One of the things that always puzzles me about old-school Marxist types is their inclination towards protecting producers on the grounds that those producers employ workers. Perhaps the most obvious example is unionists who wanted more protection, notably subsidies and tariff barriers, for the Australian car industry on the grounds that this industry employed a few thousand people.
What's silly about this approach to protecting workers is that 'workers' are a much larger group than just those very specific workers employed by car manufacturers, and those members who are not employed by car companies (say, the other 99%) are much better served by having low subsidies and low tariff barriers to foreign cars. Why? Because then they don't have to pay taxes to support car industry workers and they can buy cheap foreign cars. What's better for workers - a few thousand jobs or tens (if not hundreds) of thousands of cars at substantially reduced cost? Keeping in mind that, as the left wing pointed out amidst Joe Hockey's comments about fuel prices, a lot of working class people drive.
The answer is obviously that reducing prices for all consumers, many of whom are workers, has a larger utility payoff for workers as a group than protecting a few workers in a dying industry.
The additional irony of this approach is that it props up the capitalists running obsolete industries. A funny form of class warfare if you ask me - tax workers to pay capitalists to stay open so they can employ other workers. You can surely see how this ends in a vicious circle of shrinking tax revenues, slowly dying industries and general economic stagnation. Want a case study? Have a look at France.
Incidentally, I was just in France, and what struck me the most (besides the cheese and wine, obviously) was how every cafe was understaffed despite youth unemployment sitting at 24.4% (and rising). Surely the benefits of a high minimum wage (around 50% of the average wage in France!) are here offset by the huge utility penalty suffered by those who can't get jobs and those who lack up to date public goods because the government is letting a large portion of its labour force (and hence tax base) sit idle?
Anyway, this conversation leads naturally to a discussion of how to best protect workers under modern economic conditions (notably globalisation and automation). I will proffer an article on this issue shortly. It will cover the difference between market (France) and post-market (Scandinavia) interventions in the economy. You see, I'm not actually some neo-liberal (whatever that means) scumbag, I just think progressives should get some economic training before barking about what's 'fair' for workers.
What's silly about this approach to protecting workers is that 'workers' are a much larger group than just those very specific workers employed by car manufacturers, and those members who are not employed by car companies (say, the other 99%) are much better served by having low subsidies and low tariff barriers to foreign cars. Why? Because then they don't have to pay taxes to support car industry workers and they can buy cheap foreign cars. What's better for workers - a few thousand jobs or tens (if not hundreds) of thousands of cars at substantially reduced cost? Keeping in mind that, as the left wing pointed out amidst Joe Hockey's comments about fuel prices, a lot of working class people drive.
The answer is obviously that reducing prices for all consumers, many of whom are workers, has a larger utility payoff for workers as a group than protecting a few workers in a dying industry.
The additional irony of this approach is that it props up the capitalists running obsolete industries. A funny form of class warfare if you ask me - tax workers to pay capitalists to stay open so they can employ other workers. You can surely see how this ends in a vicious circle of shrinking tax revenues, slowly dying industries and general economic stagnation. Want a case study? Have a look at France.
Incidentally, I was just in France, and what struck me the most (besides the cheese and wine, obviously) was how every cafe was understaffed despite youth unemployment sitting at 24.4% (and rising). Surely the benefits of a high minimum wage (around 50% of the average wage in France!) are here offset by the huge utility penalty suffered by those who can't get jobs and those who lack up to date public goods because the government is letting a large portion of its labour force (and hence tax base) sit idle?
Anyway, this conversation leads naturally to a discussion of how to best protect workers under modern economic conditions (notably globalisation and automation). I will proffer an article on this issue shortly. It will cover the difference between market (France) and post-market (Scandinavia) interventions in the economy. You see, I'm not actually some neo-liberal (whatever that means) scumbag, I just think progressives should get some economic training before barking about what's 'fair' for workers.
Comments
Post a Comment