Continuing in the same vein as the previous post, the unions are protesting a two year delay in the aged pension as announced in the recent federal budget,

The Federal Government is facing a protest from two of the country's biggest blue-collar unions against its plans to raise the pension age to 67 by 2023.

The Construction, Forestry, Mining and Energy Union (CFMEU) and the Australian Manufacturing Workers Union (AMWU) say it is unpalatable to expect people in arduous jobs to work to that age.

The pension age increase was announced in the Federal Budget and unions say they will fight the decision.

Is anyone surprised? Union officials deciding to fight a measure that will delay their opportunity to feast at the public trough by two years. That's expected though and isn't the real issue here: government and the pension itself. The two year delay is a classic knee-jerk response to the looming old-age crisis and while the government can claim it's a "responsible reform to meet the challenge of an ageing population and the economic impact it will have for all Australians" until the cows come home, it's a policy that will, at best, keep the system running for a few years longer. Unfortunately it does nothing to address the real problem: artificial disincentives to work and save and a heavier reliance on the welfare state.

Why does the government feel the 'need' to get involved in welfare? Quite simply because they created the 'need' to. While in the past family, markets, mutual aid, charity, and work (savings) were ways people provided for themselves, the lure and security of the trough has removed or severely diminished most of those. The whole thing is just one big contradiction: on the one hand, government forces companies and individuals to contribute to a super fund, bemoaning a lack of savings and the looming crisis, while on the other hand they're firmly committed to a policy which continuously diminishes the purchasing power of the dollar! While hypocritically pretending to fight inflation, they encourage massive amounts of credit expansion and constantly increase the amount of money in circulation. There is simply no incentive for the average Joe to save when the government will simply inflate it away (and psychologically obscure this danger with the 'security' of a pension).

Old-age security is too important to be left in the hands of the state but the first step to fixing it isn't to simply delay the pension age. The solution is to bring back incentives to save, cease debasing the dollar and put some responsibility back into the hands of the people. The unions can fight for the pension all they like, but if by the time they hit 65 or 67 it's worth considerably less (as far as purchasing power goes) and reduces them to near-poverty, they might find that the old-age 'security' the state provides them and unions 'won' for them isn't so secure after all.

Earn or Learn: that's the message the government is now sending to the Australian Youth,

"Any Australian under 25 will need to be either working, studying or training under a new plan agreed to by the Federal Government and state and territory leaders."

The government, together with the unions[1], have progressively increased the cost of youth labour to the extent that the government feels obliged to pass yet another law to fix "youth unemployment". This is nothing more than a bandaid policy aimed at fixing a problem caused by government intervention. Rather than forcing youth to do what a group of bureaucrats think is "right", how about first they allow them to choose whether or not they want to work or study. As it stands right now, with the minimum wage at a staggering $14.31 per hour (set to increase further in 2009), it's no wonder fresh high school graduates can't find work. They're products of an education system that leaves them barely qualified to operate a dishwasher yet alone function in the workforce; they're being systematically dumbed down by compulsory state-run education and this move will do nothing but add yet another taxpayer-funded burden to our economy.

Businesses are already being subsidised by 'free' government education. They don't see the need to invest in their staff because they're (being forced into) paying for training already. As the direct beneficiaries of training and education, if the government gradually removed their involvement in the education industry and allowed the market to function, business should and would bear the costs, voluntarily. It would probably be a lot cheaper, practical and relevant to boot! Who can honestly say that what they learnt in high school is useful to them in the workforce; I had to 'unlearn' most of what I was taught as soon as I left!

If our leaders are serious about 'helping' "...young people avoid slipping into long-term unemployment", then they should repeal the minimum wage laws. They should let people work at the level where the cost of labour is equal to labour productivity. Every young man and woman willing and ready to work should be allowed the opportunity to do so. A free labour market would welcome young people, which would not only exhort and restore the spirit of work but also improve labour skill and know how. The labour productivity of Australian youth would likely rise and exceed the ominous minimum levels that presently condemn millions to idleness.

On a more cynical note (seem to be doing this a lot these days...), what's the bet that the next Australian Bureau of Statistics (ABS) unemployment data will show a remarkable decline in unemployment, considering that the government has literally made it illegal for under 25's to be unemployed. Kevin Rudd will be grinning with glee at the success of his latest scheme...but it's just a superficial, statistical, (at best) short-term 'gain', just like every other government initiative designed to "help us". The cost to production, to wealth, whether in lost labour or the cost to the taxpayer who has to foot the bill, will be untold.

