Reserve army of labour

Written By: - Date published: 11:47 am, September 1st, 2010 - 33 comments
Categories: bill english, employment, jobs, john key, national - Tags:

In some economic theory a moderate rate of unemployment is a Good Thing. It creates a pool of cheap (even desperately cheap) labour for capitalists – a reserve army of labour. It is thought to keep inflation down (in the short term). From a cold-blooded capitalist point of view it is useful to keep the natural rate of unemployment fairly high.

So it was interesting to see Bill English come pretty close to admitting that the Nats are “relaxed” about our current high unemployment. As reported by TVNZ, Phil Goff came out swinging:

The Government admitted today for the first time that unemployment at present levels is a deliberate part of its economic policy, Labour leader Phil Goff said.

“In a revealing interview today on television, Finance Minister Bill English said the current number of 159,000 unemployed New Zealanders was ‘part of the Government’s rebalancing story’,” Phil Goff said.

“Mr English said that this number of people being unemployed was not ‘brutal at all’. “That is an extraordinary admission. While the recession is responsible for some of the rise in unemployment, Mr English has made it clear that government policies have also contributed to rising unemployment and will continue to do so.

“Mr English has come closer than any minister so far to admitting that for this government the present high rate of unemployment – at 6.8 per cent – is a choice. “I would like to know if Prime Minister John Key shares his finance minister’s economic prescription for New Zealand.

Key-Trump (from Scoop.co.nz)

Most writers here at The Standard have assumed that the Nats dismal performance on the economy in general, and jobs in particular (how ’bout that Jobs Summit eh?) is a matter of simple incompetence. Perhaps not. Like Key’s unguarded “we would love to see wages drop”, perhaps Bill English English has given us a glimpse of the Nats real thinking. “We would love to see unemployment rise” might be overstating it, but from the way the Nats are laying off workers and doing nothing to create jobs it is clear that they are perfectly relaxed about “rebalancing” the economy on the backs of the unemployed.

33 comments on “Reserve army of labour”

  1. Lanthanide 1

    Remember he did say that being able to get unemployment down to 3% was “a hoax”. Marty even has a post on it:

    Unemployment back to English’s ‘realistic’ level

    “if we continue with National’s policies over the next three years we will be able to create another 115,000 jobs and bring unemployment under 6%. These are realistic targets…Labour’s claim that it can bring the unemployment rate down to 3% is also a hoax”

    Seems he hasn’t changed since 1999.

    • IrishBill 1.1

      I’d just like to note for the record that I am not one of the Standard writers who think the government is simply incompetent.

      They are doing exactly what they did in the 80s/90s and to pay off the same support base. They’ve just got better PR this time.

      • felix 1.1.1

        I agree. Do people think it’s a coincidence that unemployment just happens to blow out every time we get a right wing govt? Sheesh.

  2. randal 2

    the nice word that economists use is “the residual”.

  3. marsman 3

    Blame the unemployed for not having a job,force them to look for non-existent work. Hey Presto :-
    Lower wages. It worked the last time these same slime-balls wrecked the country.

    • just saying 3.1

      Aided and abetted by Labour, who won’t stand up for the unemployed when NACT blames and bullies them, lest they lose popularity with the redneck benebashers.

      I sometimes wonder what the political landscape would look like if we had an actual opposition.

      • Lanthanide 3.1.1

        “I sometimes wonder what the political landscape would look like if we didn’t have rednecks”
        Fixed that for you. Political parties reflect the voters, or they don’t get voted in.

        • just saying 3.1.1.1

          Yeah well, there’s leading from the front and leading from the back.

          In the past Labour has taken on some very unpopular principled stances and brought about positive change and moved public opinion in the process.

          And any teenager can tell you that desperation to be popular generally has the opposite effect.

          • Rex Widerstrom 3.1.1.1.1

            I agree with you, just saying.

            Serendipitously I just came over here from commenting on an innocuous post on Kiwiblog about Justin du Fresne’s retirement in which DPF said centralising radio in Auckland “made sense if you can get the same ratings”.

            My response was that if everyone is serving slight variations on tasteless blancmange and more people eat your blancmange than do the oppositions that neither means your product is good nor that they wouldn’t respond well if someone had the foresight and guts to start offering chilli.

            Tortured metaphor aside, the same applies here. Being in Opposition is about having time to advance brave, visionary plans and win people over to them, perhsaps making slight adjustments on the way. It’s not – though it has become so – about “waiting your turn” while cleaving your policies as close as possible to those of your opponents on the basis that “they won last time, so if we do more of what they’re doing, we’ll win next time”.

