Ken over at Road to Surfdom has written another cracker of a post, looking at one of the key flaws in arguments for WorkChoices:
Most workers don’t regard their job as an economic transaction
This is where an economic model of the employment relationship falls down. It assumes that employers and workers are rational actors who are exchanging information about the value of a commodity called ‘labour’ in a market (or at least it assumes that’s what they’d do if only they were left to get on with it without the State interfering all the bloody time). In truth, while many managers might think of labour as a commodity, few workers do.
For most workers, work is primarily a social relationship. Sure they get paid for it but that’s only one part of a complex relationship. Our job says a lot about who we are - to family, the wider community and to ourselves. The idea that people make decisions about their jobs based solely on maximising the price they can get for their labour is self-evidently ridiculous to anyone who is capable of observing RealityWorld objectively instead of through an ideological prism.
That gets right to the heart of one of the key reasons why WorkChoices is unpopular, I think. It’s not necessarily that people are scrambling to join unions (though there’s significant evidence around that more workers have a favourable view of unions than not and more would be interested in joining one than are actually union members) or that every clause in an award is treated as sacrosanct. It’s that the justification of WorkChoices in terms of the economy doesn’t resonate. In fact, it suggests to people that they are going to be treated as commodified labour rather than as, well, people.
As I’ve argued before, many of the features of WorkChoices make it very clear that what it’s about is actually in effect a class agenda - the defence of management prerogative at all costs, and the desire to increase the share of GDP going to profit rather than labour. Of course, such a justification would have been deeply unpopular, and was never advanced even at the time when the government and business were still trying to sell WorkChoices rather than pretend it no longer exists and “neutralise” the issue of IR. But the notion that WorkChoices is an “economic reform” (and the political case modelled on that advanced for the GST), flawed as it is anyway, backfires badly because it runs straight up against the desire of employees not to be viewed only as a “factor of production”. The great merit of Ken’s post is that it makes, and makes well, an argument that should be obvious to the commentariat were they not dazzled either by microeconomic necromancy or political spin.
Excellent points from both you and Ken.
I’ve always felt that the “rational actor” model of economics was a vastly overstated claim in any case, not just employment decisions. THe model totally ignored a wealth of data from psychology about how people actually do make most decisions, and especially the “big” decisions.
Rationality simply doesn’t come into it as much as the logicians might wish.
Or, perhaps, it’s a very narrow understanding of rationality.
Rationality, tigtog, is a much misunderstood concept.
I don’t want to get into an argument on Workchoices - there’s grounds to be unhappy with it within a rational choice framework (hint: labour markets are not characterised by bilaterally perfect competition with costless symmetric information. And how come a “deregulatory” approach needs thouands of pages of legislation and thousands of public servants anyway?). But I get really annoyed at people who simply say in response to an argument from human rationality “oh well people aren’t rational, and money isn’t everything”, and think that’s a sufficient response. It’s at best only a very partial response.
Firstly - “people aren’t rational”. True, but so what? You have to show how they’re irrational and (most importantly) how that alters the case. The behavioural economists try to do that, but it’s hard to turn that stuff about systematic biases into an argument against Workchoices. Just demonising “rationality” doesn’t cut the mustard.
Secondly - “money isn’t everything”. Not even the most Gradgrindian economist ever said it was. Of course a job is about more than money - it’s about social networks, sense of identity, place in society, etc. The unemployed are generally very unhappy.
But this doesn’t alter the analytic case one whit - when empiric labour economists set out to measure labour supply and demand curves (ie how workers and employers respond to changes in measured cost/returns) these things are already embedded in peoples’ preferences. If they matter more than money, that will show up in their revealed behaviour (never trust what people say, watch what they do). Strangely enough that revealed behaviour tends to show that while other things do indeed matter, people are far from indifferent to money.
/rant
Everyone:
Welcome to the REAL world …. this is an important reason why the L-NP Coalition is so justifiably hated and distrusted; why the “Labor” Party is despised and distrusted; why the Unions are distrusted; why employers so often are the underlying cause of industrial action - whether that industrial action be overt strikes and go-slows or insidious work-to-regulations, downgraded performance or outright sabotage to get back at the nasty boss who treats his/her workers like dirt.
Surely those who cooked up WormChoices already knew that, didn’t they?
Even if it’s just a narrow understanding of rationality, broadening it can be problematic.
Part of the problem with models of rational choice is that they can be stretched to excuse any behaviour as rational insofar as someone is doing whatever satisfies their own preferences given their own understanding of (or information about) a situation at that point in time.
