One lesson to be drawn from Labor’s employment white paper is that the nation’s bipartisan commitment to menacing and immiserating the jobless and underemployed seems destined to roll on unabated.
Another is confirmation — if we needed it — that the politics of the current moment is spectacularly lacking in courage or answers. After all, political failure invariably betrays a failure of imagination.
What the paper doesn’t lack, however, is an overriding political fidelity to the neoliberal consensus. On the contrary, it percolates the paper, even if thinly disguised by rhetoric of a “new, bolder” vision of an economy where “full employment” is defined to mean “everyone who wants a job” can find one “without having to search for too long”.
Scratch this rhetoric away and what remains by way of policy change is little that points to a material shift in the status quo for the unemployed, much less a deviation from one of the most pernicious political deceptions in living memory.
For decades, the country has been sold the lie that the unemployed, as a general rule, naturally meet the description of “bludgers” or “leaners”. People who, to borrow from the canon of Morrison grandiloquence, haven’t mastered the fundamental lesson that to “get a go, you must have a go”. When in reality, as Professor Ross Garnaut has recently written, both the federal government and the Reserve Bank have long insisted on a pool of what we might call the involuntary unemployed to suppress wages and keep inflation low.
It’s true governments of both persuasions have never expressly acknowledged so much, though it’d be foolish to expect anything else.
The idea their chosen economic policy settings have deliberately (and unnecessarily) impoverished hundreds of thousands, on the basis the economy supposedly mandates a “natural” level of unemployment to control inflation, is something of an invisible blood-sport for a reason. If people understood the deception being played, most would probably find it intolerable and condemn these realities as something to which no civilised society should freely submit, particularly when sound alternatives exist.
And so, to the minds of politicians, it’s better and more politically expedient to bypass the cognitive dissonance that ensues by invoking the spectre of the lazy and wilfully unemployed. Hence the misnomers “Jobseeker”, “Newstart” and “mutual obligations”, which deceptively reframe unemployment as something irrevocably or pathologically tied to the individual themselves, as opposed to the desired macro-economic outcome that it so often is.
All this in turn licenses an institutionalised duplicity of the worst kind, and one whose logical endpoint finds ugly reflection in the nadir of robodebt and today’s manufactured hierarchy of winners and losers.
But there are reasons to think this neoliberal conception of “full employment” — called the non-accelerating inflation rate of unemployment (NAIRU) — is seriously fraught, at least so far as NAIRU estimates have consistently overestimated the minimum level of unemployment society can ostensibly sustain before inflation begins to rise. To the government’s credit, this much the white paper has been prepared to acknowledge.
What it has shied away from confronting, however, is the simple tale distilled in today’s economic conditions: the NAIRU is not fit for purpose.
For one thing, it’s notable that over the past several months, none of the Reserve Bank’s spooky warnings about a wage-price spiral have come to pass, even as the country continues to contend with stubbornly high inflation. Indeed, wage growth has been decidedly modest and non-existent in real terms, which is all the more striking given unemployment has been sitting at 50-year-lows of between 3.4% and 3.7% for the past 15 months.
On the logic of what passes for orthodox monetary thinking, this confluence of factors should have conversely given way to excessive wage growth and spiralling inflation, but it hasn’t.
Zooming out, there are at least two considerations that explain this puzzle. One is that the Reserve Bank’s modelling wrongly takes as its starting point the assumption that inflation is caused by demand-side considerations, even though, by its own admission, the inflation of today owes to a combination of supply-side disruptions and pandemic budgetary stimulus measures.
The other is that a ’70s-style wage-price spiral — where workers demand high wages to compensate for price inflation — assumes a level of worker bargaining power that simply doesn’t exist these days due to the forces unleashed by market deregulation, globalisation and falling union membership.
And to this we should add that the central bank’s narrow focus on “unemployment” in its modelling is altogether too blunt, ignoring as it does the high prevalence of underemployment within the economy.
The government’s white paper expressly acknowledges the last point but politely sweeps from view the others in its statement that the NAIRU, though “useful” in its opinion, doesn’t “capture the full extent of spare capacity in our economy or the full potential of our workforce”.
It then goes on to emphasise that on its reckoning there are some 2.8 million people in Australia who want to work or would like to work more hours than they do. Noting this and the tendency of the NAIRU to grossly inflate what seemingly constitutes a desirable level of unemployment, it proceeds to detail some ways existing policy settings can be tinkered with so the NAIRU is driven down over time to better reflect reality.
These include changes to the aged pension — by increasing the number of hours pensioners can work before seeing a reduction in their pension — as well as a doubling of the period in which other welfare recipients can retain social security benefits, such as concession cards, when they secure work, to further incentivise the uptake of jobs.
In other words, the white paper proposes to dither around the frayed edges of the NAIRU, seeking to improve its accuracy, rather than jettisoning it for the comprehensive public policy failure that it is. Under these damaging policy settings, a pool of the systematically unemployed would persist, unfairly consigning thousands to the shackles of punitive destitution by design.
And it’s from this vantage point that the white paper entrenches the greatest institutionalised deception of all. For after all, using unemployment as a buffer against inflation is, and always has been, a political choice, as many progressive economists have pointed out. It is not, as the white paper would have you believe, an unavoidable albeit unfortunate necessity.
The tragedy of the current moment is that if the government’s aspiration of “full employment” was genuine — if it truly wanted to harness the benefits of employment to improve individual and national wellbeing and consign unemployment and its unhappy sequelae to the past — providing a full-time job to all the unemployed and underemployed who want one would be a far more effective answer.
Proposals for a federal jobs guarantee have of course been around for years, and have been enjoying a renaissance in thinking in both the United Kingdom and the United States in recent years.
Part of its beauty — aside from being an effective antidote to neoliberalism and a shrinking middle class — is that, paid at the minimum wage, it wouldn’t be inflationary, and estimates of its fiscal impact are consistent with there being no need to raise taxes. At the same time, it would be entirely voluntary, providing people with the dignity of a job as a universal right accessible to all. Poverty would recede, the spectre of recessions would fade, as would the divisive scapegoating of welfare recipients.
In a nod to the idea’s growing popularity, the Biden administration just last week revitalised a version of Franklin D. Roosevelt’s Civilian Conservation Corps — renamed the “Climate Corps” — with the program designed to employ 20,000 underemployed Americans at the living wage in its first year to fight climate change.
Put differently, it’s possible to reverse the damaging social and environmental effects of neoliberalism by looking to the past (including our own pre-1970s definitions of “full employment”) with an inspiring modern twist. The alternative is the policy vacuum we confront, vacated by bipartisan allegiance to neoliberalism and its unceasing indifference to the poor.
