The RBA’s policy deliberately creates unemployment. So why do we treat the jobless so badly?
87 comments · 98% upvoted · source · other discussions
comments
aussiegreenie
Dancingbeavers
The economy requires people to be unemployed- training, between jobs, unpaid care. People treat the unemployed as if it’s a long term life choice.
mohanimus
Unemployment also puts downward pressure on wages. Something desirable to businesses the decision makers at the RBA will seek employment at after they finish working at the RBA.
Ok-Bar-8785
We also have inflation, businesses adjust everything up for profits other than wages. Essentially achieving downwards pressure.
A lot of my jobs have been on a EBA and have terms for a pay raise of x% or CPI ( whatever is higher.) This happens yearly in July. I then just checked a handful of other EBA's and they also have July set for CPI adjustments.
I then looked at some data of month to month CPI from a few years... And well by coincidence june-july are always lower.
Is it a conspiracy or another mechanism built to suppress wages?
ALLIRIX
Something that might make you mad: CPI is a very incomplete measure of inflation. It doesn't include the cost of assets or asset mortgages. Which makes sense for economists, it provides a metric to measure how much an investment rose above base consumption levels. But to pin wages to CPI means you're doomed to fall behind the capital class. To see how screwed you were over covid look up Employee Living Cost Index in Australia. It's slightly less than CPI right now because interest rates are steady relative to other cost pressures, but it rocketed past CPI over covid.
Ok-Bar-8785
Yeah I'm already not a fan of CPI , it's a statistic like GDP that is useful for economists but thats about it.
It's almost like the system is built for paper value and humans quality is of little importance other then creating value for the system.
I'll look into the Employee living cost index but I know what the reality is that I live. Even with upskilling/ promotions/ moving/ what ever I can do to try get ahead it still feels like nothing really gets much better. If I stay stagnet in the work force I would be alot worse off. The better jobs are more competitive and less of them so it's just a never ending battle, but I guess that's what they want.
I'm still grateful being in Australia, it's not as good as it could be but there are alot of other parts of the world that have it much worse.
CPI is flawed in many ways
Ancient-Elevator-485
People like running down others to feel better or above others. As if having a job makes you a good human being!. Most serial killers, abusers and dealers have jobs but people like to treat others like shit so they feel better about their own miserable existence!.
Certain_Syllabub_514
Because the fear of being unemployed is one of capitalism's biggest levers.
The last thing most employers want is for people to have choice of employment. They want you to feel lucky to have the job you have, and a queue of people behind you willing to take that job for less money.
artsrc [OP]
Whenever I hear the words "skill shortage" I think .. yes!, ideally there would be a shortage of every single skill.
ScruffyPeter
Labor were literally anti-worker in lead up to SA election in being happy to promote immigration rather than increase wages with aged care workers.
WastedOwl65
Aged care facilities would collapse without immigration. Have you been to one lately?
azreal75
If it was pleasant being unemployed, you’d not be properly motivated to accept the shitty conditions at your next underpaying job.
Infinite_Shower_5390
And if it’s really miserable you can’t afford transport and the basics of life, that way you will accept poor working conditions and low pay.
Sometimes I feel like some Australians don’t even want an underclass.
artsrc [OP]
There is evidence that misery is not actually well supported by evidence:
Flat-Banana3903
the conversation is hardly the single source of truth lol
aussiegreenie
At least the people writing are experts in their field.
Swank_on_a_plank
Unfortunately, I think that's the issue people have with it.
olucolucolucoluc
Key point being "in their field". And a lot of them either get their theories debunked or found out as frauds later. But by that point The Conversation starts to paint them as disgraced and therefore absolve themselves of publishing their work(s).
aussiegreenie
And a lot of them either get their theories debunked or found out as frauds later.
That is total bullshit. It is the typical anti-intellectual statement that is used to cover corruption. Do you know who are staisitcally more likely to be frauds? Politicians and "Business Leaders"
artsrc [OP]
Yes, but it is the only external source cited so far in this thread.
If you have evidence that cruelty leads to better outcomes, to combat the two entirely different pieces of well researched evidence to the contrary, post it.
olucolucolucoluc
That's not how genuine debate works. It is up to YOU to provide multiple, verifiable, different sources to make/back up the claims YOU are making.
artsrc [OP]
Ironically I provided two pieces of evidence to back up claims. Those conversation articles were two different avenues to pursue the question of the impact of misery on employment outcomes.
The unemployment insurance one referenced a series of studies on the impacts of targeted income replacement level, versus poverty level, unemployment insurance for a period.