While this can be intuitively appealing and apparently powerful, it also runs the risk of breaking down into a very micro-level version of explaining behaviour in a very post-modern way - i.e. there is no meta-rationality, just individual rationality, and no one can say my behaviour is irrational so long as I do whatever I feel like doing, for whatever reason I feel like it.
When taken this far, justification of rational choice models becomes a bit self-defeating as it removes the purported power of such models; to explain the macro-level outcome of the aggregation of individual decisions.
Better to use rational choice models with reasonable bounds of expected behaviour from average individuals.
Rationality, tigtog, is a much misunderstood concept.
We’re in quite violent agreement three, DD. I guess that serves me right for being too brief in my comment.
People do attempt to rationally analyse choices, but most of us rarely truly examine our irrational framework of preferences that constrain our analysis of those choices. Which is why, as you said, you pay attention to what people do more than what they say.
The Australian working public has shown time and time again that its yearning for higher income means its willingness to trade off award conditions in exchange for risk and higher financial rewards. Workers have chosen that they do not need a paternalistic bubble, opting for contractor relationships, performance based or profit sharing pay arrangements.
Bigger houses, bigger cars and bigger plasma TV’s don’t come cheap. Workers should be free to choose how their quality of life is determined either via money or via time (because different people value different things).
It’s just plain condescending to suggest that worker’s NEED protecting by legislation. If their union was effective they would be protected by their comrades. The majority of workers today have never seen a union nor would know what they look like. So the ALPs and ACTUs hysteria over working conditions applies to a fraction of people who haven’t already moved into the 21st century.
For the majority, the penny has dropped - head down, bum up - the boss isn’t running a charity and I want to send my kids to private school.
Do you have any evidence, other than your own preferences, that people believe the only way they get to exercise choice over what they do with their money, is to be denied any agency when they enter the workplace?
Part of the problem here is locating ‘rationality’. Does it go on the subject side or the object side? Squeezing it into either box really doesn’t do it justice nor is it particularly useful for understanding how market operate in real life. Sure markets exist as a result of human intervention, but there are also technologies that faciliate the transactions in the first place. Can the fish market exist without the lists of buyers and sellers given to the auctioneer, the agreement on standards, the arrangements that cut otherwise social ties between competitors etc. etc.? Of course not.
As Mark and Ken point out, the problem with Workchoices is the imposition of a new regime/techniques which cuts through the cultural links in the workplace; hence the psychological literature suggesting the trauma of losing your job can be on par with other life-events like deaths (don’t ask me for the reference though).
For the majority, the penny has dropped - head down, bum up - the boss isn’t running a charity and I want to send my kids to private school.
Well, that’s a funny thing. Because we have picayune pay rises and sandwich-and-milkshake tax breaks - it’s the executive salaries which are blowing out the averages - but at the same time we have user-pays everything, so we are really worse off. “I want to send my kids to private school” often really means “I have no choice but to send my kids to private school because government cuts have hollowed out public education to an unacceptable degree.”
Medical bills are on the rise, too. Soon we’ll be like the US, where a family can go from relatively comfortable to bankrupt just because of a serious illness.
Sorry about the threadjack. Back to the topic: I was in the car with my son who was then nine, and we were listening to an ABC item on workers losing things such as shift allowances.
He asked me to explain things and I told him what night and split shifts entailed, and that they used to get extra money for doing them because of their impact on relationships and, in the case of night shifts, health.
“But”, he said, “they’re (night shift and day shift) really a different kind of job, aren’t they?”
And he’s only nine, FFS. How difficult can it be for the architects of SerfChoices to understand?
@ amused
under the legislation a worker can appoint a bargaining agent at any time.
The fundamental issue is that if an employer is going to be an a-hole to their worker’s, ain’t no Act that can prevent this. What arbitrarily determined rates of pay and condition do achieve though is mass market distortion creating gluts and shortages.
Farmers don’t get these same protections spoken of and many of them are living on net incomes of less than 75k (my sister for one). Small businesses get thrown out of their premises if they can’t pay the rent, no protection there.
Why all of a sudden are employees in the industrial concept of the word entitled to mass protections, even in times of economic downturn, to the exclusion of other parties in the economy? Contract couriers, builders, fruitshop owners, where are their redundancy packages.
Protection is a myth. The only real protection is productivity and profit.
