Thursday, 12 January 2012

Harmful Utopian Dreams

Standing Up for Workers

At ContraCelsum we love to see employees win.  We get great satisfaction and much pleasure in seeing "workers" (to use the socialist, class-warfare term) get significant rises in income, working conditions, work satisfaction, enjoyment, and so forth.  Yet many--far too many--would accuse us of being "anti-worker".  Why would that be?

It's because we have a radically different perspective on how workers' pay and conditions should be improved.

We believe the only sustainable, and ethically defensible way to achieve rising incomes for employees is via increasing the demand for employees.  There are only three ways to increase demand: firstly, when workers become more and more scarce, and employers have to compete to employ them.  Secondly, when the labour force is growing, but the economy is growing still faster, so that supply of labour cannot keep up with demand.  When that applies, demand for labour increases across the entire economy and wages rise.  Thirdly, an individual employer becomes more knowledgeable, more skilled, more responsible, and more productive so that they are worth more to the business.  Therefore, the owner ends up realising the costs of paying him or her more more are less than the cost of replacing them.  Paying more to retain them  makes rational economic sense. Wanting more of such an employee, leads to a willingness to pay higher wages to retain them.

When income and pay rises under any of these conditions we applaud and rejoice.  Of course exactly the same drivers and dynamics apply to all management staff, and ultimately to employers as well.

When we are criticised as being "anti-worker" what the critics really mean is that we are opposed to the way they advocate for increasing the income of employees. It is an argument about means, not ends.

Psycho Milt is having conniptions over at No Minister because the Ports of Auckland has announced it is pushing ahead with employing contractors, in preference to its unionised workforce.  Milt sees this as yet another example of pushing workers' pay down (aka, oppressing the workers).
Apparently it's wonderful and celebratory news that yet another workforce will get its pay and conditions pushed down
Milt wants both to preserve the current pay rates of the unionised wharfies, and even increase them.  So do we.  But it is how we go about achieving that goal which is radically different.  For Milt, the matter is relatively easy.  You either pass a law forcing the company to do just that.  Or the employer decides on its own to pay them more.  It is easily done.  And we have to acknowledge, Milt's approach has simplicity and directness on its side.

But will it work?  Is it sustainable?  Can the increasing wage bill be paid?  Only if "the whole system" is aligned to sustain such an increase.  Firstly, all other ports in New Zealand would need to pay employees at the same rate, and all employees would need to be as equally productive as the workers at Ports of Auckland.  Otherwise, some ports would be more productive than others and would charge lower fees to shippers, exporters and importers, thereby attracting more business away from Auckland, reducing its revenue.

Secondly, there would need to be no other potential employees prepared to work for any lower wages than those currently paid to Ports of Auckland workers.  If so, the government or someone would have to "close the shop" and prevent anyone else working at Ports of Auckland.

Thirdly, all global shipping companies that do business in New Zealand would need to agree to such a cost impost and not change their routes, destinations or frequency, if the increase in wages at the stroke of a pen were to be sustained.  It would need to be illegal, for example, for shipping companies to say to Fonterra, "Look, costs in NZ ports are too high.  We are prepared to ship your milk power out of Sydney or Melbourne, but its up to you to get it there."

Now, of course none of these conditions would ever apply--unless the entire global economic system were to become a command and control economy.  For Milt's method of increasing wages by fiat ignoring market conditions of supply and demand to be sustainable over time that's what is needed.

Because of the actions of the unions at Ports of Auckland, because they and Milt want to apply the "rising wages by command and control" method, business has declined and workers will now have to be laid off.  Get this: who is more anti-worker: Milt or us?  His method has turned out to be terribly destructive and harmful to workers.  Maybe Milt would like to sit down and explain to those about to receive their redundancy notices that they are going to be much better off as a result of  "standing up for workers" using the command and control method. 

Who is the real anti-worker here?  Since the global command and control economy is a naive utopia and will never exist, those who try to increase the income of employees by command and control methods are the worst enemy of all workers over the longer term.

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