            And if you don’t win next time, then you maybe adjust your chilli recipe. But you don’t switch to making blancmange.

  4. Jum 4

    Great to see some more people hop on the ‘realspeak planet’ with me.

    Everyone else is insulting NAct if they think this is just an unlucky turn of events for unemployment to be rising with little abatement. This government is not stupid. It’s goal is to see its voter base richer and to provide them with cheap labour. They’ve admitted that so many times in so many slipups over the last few years; they have proved it in the past – same conservatives, same end goal.

    It just stuns me that so few people get this. Obviously, NAct’s voter base does so they’ll keep happily quiet about it as they rake in the taxpayers’ money (they’ll say most of it’s theirs; I’ll say most of it’s ours that they have manipulated away from us, or created via the moneymen like Key).

    That leaves the voter base that doesn’t have a thought on politics as having a place in their lives, and the voter base that is so exhausted trying to survive (another reason to increase unemployed and desperate workers) they won’t care until after the next election and they will care greatly, then.

    But it will be too late for any chance of an equal New Zealand that has any chance of autonomy as a free country.

    • Ari 4.1

      Even if it’s not their goal, they seem way too happy about it for anyone to be taking that on faith. Someone who thinks unemployment is ever a good thing from any perspective has more to explain than just whether they’re actively promoting unemployment- like for instance, how they sleep at night.

      • Draco T Bastard 4.1.1

        Well, actually they should be taking a psych examination. If you don’t have a conscience then sleeping at night while ensuring that people are starving in the streets won’t be a problem and I suspect that neither Blinglish nor Jonkey lose any sleep.

      • Pete 4.1.2

        Wasn’t it Rainier Wolfcastle that said he slept at night “on top of a pile of money with many beautiful ladies”? I expect it’s a variation on a theme, not necessarily including the latter part of the example.

        • Ari 4.1.2.1

          In which case I’m sure they’ll be fine if we tax them into oblivion for the sake of the rest of us, seeing we’re only following the same sort of logic as them, but on a broader scope. 😛

  5. Draco T Bastard 5

    “We would love to see unemployment rise” might be overstating it,…

    No, it isn’t. That’s how capitalism works – low wages and desperation for the many and high profit for the few.

  6. MikeE 6

    ” From a cold-blooded capitalist point of view it is useful to keep the natural rate of unemployment fairly high.”

    No its not, from a cold blooded capitalist point of view its usedful to keep the natural rate of unemployment as low as possible, providing demand for workers isn’t created artificially. Sure high unemployment = cheaper wages, but lower unemployment + positive growth = more $$$ for consumers to spend.

    As a cold blooded capitalist I know which one I’d rather have.

    • Ari 6.1

      MikeE, that’s because you have a capitalist point of view as opposed to a corporatist one. Corporatists don’t care about the overall economy so long as the money they have in hand in the short term is maximised. Capitalists in the Adam Smith sense want to boost the economy by promoting wage growth. It’s frankly a pity that we don’t have more employers that think that way.

      • mcflock 6.1.1

        bang on – and don’t forget about the cult of NAIRU, where if unemployment gets too low the actual $$$ the workers are spending is worth less, so they use their fiendish collective bargaining to demand commensurate pay increases, thus continuing the cycle…

        Simplistic bollocks, though.

    • Draco T Bastard 6.2

      That sounds really nice MikeE but for one minor technicality – compound growth cannot happen forever and we’ve hit the hard physical limits of the economy.

      • Ari 6.2.1

        Well sure, which is why it’s all the more important to have a fair distribution- when you’re growing the overall economy a little more inequality is tolerable because conceivably some of those people are growing the pie as well as their own share. When you hit the limit, that scenario becomes pretty much impossible and vast wealth disparity becomes important for reasons other than severe poverty or starvation benefits.

  7. William Joyce 7

    Yes Ari…”Corporatists don’t care about the overall economy so long as the money they have in hand in the short term is maximised.”

    The Corporation (and the coporatists that live off it) is are a different animal.
    As an :”artificial person” the corporation has
    – no heart unless those who work for it supply it
    – no loyalty to the community unless those who work for it supply it
    – no patriotism unless those who work for it supply it

    It lives longer than the life of of it’s workers
    – sometimes sucking the life out of it’s employees and their families
    – sometimes at the cost of the lives of it’s employees

    It feeds on our resources
    – the environment, labour, taxes, sovereignty
    – it is entirely self-serving unless the workers or the state make it otherwise

