The Pen is mightier than the sword, but the Pen must sometimes move the sword against corruption if the corrupt are not moved by the pen.. An idea without an implementer is useless. "The Rulers do not carry the sword in vain"Rom 13:4

Monday, January 6, 2014

The myth of Full Employment and annoying "Externalities".

Yes, the idea of "Full Employment" is an entirely artificial and shakey ideological viewpoint that is disconnected from the real world. It makes good political soundbites to speak about it.. just two words.. easy.. "Full......Employment"... just the kind of phrase a cash strapped, mortgage heavy, suffering electorate want's to hear.  Both sides of our lame adversarial system will bleat on about this, but the "Workers" side.. Labor in Australia or the Demobrats in the USA, will call this hand, and raise it to "high wage, high skill jobs"...which is another complete myth except for the Union leaders who's primary skill is with the mouth and the megaphone.

Even Dr John Buchanan of Sydney Uni Economics faculty declared he has been:

- A Marxist (now lapsed)
-A Union activist.
-A Student activist.

After his informative and fairly balanced lecture about his former 'messiah' Marx on the Sydney Idea's key thinkers series in 2009, he ends up and concludes with a kind of 'back to the future' fantasy where he calls for 'social justice' that reflection on, if not the embracing of,  Marxist ideas should at least take us toward.

The problem with phrases such as Full Employment, High Wage High Skill Jobs, and Social Justice is just that....they are phrases of language designed to  inspire rather ignorant, short attention span simple minded, masses (that's you and me) into thinking that "If only" we elect this bunch or that, these things will actually come true for "us".... rather than the select elite from their party who are at the motivational heart of such soundbites.

They never come true for us. But we keep on believing them.

The problem is.. "Externalities".  -what are they?  Well..it's pretty simple stuff.. as an example we can point straight to China and how they make 'stuff' at incredibly low prices  and slap down Australian manufacturing with the back hander of unbeatable pricing and improving quality.  So, it should be patently obvious to anyone who can think further than the highly selective 6.00pm  news, or the 'Sunrise' propaganda, that in spite of the bluster and blab about full employment etc, it just aint gonna happen in this rather well disguised primal world of survival of the fittest and sneakiest.

The people who will be fully employed, and have high skill/high wage jobs are those running the propaganda machine that seeks to persuade 'us' that such things can eventuate as long as we vote for them.

The usual 'spin' from the finance folks in political parties is that 'we need to move more to a service economy'... because they observe the slow painful death of manufacturing in Australia. But this 'service' myth needs some simple spade is a spade analysis in terms of macro economic reality. Here it is. "If".... the type of job sector where there is growth is 'service'..say finance,  umm.. who are the customers?  Well pretty obviously it's also 'us'. but think for a brief moment, even though (as the Bemm River Bait and Tackle dude Mark said during holiday "My head hurts") it will hurt (but not harm).....  'service'... i.e....giving financial advice does pretty much *zero* for the overall economy, and much less for our national debt. The only ..ONLY thing which will enable us to reduce our overseas debt is to make stuff, grow stuff or dig stuff and sell it overseas.

But those 'externalities' can have and are having serious impact on those areas also. We are not the only nation that has 'stuff' in the ground or can be grown on it.  Other nations do that too and have just as much lust as we do to sell it. If they have a lower labor cost economy...hmmm that makes us 'toast' as the saying goes. At least on the surface.  There are lot of backroom Ricardian deals that will mean we can still sell some stuff if the customer really wants to sell some stuff back to us and the balance of that equation is mutually beneficial.

"Externalities" means survival of the fittest, slickest and meanest. So, next time some political Galah pontificates and sprukes to you about 'Full Employment' just yell at him or her "My head hurts".

Then join my team

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