[1] Just a quick note: I have no problem with voluntary unionism so long as they're not backed by the government, don't receive government handouts, 'favours' and so on and don't make any contributions to government or party officals. In other words, unionism is fine as long as the union doesn't engage in coercive or violent activity (sadly, that's the definition of the modern union!).

Nothing depresses me more than listening to Julia Gillard, I don't think anything she says makes sense. From the ABC,

"The political party in the Australian Parliament that is spitting in the face of the Australian people and refusing to recognise that mandate is the Liberal Party, with Mr Turnbull dithering on one side, looking over his shoulder to see what Mr Costello is going to say to him next."

What Julia doesn't understand is that their new IR laws will destroy jobs. Unfortunately she can't see beyond the few short-term jobs it will "save" and definitely can't see thousands of jobs that will never be created because of these "reforms". Of course the unions are in full support,

Ms Burrow says a national union poll shows workers want new laws to protect them during the global financial crisis.

"People know that the rights and protections that are in the government's IR bills are more important than ever in an economic downturn," she said.

"Unfair dismissal protection is absolutely central to people's security, they must be put in place."

Any policy that increases the cost of labour above the market rate (when I say market rate, I mean the fair rate) will increase unemployment and lower the standard of living of the nation as a whole. The government has made it nearly impossible to tell if someone is 'employed' or not, the ABS definition is a joke:

"Employed persons comprise all those civilians aged 15 years and over who worked for one hour or more in the reference week or who had a job from which they were absent. Work is taken to mean work for one hour or more during the reference week, undertaken for pay, profit, commission or payment in kind, in a job, business or farm, or without pay in a family business or farm."

Needless to say, even if you aren't 'employed' according to the above definition (one hour a week? are they kidding?), you have to fill several criteria before you're considered 'unemployed'. If you saved for a rainy day and never have to step foot in a Centrelink office, chances are you're not unemployed by their definition.

Some more union back-scratching from the Rudd government masquerading as a measure to "help workers and their families who lose their jobs through no fault of their own" as Rudd announces $300m for (unionised) retrenched workers:

Retrenched workers will now be able to immediately access help to find a new job under a $298.5 million plan announced by Prime Minister Kevin Rudd today...

...Those seeking assistance will now have access to a $550 credit for computer courses, training for heavy vehicle licences and work boots and equipment.

They can also access help for career advice, job applications and skills training.

Last week the Government committed $155 million to encourage employers to keep apprentices on despite tougher economic times

Please. As I mentioned last week and as many people have shown before, this kind of spending does nothing to help our economy. All it does is divert resources away from the areas that need it (i.e. productive industries) and give it to the areas that don't. I'm going to avoid the "through no fault of their own" part of Rudd's explanation (people who were living above their means are guilty as well) and rather focus on why this won't work. For one, how could Rudd possibly know that the market is clamoring for computer skills, heavy vehicle drivers and construction workers? The short answer is he can't! No one can know that, only the market can determine where labour should be efficiently allocated (it's not perfect, but it's better than Rudd!).

The issue we have here, as usual, is Rudd using 'emotion economics' to satisfy his union buddies -- the ones who helped him get to where he is today. This is nothing more than union back-scratching at its best, propping up his mates at the expense of every other Australian. If you complain about this idiotic economics on a logical footing, you're "heartless" or you "don't care about jobs", as the Liberal party is finding out the hard way.

No matter how well an enterprise may be managed, it will fail if it does not know how to protect its interests in the drawing up of the customs rates, in the negotiations before the arbitration boards, and with the cartel authorities. To have 'connections' becomes more important than to produce well and cheaply. -- Ludwig von Mises, The Myth of the Failure of Capitalism (1932)

These handouts need to stop. They are only going to prolong this crisis, cost thousands more jobs and reduce the wealth of our nation.

What do you get when you cross a Labour government and a recession? Unions coming out of the woodwork. Their bullying tactics act to serve their particular interest group(s) at the expense of the rest of the nation. The belief that they increase wages over the long run is completely misguided and is one of the greatest fallacies that we've failed to deal with (adequately) for centuries. Wages are determined by productivity -- artificially propping up wages above the market level by embracing short-sighted antisocial policies brought about through intimidation or coercion (i.e. government support) will only serve to increase unemployment.

As Barack Obama's top aide Rahm Emanuel recently put it,

"You never want a serious crisis to go to waste. It's an opportunity to do things you could not do before."

