Book Reviews | Gordon Campbell | News Flashes | Scoop Features | Scoop Video | Strange & Bizarre | Search

 


No Right Turn: Unemployment And Welfare Policy

Unemployment And Welfare Policy


http://norightturn.blogspot.com

A lot of pronouncements on welfare policy are targeted at unemployment - at getting people off the dole and into work. Right-wing solutions, such as those advocated by National and ACT, claim that they will achieve this by being punitive - by slashing benefits, imposing time-limits, and demanding participation in mandatory work and "job skills" schemes (which ironically may prevent people from attending interviews).

The problem with these policies is that they are based on a completely outdated view of our economy and the causes of unemployment.

Once upon a time, we ran a social democratic economy, aimed at providing full employment. When the market didn't provide jobs, the government did, either directly by hiring more people, or indirectly through policy settings designed to protect and foster local industry and encourage employment. For much of the period, unemployment was low to nonexistent, and while the anecdotes about welfare ministers knowing everyone on the dole on a first-name basis are false, it's unquestionable that unemployment was far lower than it is today.

You can see how punitive measures against the unemployed make sense in such a setting. Jobs were plentiful, and more could always be created by the government (by building another dam, cutting down some more trees, or getting more people to work on the railways). Unemployment was, for much of the period, a matter of choice.

However, we no longer live in that sort of economy. Since 1984 (and in particular since the passing of the Reserve Bank Act 1989), we've given up on the old social democratic goal of full employment in favour of pursuing low inflation. The Reserve Bank manipulates interest rates to ensure that inflation stays in the range of 0 - 3% in the medium term (it was 0 - 2%). It's like an accelerator - when they lower interest rates, they're pumping more money into the economy and allowing it to grow faster; when they raise them, they're reducing the money supply, and starving it of fuel. The relevance of this is that

  1. raising interest rates tends to increase unemployment; and

  2. the Reserve Bank views low wages (or rather, low wage growth) as an essential part of low inflation. The wage increases that would naturally occur when the labour market is tight and businesses must compete for staff are "wage inflation" that must be stamped out.

And so we had the spectacle on Agenda last month of the Governor of the Reserve Bank saying that "it concerns us... when you can't find the people or the skills at sensible prices" and that interest rates would have to rise - and people be thrown out of work - because businesses "complain they can't get staff, they're having to pay a lot more for them" and workers were "looking to negotiate at higher levels".

Under such a system, it is simply unjust to be punitive towards the unemployed. In a very real sense it is not their fault - the individuals concerned have just got the short end of the statistical stick, and if it wasn't them, it would be someone else. Punitive measures to "encourage" them not to be unemployed is like picking someone at random and beating them for being picked. The injustice - not to mention sheer pointlessness - of that ought to be apparent to all.

If we are going to run a system where 5% of the workforce must be unemployed because it makes the economy as a whole "more efficient" (i.e. low-wage), then we have an obligation to provide for them. It's as simple as that. Otherwise we are building the happiness of the many on the suffering of a few. Utilitarians may like that tradeoff, but I think it is grossly immoral.

What about those who don't want to work? Well, what about them? I have no doubt that there are some who would rather spend their lives on the dole, but they are a small fraction of the total unemployed (certainly less than the 10,000 who have been unemployed for over a year), and the best solution is simply to let them. No-one is made happier by forcing someone who doesn't want to work into employment at the expense of someone who does. There's simply not enough jobs to go around (and never will be, as long as our monetary policies continue), so they might as well go to the people who actually want them.

ENDS

© Scoop Media

 
 
 
 
 
Top Scoops Headlines

 

Werewolf: Living With Rio’s Olympic Ruins

Mariana Cavalcanti Critics of the Olympic project can point a discernible pattern in the delivery of Olympics-related urban interventions: the belated but rushed inaugurations of faulty and/or unfinished infrastructures... More>>

Live Blog On Now: Open Source//Open Society Conference

The second annual Open Source Open Society Conference is a 2 day event taking place on 22-23 August 2016 at Michael Fowler Centre in Wellington… Scoop is hosting a live blog summarising the key points of this exciting conference. More>>

ALSO:

Buildup:

Gordon Campbell: On The Politicising Of The War On Drugs In Sport

It hasn’t been much fun at all to see how “war on drugs in sport” has become a proxy version of the Cold War, fixated on Russia. This weekend’s banning of the Russian long jumper Darya Klishina took that fixation to fresh extremes. More>>

ALSO:

Binoy Kampmark: Kevin Rudd’s Failed UN Secretary General Bid

Few sights are sadder in international diplomacy than seeing an aging figure desperate for honours. In a desperate effort to net them, he scurries around, cultivating, prodding, wishing to be noted. Finally, such an honour is netted, in all likelihood just to shut that overly keen individual up. More>>

Open Source / Open Society: The Scoop Foundation - An Open Model For NZ Media

Access to accurate, relevant and timely information is a crucial aspect of an open and transparent society. However, in our digital society information is in a state of flux with every aspect of its creation, delivery and consumption undergoing profound redefinition... More>>

Keeping Out The Vote: Gordon Campbell On The US Elections

I’ll focus here on just two ways that dis-enfranchisement is currently occurring in the US: (a) by the rigging of the boundary lines for voter districts and (b) by demanding elaborate photo IDs before people are allowed to cast their vote. More>>

Ramzy Baroud: Being Black Palestinian - Solidarity As A Welcome Pathology

It should come as no surprise that the loudest international solidarity that accompanied the continued spate of the killing of Black Americans comes from Palestine; that books have already been written and published by Palestinians about the plight of their Black brethren. In fact, that solidarity is mutual. More>>

ALSO:


Get More From Scoop

 
 
 
 
 
 
 
Top Scoops
Search Scoop  
 
 
Powered by Vodafone
NZ independent news