Catallaxy Files

What a relief. We now discover that Obama is siding with new French President Hollande to promote pro-growth policies in Europe. Let me suggest a few for France:

• increase the retirement age to 67 (in line with Germany)
• deregulate the labour market, bringing in US-style labour market laws and reduce labour on-costs. This will allow firms to flexibly hire and fire employees
• reduce the size of the public sector and amalgamate a couple of levels of government
• reduce public sector salaries so that university graduates have an incentive to join the private sector, rather than favouring a public sector career
• reduce the burden of regulation in starting and closing a business
• reduce tenant’s rights so that landlords have an incentive to rent their apartments rather than leaving them vacant (about 60% of apartments in Paris are vacant because of the difficulty in evicting tenants)
• adopt English as the official language

There are many more things that could be done to promote growth, but this list is a good start. What suggestions do you have?

Jo Nova has put up some stats on Government spending on warming-related activities in recent years, suggesting that they are outspending Heartland by a factor of about ten thousand. Apparently more needs to be spent in western Sydney where penguins disrupted a Flannery PR exercise. (Penguins like warming?)

And in Queensland. Not an ALP seat in the House?

And a focus of the fury:

Only 25 per cent of voters supported the carbon tax and 72 were opposed, the poll found.

These are not forecasts but actual descriptions of life in Greece as it is unfolding:

In Athens, the homeless are on the streets in growing numbers, soup kitchens feed twice as many people as a year ago, and the poor are diving into garbage bins in search of scrap they can sell.

Greece is close to breaking point as it struggles with austerity targets set by creditors, but this is just a foretaste of the nightmare of unrest, hunger and even anarchy that could engulf the debt-crippled nation if it is forced out of the euro.

And where might it go? There are no genuine precedents although the one parallel that comes to mind is Germany and Austria after the end of World War I before the signing of the Treaty of Versailles.

If the exact economic impact of such a move is hard to nail down – newly issued drachmas devalued by up to 70 percent, runaway inflation, a banking meltdown, a collapse in trade – the implications for ordinary Greeks crushed by the debt crisis are even harder to predict.

But who is to do what? If the Greeks won’t help themselves by agreeing to live within their means, and others are no longer prepared to subsidise their standard of living ad infinitum, then what’s next? And there are no doubt many who are caught in a trap of the voting patterns of others, who would have preferred governments of restraint rather than the handing out of commitments to spend that could never be afforded and so are innocent of any direct culpability in their economy’s disastrous turn.

But as with the Global Financial Crisis, we in the rest of the world had nothing to do with the American housing market but when it fell apart we have been forced to share the burden of adjustment. There is no good outcome, it seems, only degrees of bad. And the effect on the rest of us may be the GFC once again.

Following from my earlier post, here is a graphical representation of the Government’s fiscal strategy. It shows clearly that the Budget increased spending both in 2012-13 and across the four year forecast period.

Here is the chart for all of the Government policy decisions since elected in November 2007

Surely nobody is surprised to hear the news that Communist union stalwart Wally Curran sold out the members of the Meat Industry Employees Superannuation Fund (MIESF) where he was a trustee director.  The union super fund invested $30 million in Austcorp International which has gone bankrupt, leaving the unionists’ investment, with luck, now worth maybe just $100,000.

Mr Curran and two others involved in the MIESF personally received consultancy fees from the firm.  Mr Curran, now living on the old age pension, said Austcorp was impressed with his acumen in the real estate business in Melbourne’s west, though Mr Curran claims that Austcorp did not take his advice.

Real estate values are critically determined by regulatory approvals and political influence can come in very handy in this respect.  Political influence is the key stock in trade of the union members who dominate the union super funds’ trustees.  Unfortunately the exercise of political influence in commercial matters invariably brings net costs to the community.  It clearly diverts management time to pleasing politicians rather than meeting consumers’ needs – a favourable planning decision can increase the value of land tenfold.  As long as political discretion remains important, a business would be unwise not to place an appropriate part of its effort in this direction.

Tony Abbott has described the union dominated superannuation funds as a “gravy train for union bosses” but where those union bosses in superannuation funds also use influence to gain political favours the effects are more pernicious.  They can distort markets and lead capital and other resources into avenues with low, even negative, values.  And, as we see with the MIESF, if the political payoff does not occur it leaves members with a hole in their superannuation savings.

Real estate is not the only industry where political influence can have egregious effects.  Energy is also important.  Renewable energy requirements have proved to be a boon the union super funds.  Industry Funds Management owns Pacific Hydro which it may value at perhaps 10 per cent of its $33 billion assets.  The investment would be seriously devalued if the regulations requiring electricity retailers to include a growing share of exotic renewable energy (mainly from windmills) in the energy they supply to their customers.  Political influence is vital to keep this scam on consumers going and the union based super funds have that in spades.

Meanwhile, the renewable requirement is boosting electricity prices as a result of the cheapest form of renewables costing three times the price of (more reliable) fossil fuel alternatives. Currently the cost impost on electricity consumers is 4-5 per cent but this will rise, independently of the carbon tax, to over 15 per cent by 2020, as long, that is, as political muscle overrides consumer interests.

It most unlikely that union bosses have the commercial or investment skills generally required of super fund trustees.  Their remuneration, at $100,000 a year plus, are less than those in many non-government super schemes but their training and background has given them no skills or experience in business management, law, accountancy or other areas which might be helpful in securing reliable and strong earnings.

