Category Archives: labour economics

The pay equity settlement is unfair to fair employers

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My objection to the $2 billion pay equity settlement is an employer can live a morally upright life, hiring on merit, paying the most he can while still staying in business, and still be successfully sued. Their good names are blackened forever.

The court case and the pay equity bill before Parliament are not about anything the retirement home employers did wrong. They paid the going rate. The case was about what was paid in other industries based on the contentious concept of comparable worth.

The notion that the same job should not pay different rates because of sex is a question on which all agree. Comparing pay in a job to jobs in other industries because more men work in them requires many leaps in reasoning that is less to do with justice and is more about ideology and economics.

The most obvious of which is the extent to which you accept the market setting wages. That is a different dispute to someone being paid a different pay in the same job because of their sex.

Employers hiring on merit is a basic practice of any business who wants to survive in competition. Not hiring the best regardless of sex and race sacrifices profit for bigotry.

Anyone suggesting that the immorality of the market is open and shut was watching the other channel when the Berlin Wall fell and extreme poverty dropped by two thirds in China, India and elsewhere since 1990. The market has at least an arguable case as an acceptable way to set wages.

Many tweet their moral contempt for the market on a smart phone that would have cost many millions of dollars to make when the Berlin Wall fell, and they would not give up the Internet for life in return for $1 million. Are we all millionaires just because of the digital economy?

Adam Smith wrote that matters of distributive justice can only be resolved if people distance themselves from the grubby particulars of their own positions in particular disputes. This evolved into John Rawls arguing that the justice of social institutions should be tested from behind a veil of ignorance where people don’t know their particular place in society or their individual talents.

Rawls argued that a society is fair if you would not mind turning up anywhere in it at random. Inequality is OK if the poor are looked after better than in a more equal society. It is better to be poor in a rich society than poor in a poor society. Rich societies can afford generous welfare states.

Behind Rawls’s veil of ignorance, most would easily agree on equal liberty, equal opportunity and all jobs to be filled on merit. Would agreement on having a market economy be just as quick?

Strong competitive markets do not favour one individual over another. They harness self-interest to generate massive wealth, widely distributed. The income of the poorest, along with the whole of society, benefit from competition in a market economy. Behind the veil of ignorance, not knowing where we will turn up at random in a society, rational people would support competitive markets.

The market delivered the Industrial Revolution. Yesterday, today and every day, 200,000 plus people escape extreme poverty in developing countries because of the spread of capitalism. Yes, this involved inequality and markets determining wages but living standards increased 30-fold since the dawn of the Industrial Revolution; life expectancy doubled since 1900.

OK, you do not have the luxurious life of billionaires, seven of the top eight were self-made I might add. Oddly enough, you probably enjoy a better life than John D. Rockefeller did 100 years ago. Rockefeller lived in a big draughty house with lots of servants. Cars were primitive as was medicine. No refrigerators, washing machines or other domestic appliances we take for granted. Running water, much less safe tap water were brand new inventions at best.

The living wage in New Zealand is set high enough to afford mobile phones, the Internet, overseas holidays and Sky TV too. All beyond the reach of Rockefeller despite his billions.

Would you step into a time machine to go back to the good old days of the 1970s before Rogernomics? You must leave everything from your iPhone to cheap international travel at the door, knock a few years off your life expectancy, and watch two TV channels with no VCR. How many remember what a VCR is? I would pack a few recently invented medicines to ever contemplate stepping back in time to the good old days before neoliberalism no matter how much money was waiting for me at the other end.

Even the biggest critics of neoliberal New Zealand only go so far as to claim that the good old days of the 1970s was an egalitarian paradise except if you were female, Maori or gay. That is two-thirds of the population! The good old days were a very boy’s own good old days.

The road to a more just society is still full of trade-offs. We should have a hard head as well as a soft heart. The case for the pay equity settlement and against the market setting wages is not open and shut.

If I was to spend $2 billion more in the health sector, distributive justice would mind me to spend it on Pharmac and hospital waiting lists. Mental health workers want a flow on of the pay equity settlement. I would spend that money on hiring more mental health workers, not paying the existing ones more.