He was implying of course that a crisis is the perfect time to increase the size of government. Likewise, unions take this opportunity to further restrict competition in their own sector of the labour market to raise wage rates. Unions don't allow competition from non-union workers and have a generally limited number of places or strict requirements for entry. For the people who don't join the unions (whether it's their choice or they are rejected), they must look elsewhere or remain unemployed. This will increase the supply of labour in the un-unionised sectors driving down wages and/or increasing unemployment. The unions, however, don't care what happens to these people -- their only interest is in serving their own, selfish interests, reducing the wealth of the nation as a whole.

Master Builders Association (MBA) executive director John Miller says the Government should slash planning red tape so that Canberra's schools can benefit from the Commonwealth stimulus package.

The Greens and the Liberals oppose the plan, but Mr Miller says it is necessary to cut planning red tape to ensure the territory meets Commonwealth deadlines and schools don't miss out.

"The Government's hell bent on making sure that we can actually get this work rolling out the door," he said.

"This is the situation, it's use it or lose it, we just can't afford to lose this work in an economic environment where we're potentially facing redundancies, particularly in the building construction industry."

He says the move would also help avoid job losses in the building industry. -- Source

Unions function through 'emotional economics', tugging on the heartstrings of the people and always portraying themselves as the victims. Take the above as an example: no matter what the situation, they're always seeking to "avoid job losses" in their respective industry. All this does is keep labour occupied in unproductive, wasteful sectors of the economy. If labour is artificially held in these industries all it does is slow down the development of more productive industries by increasing the price of labour. In effect, everyone else is subsidising these people.

One-hundred and seventy Victorian workers at a protective clothing supplier face an uncertain future after the appointment of administrators.

Staff of Melba Industries, which makes clothing for the Country Fire Authority and the Metropolitan Fire and Emergency Services Board (MFB), are being briefed by the administrators.

Melba Industries has 120 staff in Geelong and 50 in Thomastown.

The company also supplies protective clothing for the armed services and components for the car industry.

The administrators say they will be seeking government help to keep the company afloat. -- Source

The government should not keep this company afloat. Their failure is obviously a result of a misallocation of resources during the recent boom -- their business model appeared to be profitable thanks to easy credit bought on by government and the RBA (interest rates below market rates) when in fact it wasn't. It needs to 'die' and free up the capital for other entrepreneurs. We have to avoid 'emotional economics' at all costs -- all it does is hurt the very people they're trying to protect, Australians.

Why is the government only focusing on jobs? Earlier today there was this article, then we also had $155m for employers to keep their apprentice's. Earlier in the week (surprise surprise) we had the unions telling us that we're talking people out of jobs. Right.

The issues we're facing have nothing to do with jobs. The focus needs to be on increasing wealth or value in our economy, not on full employment. Full employment is easy to achieve: Cavemen had full employment; the Egyptians had full employment; prisons have full employment. As lord Keynes once suggested, we can bury old bottles with money in them and then ordinary incentives will get people out there digging! Unfortunately this will do nothing to ease the crisis and get us back to where we need to be. In fact, it will only delay the restructuring process by keeping people in jobs where resources have been inefficiently allocated.

The only way to achieve greater wealth or value, thereby improving our economic well being and possibly (if the state doesn't get involved -- hah) achieving full employment, is by increasing production. Full production needs to be the goal. So why can't the politicians see that, why do they still harp on about jobs? It's quite simple really: they don't know the truth (politicians are generalists not economists); they're probably receiving their advice from 'brains for sale', people with vested interests in not achieving full employment; and emotion sells (or in this case buys votes). Here's a quote from Henry Hazlitt that sums it up nicely,

It would be far better, if that were the choice—which it isn’t—to have maximum production with part of the population supported in idleness by undisguised relief than to provide “full employment” by so many forms of disguised make-work that production is disorganized. The progress of civilization has meant the reduction of employment, not its increase. It is because we have become increasingly wealthy as a nation that we have been able virtually to eliminate child labor, to remove the necessity of work for many of the aged and to make it unnecessary for millions of women to take jobs. A much smaller proportion of the American population needs to work than that, say, of China or of Russia. The real question is not how many millions of jobs there will be in America ten years from now, but how much shall we produce, and what, in consequence, will be our standard of living? The problem of distribution on which all the stress is being put today, is after all more easily solved the more there is to distribute.

We can clarify our thinking if we put our chief emphasis where it belongs—on policies that will maximize production. -- Henry Hazlitt, Economics in One Lesson