I can hardly wait … I’m sure I will be having the same sleepless weekend as Thommo.  The idea of throwing in phone spooking or whatever .. .masterful.  I don’t think Maxwell Smart could have even come up with that.

And let’s face it, we need names.  You know Labor names, Labor mates, those who supported your campaign to become a parliamentarian to represent the fine folk of Dobell, even if it meant giving up the job you really loved – representing the fine folk who are (or, should I say, were) members of the HSU.  It must have been gut-wrenching to leave that role (and all the perks; Beppi’s is so expensive if you have to pay yourself.)

But there is something else to look forward to (drum roll here) – the release of the review of the Fair Work Act.

This is the review that was forced on the government because it refused to submit the original act to a regulatory impact statement thereby triggering a post-implementation review.

The then Minister tried his darndest to keep the review as narrow as possible by focusing only on the objects of the act and declining the advice of his department (since released under FOI) that the issue of the impact of the act on productivity be included.  Oh dear.

So just in case you cannot wait until the report’s release, I can forshadow the findings below:

• The Fair Work Act (FWA)  is a well-drafted and coherent piece of legislation which creates an appropriate balance between promoting workers’ rights and achieving flexibility for employers;
• All the macroeconomic indicators point to satisfactory outcomes (unemployment, economic growth, wages growth, number of industrial disputes), thereby supporting the continuation of the FWA in its current form;
• While productivity growth has been unsatisfactory, the explanations are multI-factoral and the decline in productivity pre-dates FWA;
• We refute the employers’ complaints about the act and suggest they remedy their own weaknesses to improve business performance (see Shorten MBA Business Advisory Services);
• There are a small number of technical changes that could be made to the act, including limiting the scope for employers to lock-out their workers, which should be subject to a long cooling-off period and a formal warning to the tribunal.
• Other changes as suggested by the unions could also be considered, including in relation to easier access to arbitration and removing any restrictions on the content of bargaining and agreements.

CAN YOU WAIT?

• All up, the FWA is really quite beaut and should continue in its current form.

For those who have followed the tortured history of institutional industrial relations in this country, there is a certain irony to the fact that it is BHP that is now firmly in the sights of the gun of the much-depleted ACTU and the  union movement, generally.

(Check out the ACTU website and there is a case study in non-transparency – no financials, no details about what officials earn, what other positions officials hold, etc. – and this is from a group of trogs who tell us that unions are already heavily regulated.  Pleeease.)

For years and years, it was Rio Tinto that was the bete noire of the union movement – recall the battles at Bell Bay, the alumimium smelter in Tasmania (which must be on the cusp of closure – well done, Howsey, trying to spread mainland conditions to regional Tasmania) and at the coal mines.  By contrast, BHP was regarded as a ‘friendly’, happy to do special deals with their union mates and affording special privileges to those mates.

But now we have the workers at the BHP-Mitsubishi coal mines in Queensland going out on strike for a week because of what that mean Mr Nasser, Chairman of BHP-Billiton, said.  After all there were only 3200 incidents of protected action at the coal mines last year – many called off at short notice, which is allowed under the act – and I guess the CFMEU and ETU need to keep the figures up.  After all, BMA has closed one mine; perhaps another one could follow.  Well done, to the leaders of the unions.

Now Bill Shorten MBA has got in on the act and started up his free business advisory service again.  (We should be so lucky after Bill’s deep business experience … what’s was that, you say … running the AWU of course!)

If a company is struggling to persuade long-standing workforce of the case for change, then perhaps the problem isn’t just the law, maybe it’s the way the case is being put and the engagement of the workforce.

PLEEEASE, Bill, this dispute is all about the unions muscling in on the management of the company and dictating rostering and contracting arrangements.  They also want safety jobs reserved for union officials.  IT IS ALL ABOUT THE LAW AND THE FACT THAT THESE MATTERS ARE NOT PROHIBITED CONTENT IN AGREEMENTS.

Shorten is also wont to disbelieve BHP’s pause of its billion dollar pipeline of investments in Australia – he’s a brave man.

The ultimate irony is that BHP is one of the best employers around – it pays well, provides excellent training and has an exemplary commitment to workplace safety.

Sometime you don’t know what you’ve got til it’s gone, BHP workers.

As the accompanying article on Drudge says, Obama was indeed born in Hawaii but asks why there has been so little vetting of the president. As they write:

It is evidence–not of the President’s foreign origin, but that Barack Obama’s public persona has perhaps been presented differently at different times.

The US is not really a country but a soap opera. How extraordinary this entire episode is.

Jess Irvine has an op-ed in the SMH where she makes the argument

Meanwhile, business is acting like an adolescent, too, chucking hissy fits about workplace laws and taxation because it has learnt that this is an extremely effective parental manipulation strategy. In the teenage economy, the returns from rentseeking – or seeking special treatment from mum and dad – are higher than the returns from productive pursuits, like actually innovating business practices. Business chucks a tantrum because it’s easier to manipulate mum into given you $20 than going out and getting a job and earning it yourself.

Problem is in the same paper we have this story.

There are more than 65 technology startups in Silicon Valley that were created by Australians, and this number is growing rapidly. Many who feature in a major video series launching on smh.com.au on Monday are highly critical of both the government and the venture capital industry in Australia. They say Australia is asleep at the wheel and risks being left behind.
“They’re moving to the US, they’re getting a green card, and they’re not coming back,” says Matt Barrie, the Sydney-based CEO of global online outsourcing site Freelancer.com.

Looks like those ‘rent-seekers’ are able to earn money elsewhere but not here.