    Under one of the most iniquitous maxims in the history of the world – “maximise profits for the shareholders” – it gives nothing back to anybody unless it is made to, obliged to or is in it’s interests to do so.
    The people who live and thrive off the corporation, the corporatists, do so with certain values
    – Maximise profits for the shareholder regardless of the consequences.
    – Produce good results for the profit/loss and especially for the cv.
    – You can always move on before the chickens come home to roost.
    – Liability (corporate or personal) can always be limited if your smart enough.
    – Costs should be reduced anyway you can regardless of the external consequences.
    – There is no loyalty to a nation state or it’s people only markets to exploit.
    – Democracy is an enivornmental factor that can be purchased or manipulated.
    – Taxes are an expense that needs to be evaded or avoided (whichever you can get away with)
    – The taxpayer’s money, from the state, is just another income stream.
    – “What’s good for business is good for the country” is propaganda to prevent riots.
    – Consumer consumption not only provides profits but appeases the masses with trinkets.

    *he sighs as he pours another bourbon and switches over to “The next coked-up stick-fugure”*

    • Bored 7.1

      Billy Boy, you list it like it is….which leads me to ask everybody else what the hell do you expect from NACT? They support the rule of the corporates who already have a huge pool of surplus labour offshore with which to bludgeon down the price of labour in NZ…..in reality the local level of unemployment is becoming of less consequence as globalisation pushes down wages. We are going to be forced to work part time in Call Centres catering to rich Indians and Chinese in the future as our wage rates become Abysinnian. Hand me that Bourbon while you can still afford it.

  8. gingercrush 8

    I don’t actually see the problem. Low unemployment that Helen Clark and the Labour administration of 1999-2008 enjoyed was at a direct cost of gross speculation in property, investment away from exports and towards imports. Where house prices inflated way too much. Where foreign ownership grew and greenhouse gases rose significantly (funnily enough two things the left like to scream about occured with a left-wing administration). Where property development was all the rage and actively encouraged by the Labour administration. Where commodity prices rose and government spending grew. Where we as New Zealanders spent and spent and spent.

    Eventually things will not remain rosy and we actually saw this downfall when multiple financial institutions became bankrupt and thousands of average New Zealanders (both Labour and National voters etc) lost their money. That eventually leads to the classic bust and boom syndrome so symptomatic of the New Zealand economy. Of course jobs were not going to remain in an economy where New Zealanders, farmers, property developers and owners, workers etc etc etc are carrying so much debt. That debt will take years to unwind and is exactly why we will not be seeing any return to the low 3 and 4% unemployment we enjoyed during the heights of a speculation boom.

    It seems fucking stupid to me to see a swathe of seriously unhinged people frothing at the mouth not actually understanding why New Zealand has current high unemployment. When our unemployment actually isn’t that fucking high compared to many other countries. And you can all piss and shit about and look at Australia as an example. That their economy still relies on speculation and will continue on speculation in mining etc for years to come and the demand and presumably lower debt enjoyed by mining companies may mean their economy does far better than New Zealand and basically every other OCED country for some years to come. But when the shit finally does come and Australia actually wakes up to how indebted they really are. That is going to be a crash that will be utterly nasty.

    • Bright Red 8.1

      show how the property bubble created all the jobs that have been lost.

      And ‘Bill English says so’ isn’t evidence

    • prism 8.2

      Nice analysis gc. And the property bubble was behind the consumer buoyancy and feeling of wealth that led to spending on hp or no deposit and delayed payment. Labour could not even bring itself to introduce consumer protection against rorts by fast johnnies and exorbitant interest. Everything bubbled along with the housing prices rises of about 10% annually that remained outside CPI measuring.

    • IrishBill 8.3

      Sounds like you’ve gone all anti-capitalist there, ginge.

      Good.

    • Draco T Bastard 8.4

      Labour may like to paint itself as “left” but it is decidedly right wing. Centre right maybe but no way is it left.

  9. Jum 9

    Captcha ‘language’

    Is there a possibility of social capitalism? We know freemarket doesn’t exist because these freemarketeers keep enlisting our socialised structures to help them out of financial trouble, (this morning in fact!) sooooooooooooooo, is there a new ethical social capitalism where everyone has a chance to be financially content but not at the expense of everyone else?

    We know free education to the highest level the individual intellect can handle, free healthcare up to 18 and over 70, NO tax cuts, do help people to find jobs and live a better life.

    Anyone who wants an American freemarket life can go there.

    • mcflock 9.1

      You Socialist!
      That’s a good thing, imo, by the way 🙂

      I tend towards free education, and healthcare regardless of age, and the right to work 40 hours a week and a maximum of 40 hours a week for a decent wage for all. And scrapping GST.

      Of course, modest tax increases on the wealthy would be needed to fund it, and a FTT.

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