The other looked at the impacts of economy wide doubling of job seeker, and removing mutual obligations during COVID.
olucolucolucoluc
And yet you missed the point. Both were from the same publisher.
artsrc [OP]
They are both papers by academics that reference peer reviewed research.
For example from the unemployment insurance one:
https://www.nber.org/system/files/working_papers/w27574/w27574.pdf
olucolucolucoluc
Peer review research is known for its flaws.
I ain't touching a sketchy PDF link btw.
artsrc [OP]
The organisation is : https://www.nber.org
Peer reviewed research is flawed. It is also the most reliable source there is.
WastedOwl65
Yet, you're here whinging!
Flat-Banana3903
I like to highlight to simple people their error of their ways, it is what I do
Positive_Amphibian_2
This is 90s propaganda bro, give it a rest
ScruffyPeter
More like 70s propaganda. https://en.wikipedia.org/wiki/Social_security_in_Australia#Contemporary_welfare_attitudes
For example, Hawke government did the stick to youth by putting them on smaller payments as well stricter requirements.
Id0ntc8r3th8tmuch
If it was pleasant being unemployed, you’d not be properly motivated to accept the shitty conditions at your next underpaying job.
I'd rather be unemployed and absolutely bored out of my mind during the later rounds of lockdown in Victoria during covid (when there was no $550 supplement on top of the base rate for jobseeker allowances to save the floozies that have never experienced unemployment from experiencing a taste of poverty) than work miserable shit work that induces health issues, especially for someone like Gina R or Gerry H (not for all the money in the world).
There is only so much shitty work conditions people would accept before leaving, without turning into people like one individual that burned down a toilet paper manufacturing plant recently in the US.
I highlight that example from a country where they have even less government benefits for the unemployed than Australia and supposedly more incentives to remain employed at shitty employers (maybe more so as their products made for handling shit amongst other things).
Maybe it is just a small anecdote in your mind and those whom upvoted such a post (perhaps never heard the term "going postal" before) but I think it is more than enough to show how absurd your post genuinely is based on the ignored experiences of low level, shit kicking jobs (from the woolies nightfall member through to the keyboard jockey you waited an hour on hold for to discuss matters with the ATO) with different kinds of misery (physical issues or mental burnout).
Misery is a bad motivator that also affects workplace culture, as misery loves company (practically half of reddit are here because of misery and escapeism, if not someone like myself taking my time on the porcelain express) and a miserable fellow employee will bring down motivation of other employees which reduces output and production (even when people have a whinge about the supposedly cruisy lifestyle of unemployment on benefits while ignoring the majority of social services payments are towards aged care as stated on those Notices of Assessment most people do not even read attached to a tax return, especially where they had underpaid PAYGi, misunderstood that bank interest on savings accounts is a taxable source of income or worse when it a return was paid out towards a debt for Child Services).
But pardon me for rambling, as such a vastly inaccurate statement deserves a lengthy response than something much shorter and simpler as a TL/DR: bullshit.
Oh and please adjust your diet to use less toilet paper, and remember there is no such thing as flushable wipes.
Regards from your toilet manager.
ScalyPinkLizard
He was agreeing with you, re-read his comment. Hes saying they do it so that the poor and desperate stay poor and desperate, not so they get motivated and look for better jobs.
Id0ntc8r3th8tmuch
He was agreeing with you, re-read his comment.
OK re-read it.
If it was pleasant being unemployed, you’d not be properly motivated to accept the shitty conditions at your next underpaying job.
If x was true, then people would not continue to do y.
Hes saying they do it so that the poor and desperate stay poor and desperate, not so they get motivated and look for better jobs.
Not what I read.
I disagree, unemployment can be unpleasant but people still would and do prefer it to working in shit jobs.
ScalyPinkLizard
Let me clarify: I believe /u/azreal75 was ironically/sarcastically quoting the nepobaby/boomerish concept that - keeping the poors in low quality living standards would "motivate" (force people, through threat of death) to "willingly accept" the lower statis givien to people, by the privileged parasites that think this way. I dont believe he actually thinks that is real motivation, hes quoting the talking point they use to excuse treating people like subhumans.
Quiet-Owl9220
Yeah? How about permanently disabled people who are unable to stay employed at all? Do you think treating them like shit helps them get a job? They just lack motivation, huh?
TEK1_AU
Because we have allowed our society to become one of utter greed and selfishness. Looking at you slumlords!
Proper_Scientist6979
Proud jobless guy here. Bring on the hate lmao 🤣 🔥🔥🔥🤬
😂
Positive_Amphibian_2
It's only fools who treat unemployment as a problem.
