used to write furious denunciations of “the trade union of married women” who, he said, sold by the lifetime contract what other women sold by the hour and treated other women as scabs undermining their hard-won gains. This is just as silly as the ABS exercise.

***
APPENDIX
Parallel paragraphs put McGuinness in good company

The penultimate paragraph of the first column way above:

All the two different strands among the social workers in Britain really have in common is a deep suspicion, which is often privately admitted to be a certainty, that social workers except in certain very specialised areas which are usually other fields like ancillary medical services, are no use at all.
~ P. P. McGuinness, “Welfare, mainly for social workers,” The National Times, January 13-18, 1975, pp. 33, 37.

The same argument structure is in this Edmund Burke sentence:

The Aristocratical, Monarchical, and Popular Partizans have been jointly laying their Axes to the Root of all Government, and have in their Turns proved each other absurd and inconvenient.
~ Edmund Burke, A Vindication of Natural Society, in his Pre-Revolutionary Writings, ed. Ian Harris (Cambridge: Cambridge University Press, 1993), p. 42.

That was from 1756. Same technique on show two centuries earlier:

The next day, on our starboard side, we met up with nine old tub boats full of monks — Dominicans, Jesuits, Capuchins, Hermits, Augustinians, Bernardines, Celestines, Theatines, Egnatins, Amadeans, Franciscans, Carmelites, Minims, and monks named for all the other holy saints — who were on their way to the Crazy Council, where they were going to polish up the articles of faith so they could deal with new styles of heretics.
~ François Rabelais, Gargantua and Pantagruel, trans. Burton Raffel (New York: Norton, 1991), bk. 4, ch. 18, p. 428.

Lastly, five iterations of this technique from newspaperman H.L. Mencken:

Under democracy one party always devotes its chief energies to trying to prove that the other party is unfit to rule — and both commonly succeed, and are right.
~ H.L. Mencken, Minority Report (Baltimore: The Johns Hopkins University Press, 2006), p. 222.

If it is the duty of a young man to serve his country under all circumstances then it is equally the duty of an enemy young man to serve his.
~ Minority Report, p. 173.

Philosophy consists very largely of one philosopher arguing that all others are jackasses. He usually proves it, and I should add that he usually proves that he is one himself.
~ Minority Report, p. 48.

Evil is that which one believes of others. It is a sin to believe evil of others, but it is seldom a mistake.
~ H.L. Mencken, A Mencken Chrestomathy (New York: Vintage, 1982), p. 617.

Every religion of any consequence, indeed, teaches that all the rest are insane, immoral and against God. Usually it is not hard to prove it.
~ H.L. Mencken, Treatise on the Gods (New York: Knopf, 1930), p. 343. Also, in Sara Mayfield’s The Constant Circle: H.L. Mencken and His Friends (Tuscaloosa: The University of Alabama Press, 2003), p. 90, the author states, “One of the resident psychics, an English spiritualist, took [Mencken] aside to warn him that most of the American mediums at the camp were quacks.”