Malcolm Turnbull published this speech, which he gave to the recent Young Liberal Convention. I think that a portion of it is worth reproducing because I think that it highlights something particularly worrying; not only about the Liberal Party but about both sides of politics in Australia.
The truth is that developed economies today face a double challenge – not only is technology reducing the need for labour in many sectors – manufacturing, retailing, logistics, financial services to name a few – but at the same time globalization and the Internet mean that more and more jobs and industry sectors are trade exposed than ever before so that what had traditionally been non-trade exposed occupations (accounting, law, financial analysis, retail for example) are now increasingly trade exposed – which means that their competition is not across the street or in another State, but anywhere in the world where there are many people as well educated and as hard working as Australians but prepared to work for lower wages.
All of this is putting pressure on both employment in the developed world – hence the sluggish jobs free “recovery”, such as it has been, post the GFC in North America, and on incomes – hence middle incomes have flatlined or dropped in real terms in the USA over the last twenty years.
- Speech by Malcolm Turnbull, to the Young Liberal Convention
- via: http://www.malcolmturnbull.com.au/
- Published on: January 16, 2012
I am prepared to accept all of this as fact at face value. The truth is that middle incomes have dropped in real terms ever since the September Quarter of 1981 in Australia and about 1978 in the rest of the world.
Not only have wages themselves been falling in real terms for the last 30 years but it would seem that the gap between executive pay and the average worker is also widening:
Pay at the top grew by over 300% between 1998 and 2010. At the same time, the median British worker’s real wage has been pretty stagnant. These trends mean the ratio of executive to average pay at FTSE 100 firms jumped from 47 to 120 times in 12 years.
- The Economist, 14th Jan 2012
I assume that the UK is a similar sort of economy as Australia. Admittedly Britain doesn't have the ability to keep on mining stuff out of the ground and sell it to China, largely because it's all gone but broadly speaking both countries moved from an agricultural economy, through one which was based on manufacturing to one which is now based on service industries.
I think that it's fair to say that if companies continue to be profitable then if executive salaries have risen whilst that of the average worker has fallen or gone backwards, where the money has come from to pay executive salaries.
Mr Turnbull went on in that speech to describe the sorts of values which the Liberal Party corporately holds:
Values such as self-reliance and enterprise. Personal freedom and personal responsibility. Opportunity and competition.
Personal responsibility is a two-edged sword. In the first instance it is only fit and proper for people to be self-reliant. However the economy is not a place where different players start from the same starting point. If you do start at the bottom, then the only economic chip that you have to bring to the table is your provision of labour. Factor in a dash of competition which is also a race to the bottom and its a recipe to leave those at the bottom there; freedom is pointless without any accompanying power.
I haven't for instance heard any plans coming out of either the Liberal or Labor Party as to what to actually do about the increase of competition caused by globalisation. I would have thought that the obvious thing to do would be to improve the quality of the labour force in Australia through a program of improved education standards but neither party suggests that. Such a program could be seen as an investment in the quality labour itself and would be eventually recoverable through increased income tax as a result of people being able to command higher wages. However, when it comes to governments in Australia investing in... well anything really, both sides of politics have an extremely poor record over the past 30 years. In the three and a bit decades I've been alive, neither the Liberal or Labor Parties have shown any vision or leadership at all. To be totally honest both parties have either been asleep at the wheel or have engaged in policies which have actively hurt the country.
If there are there are many people as well educated and as hard working as Australians but prepared to work for lower wages, doesn't it suggest that because of the values of competition; driven by forcing people to be self-reliant, that the only possible outcome is for wages of the average worker to go even further backwards?
A report by one of the country's main finance houses says the banks have hired too many staff in the past decade but that trend will reverse as they capitalise on technological advances and send more jobs to India and other lower-cost countries.
- Sydney Morning Herald, 17th Jan 2011.
As stated as part of the values which the Liberal Party corporately holds, ie. "Values such as self-reliance and enterprise" I assume that Mr Turnbull's reaction to the 7000 people whose jobs will be cut is to tell them to "suck it up" and to take some "self-reliance and enterprise" or maybe "personal responsibility" for their actions. How dare these degenerates think that they should rely on a corporate entity such as a bank to provide them with a wage.
The thing is that effects don't happen unless there are causes. In this case, there are multiple causes. Increased competition of labour across global markets as well a business decisions taken by essentially hired hands at corporations many layers above them.
Causes generally don't correct themselves unless there is positive action taken. Actions follow from the set of values which individuals, companies, (political parties?) hold. It just seems to that the Liberal Party as represented by their values statement which Mr Turnbull has expounded upon, intends not only to take zero positive action at all to improve this country but to also blame people and point the finger in the name of personal responsibility.
Really this set of statements is that the Liberal Party would like to return the economy to state of Social Darwinism as per the 1870s. That's fine I suppose but I wouldn't be at all surprised if say in another 30 years time, whether we don't see riots on the streets of Sydney, like we did London, Athens etc.