MagicOrpheus310
Mate the RBA could tell me it was raining and I wouldn't need to look out the window to know the sun is fucken shining, they couldn't run water from a tap let alone an economy haha
WastedOwl65
Maybe you should apply for the top job, then!
Chemical_Rooster3
Let's hear how you would approach it then. Keeping in mind the RBA doesn't, and isn't supposed to, "run the economy."
So you're the RBA, your mandate is: Prosperity and welfare for Australia, pursued in monetary policy through price stability + full employment.
In practice, this means your job is to keep inflation low and stable, keep as many people in work as the economy sustainably support, and lean against big economic swings.
The tools available to you: The cash rate, liquidity operations, guidance, bond buying/yield targets, and crisis funding facilities.
Go...
artsrc [OP]
Not him, but I would approach the government and suggest a different inflation target. I would tell the government that I want to target wages inflation, the WPI, rather than consumer prices.
In the case of a supply shock, like higher fuel prices, there is no need for action unless I see wage growth accelerating.
I would also advocate for a higher target, in the long term, perhaps 7%, with a gradual adjustment to that target over time.
lacco1
Isn’t there a stat like 10% of the population has an IQ so low that any job of activity they do it’s less productive than them just not being there, and the unemployment rate is 4%………
RagnarBateman
The RBA deliberately creates inflation and we all just blithely go along.
In the words of the great Ron Paul: end the Fed.
Avesery777
"Great" "Ron Paul"
"
RagnarBateman
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Avesery777
This is nonsense. "You have a right to life, but actually you don't have a right to the things that keep you alive. I am very smart."
International_Eye745
It sums up what is wrong with the world. A right to life but no right to the environment required to live that life. Water and land. We are in effect born into slavery.
RagnarBateman
You have a right to be able to earn a living by applying your skills in the market. You don't have a right to anything that requires the labor or capital of another. To do so makes them your slave.
Avesery777
By this logic no one can start a business because it requires the labour of another, which cannot be given willingly under a market economy due to the threat of homelessness/starvation/poverty when labour is not sold.
This is also a stupid definition of slavery
RagnarBateman
Starting a business requires the labor of the entrepreneur.
They can always pay someone to assist them. Nothing about slavery there.
All humans have to work to survive
Avesery777
If you don't understand how consent works - It can't be given under coercion, and starving to death if you don't work is coercive, and as such all labour in a market economy is necessarily non-consensual
RagnarBateman
Consent means you agree to the transaction.
If you think you should be fed, clothed and housed at someone else's expense that means you are causing them to be your slave against their consent.
You have to work for all of that.
Avesery777
Again, by this logic you can never have anything, because everything requires someone else to labour. This is also a stupid view of consent. If someone holds a gun to your head and you agree to a "transaction" as you put it, then you are agreeing but not consenting.
artsrc [OP]
If a bank offered you an account that instantly converted deposits to some other currency, like gold, would you be interested?
WastedOwl65
Tell us all how you propose to stop doing that?
RagnarBateman
Either by getting the Libertarians the balance of power in the Senate or watching it all inevitably collapse anyway.
Sillent_Screams
No country has full employment
artsrc [OP]
What do you mean by full employment?
As mentioned in the article, Australia had unemployment below 2% during WWII, and for the next couple of decades, with long term unemployment extremely rare. This was driven by a different approach to macro economic policy.
Russia currently has quite low unemployment:
https://www.ceicdata.com/en/indicator/russia/unemployment-rate
ALLIRIX
Full employment = frictional + structural unemployment
(obviously countries can have "full employment" so I disagree with the poster)
If you look those up you'll see why lower natural rate of unemployment isn't necessarily a good sign for the economy. Hint: it's easier to employ a low-skilled workforce
artsrc [OP]
I find your language “not a good sign for the economy” curious.
The purpose of an economy is the delivery and distribution of goods and services.
Unemployment in Australia results in a deficiency in the distribution of goods and services.
damnumalone
The guy replying to you is right. Having significant “structural” unemployment is a bad thing for the economy, but “frictional” unemployment is always going to be there and represents people moving between jobs or entering the job search.
Russia having low unemployment isn’t a great measure because all it is actually highlighting is 1. No one wants to lose their job in Russia so if they get one they hold onto it for dear life and 2. If they lose their job or don’t have a job they don’t look for employment because they know they can’t get it (ie they exit the workforce). 3. The jobs are more low tech, labour intensive work, so it is easy enough to swap one person out for any other because they need limited knowledge or training (and I think 4. probably also applies too - wtf would you trust Russia on economic statistics?)