.@XTOTL claim that women & Maori being screwed by neoliberalism since 1984

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Toby Morris claimed in an inequality graphic on thewireless.com in 2015 that subsequent to the 1980s economic reforms, the rich got the income of the rich double while the incomes of the majority of New Zealanders was largely static. He then claimed that

in short, regular Kiwis were screwed, especially women, Maori and Pacific Island communities

Figure 1 shows that real household incomes increased pretty much evenly across all 10 income deciles between 1994 and 2013, ranging between 40 to 50%.

Figure 1: Real household incomes (BHC), changes for top of income deciles, 1994 to 2013


Source: Bryan Perry, Household incomes in New Zealand: Trends in indicators of inequality and hardship 1982 to 2013. Ministry of Social Development (July 2014).

The figure below shows that since the end of the recession in the early 1990s, there has been rapid income growth including from Maori and Pacifika, at least 50%, if not 70%.


Source: Bryan Perry, Household incomes in New Zealand: Trends in indicators of inequality and hardship 1982 to 2016. Ministry of Social Development (2017).

The massive improvements in Māori incomes since 1992 were based on rising Māori employment rates, fewer Māori on benefits, more Māori moving into higher paying jobs, and greater Māori educational attainment. Māori unemployment reached a 20-year low of 8 per cent from 2005 to 2008.

New Zealand has the smallest gender wage gap of any country; 60% of university graduates are now women.


 


 

NZ top 1% should be drummed out of the international ruling class? @EricCrampton

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What a poor effort! The US top 1% is going from strength to strength by whatever explanation or conspiracy theory is your poison. The NZ top 1% is failing completely on its job as the ruling class extracting the labour surplus without mercy or pity to immiserise the proletariat just because it thinks that is a viable long-term strategy for its class.

Source: The material wellbeing of NZ households: Overview and Key Findings from the 2017 Household Incomes Report and the companion report using non-income measures (the 2017 NIMs Report) prepared by Bryan Perry, Ministry of Social Development, Wellington, July 2017.

The income share of the New Zealand top 1% has been falling and falling for a long time now. The class struggle has been cancelled in New Zealand. What is a point of the class war if the ruling classe is losing and the proletariat winning. Marxist would have nothing to whine about.

NZ more homeless than Mexico? @MaxRashbrooke @EricCrampton @tslumley

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Source: OECD Affordable Housing Database – http://oe.cd/ahd OECD – Social Policy Division – Directorate of Employment, Labour and Social Affairs Last updated on 21/02/2017 HC3.1 HOMELESS POPULATION via http://www.oecd.org/social/affordable-housing-database.htm

Banned from r/ProtectAndServe

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The American police subreddit did not want to know that there were a few bad apples in their rank ranks despite the overall good news about the use of lethal force.

Blacks are not shot dead out of proportion but there are more incidents of excessive force which is nonlethal. Racists are cowards. There is excessive force under the colour of authority but they chicken out when there are real consequences and serious investigations.

Back when I was to evict a drug addict from a rented house and throw him out on the street

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While feuding with strangers on Facebook, I remembered I sat on the student housing committee as Treasurer of the Tasmanian University Union.

The committee worked very well because when students were defaulting on their rent or otherwise would be difficult, it was common for a member of the committee should know them. They could comment on whether the student was short of money or spending their money on alcohol or drugs often with them at the pub on Friday night. Several of us lived at university colleges so we knew lots of people. I told the committee to come down hard on one defaulting tenant because I knew he was wealthy and he just did not want to pay. He was just trying to on because he did not like to pay bills. We had the same problem with him paying the student club fees at my college.

I had a rather sleepless weekend because on Monday morning it was going to be the job of the committee to go around together and evict a student who refuse to pay his rent and refused to communicate with the housing officer, who was a professional housing officer. On Monday morning, I was greatly relieved to hear that he got in contact so he was not going to be evicted. I was one of several who knew of his drug habit.

My brother-in-law was a youth housing officer at the office of emergency housing in an Australian state. To do his job properly he had to face the world as it is. 

He said that the clients he dealt with, the teenagers and so forth, would never be taken in by a private landlord because they do not pay their rent, damage the place and invite all their mates over for parties. He believed everyone should have a house, but he did not pretend they are all model tenants.