Of course Australia had low unemployment post war - they had massive public works program designed for everyone to “pitch in” so there was an element of duty in being employed even though you would have been doing something no one would put up with now like digging ditches and the like. Again, it’s not representative of good things, quite the opposite, it’s a function of low paying, low skill jobs prevailing significantly and a lack of choice for employees (employees with no choice don’t leave jobs).
Unemployment below the NAIRU indicates lots of likely skills shortages and gaps, so it’s not good for productivity and technology advancement, and while pushing up labour force competitiveness is a good thing, it also likely indicates more people are working significant overtime, the need for importing significant labour from overseas is higher, and also a likelihood prices are going up at a speed faster than wages.
It’s good to have a frictional rate that’s higher as it indicates choice and higher educated, more technical jobs
artsrc [OP]
Russia having low unemployment isn’t a great measure because all it is actually highlighting ..
if they lose their job or don’t have a job they don’t look for employment because they know they can’t get it (ie they exit the workforce).
All the things you describe would have been the case before the war.
Your view is inconsistent with the change in unemployment statistics since the Ukraine war.
My view is that it relates to the large number of working age people who left, the large numbers are fighting in a war, the massive work of import substitution work from sanctions, and the massive fiscal stimulus, building weapons, and paying for a large army.
My view is consistent with the facts, the change in unemployment in Russia.
artsrc [OP]
The guy replying to you is right. Having significant “structural” unemployment is a bad thing for the economy
https://en.wikipedia.org/wiki/Structural_unemployment
My reading is that u/ALLIRIX in the comment https://www.reddit.com/r/OpenAussie/comments/1sq5pnz/comment/oh5q9hg/?utm_source=share&utm_medium=web3x&utm_name=web3xcss&utm_term=1&utm_content=share_button is saying that complex, sophisticated economies have structural unemployment because they have demand for specialized skills that are likely to have a mismatch between skills and jobs.
So that having structural unemployment is, in his view, indicative of a good kind of economy.
Where as, say a medieval economy, where most people are a farm laborers, don't have structural employment because everyone has the same skills.
artsrc [OP]
“frictional” unemployment ... represents people moving between jobs or entering the job search.
Agreed.
Words are tools for communication, and their most important meanings are what is intended by the person who says them, and what is understood by the person hearing them.
Your understanding, and the intent of the commenter is consistent with the wikipedia discussion - https://en.wikipedia.org/wiki/Frictional_unemployment
[frictional unemployment] is always going to be there
In a world with advanced computer systems, zoom, telecommunications, etc. I see no reason for frictional unemployment.
Other solutions to frictional unemployment - https://en.wikipedia.org/wiki/Job_guarantee , have also been proposed.
damnumalone
In a world with advanced computer systems, zoom, telecommunications, etc. I see no reason for frictional unemployment
This just shows you have no idea what frictional employment actually is. All the things you’ve highlighted created greater flexibility, wider work arrangements and greater choice to move between employers and take longer time off — all of which lead to much more frictional unemployment, not less
ALLIRIX
An economy isn't just distribution... it's efficient distribution, or more precisely efficient allocation of scarce resources to their most productive uses. We use price as an imperfect proxy for productivity. Full employment is where the market clears: every unit of labour willing to work at offered prices (equilibrium price, where supply and demand curves meet) is matched, minus the structural and frictional barriers.
With that out of the way
Pushing unemployment below full employment (the NAIRU) forces employers to compete for a depleted labor pool. This drives up wages without increasing productivity, and employers' fiduciary passes increased labor costs onto the consumer. Higher prices force workers to demand higher wages, triggering a wage-price spiral and runaway inflation. There are social arguments for riding closer to NAIRU, but they're not economic arguments. Inflation hurts everyone long-term.
Also, an advancing economy expects some structural unemployment because of creative destruction. When Australian industries innovate, old skillsets become obsolete. Look at the Pilbara, where driverless haul trucks have displaced traditional drivers but created a massive shortage of remote robotics technicians. Or look at IT infra moving to the cloud. We no longer need server techs in-house, and cloud economies of scale minimizes the demand for server techs. It takes time to reskill those redundant workers for the new, specialized jobs. An economy with zero structural unemployment has stopped advancing
Europe has ways to fast track reskilling, so their structural unemployment is lower than ours, so I think Australia should copy their policies. But that is irrelevant to this conversation, and to Russia's low unemployment, which is driven by military conscription, brain drain, and an unproductive consumption-based war economy - not good for the long term health of their economy. If the war machine produced infrastructure instead of missiles and drones with a small unproductive lifespan then it'd be a different story.
Positive_Amphibian_2
Germany did for a short time before WW2. There were a bunch of useless jobs created overnight.
Shi-Stad_Development
Possibly not the best counter point...
Because it is easy politically to punch down.