R:
That was magical. Do you mind if I keep that comment and share it with anyone who is looking for a job or who is struggling to keep a roof over their head? In the meantime, until you return to Planet Earth, please feel free to read Derrida Derider’s comment at 12:00pm above.
Everyone:
Sorry, I did omit to say that where workers are treated fairly and decently, they often do put extra effort and commitment onto THEIR work, traditional grumbling about the boss and calling him/her rude names notwithstanding [it might even be one of the customary perks of the job :D]
Collective bargaining, representation and consultation rights, unfair dismissal protections and an independent commission all prevent employers from being “a-holes”, R, and all have been features of previous Acts.
R sez:
“Farmers don’t get these same protections spoken of and many of them are living on net incomes of less than 75k (my sister for one). Small businesses get thrown out of their premises if they can’t pay the rent, no protection there.”
Haven’t you ever read the franchise code of conduct from the TPA: small business gets protection against unreasonable termination, conciliation and arbitration of disputes by an independent 3rd party, the right to collectively bargain. And heard about the chicken meat growers who got authorisation from the ACCC to collectively bargain because of their weak market position?
I suspect employees get the protection of a fixed rate of pay ‘even in times of economic downturn’ because, unlike the small business owner or independent contractor, they also get the burden of a fixed rate of pay even in times of economic upturn. The idea of enforcing employment contracts where the rate of pay tracks the market value of workers’ output seems crazy. If the employer has best access to the necessary information then it is in the position to deceive workers about the true value of their output: why would employees trust the employer when the incentive to cheat is so strong?
What R said!!
If the ALP win, we can look forward to more behaviour of the type boasted about by Dean Mighell, and won’t that be good for the economy! Yippee!!
Funny how the ALP hold out Ms Rein as an example of a successful Aussie business, yet it is achieved on the back of many of the reforms of the Howard Government - the rise of individual contracts, private providers of job placement services, tax reductions . . . I could go on but I’ve a business to run.
It always boils down to one thing - the left, environmentalists and social activists are almost always screaming hypocrits.
And there was I thinking that most of this info came out when the Liberals attacked Rein, and she had the unmitigated gall to defend herself.
Ah Razor, not the sharpest tool in the shed. Good for a laugh though.
“If the ALP win, we can look forward to more behaviour of the type boasted about by Dean Mighell, and won’t that be good for the economy! Yippee!!”
Whose economy are you talking about? The economy of the the union members whose wages will be higher will improve. That’s typical of the obfuscation of the right. Shifting wealth from wages to profit share is “microeconomic reform” that is “good for the economy”. Shifting it in the other direction is “union thuggery”
Adrian - Rein didn’t “have the unmitigated gall to defend herself.” She chickened out. She held up her hands and said too hard. She prostrated herself to Kevin’s desire to be elected PM. I haven’t been suprised by the deafening silence of all the ALP feminists who must be bitterly disappointed that such a fine example of an independent minded female’s achievements has to be wiped away in one weekend in order to meet the wishes of her husband. Once again - screaming (or in this case stoney cold silent) hypocrits.
Good to see our Adrian giving Matt Price heaps on his blog re the ETU saga.
http://blogs.theaustralian.news.com.au/mattprice/index.php/theaustralian/comments/labor_beats_retreat_on_taped_tirade/desc/P40/
We all have our crusty old ideologies that we’re fond of, but if they don’t relate to contemporary society please keep them to yourself until such time as they become relevant:
This changed with the introduction of compulsory super. Superannuation providers are under the gun to pay out super to baby-boomers, hence the increased and increasing desire to maximise capital returns. True, this desire can manifest itself in sacking some of the very workers who stand to benefit from super payouts, but it is a complicating factor that could not have been considered by Marx, Keynes or Friedman.
In a period of very low unemployment, particularly for skilled labour, people have no agency in the workplace?
I’ve seen productive workers ground down and profitable enterprises swallowed up, digested and shat out by sloppy, greedy managers. The first part of your final sentence R is the only one that makes sense.
The small business owner has a motivation that employees don’t have. When employees leave work they leave behind wider concerns about the business. Any manager who pays people $10/hour while at the same time insisting that they behave as though they bear personal responsibility for the business’ very survival - if employees are valued that highly they should be paid accordingly and share in rights/responsibilities of ownership, and if they shirk that for the bird-in-the-hand of employment then the manager must downgrade expectations accordingly.
The union movement has always been able to manage and siddeline maddies like Mighell. Just when the Libs have managed to puff him up to be the boogedy man (unlikely given the swift resignation, but possible), watch some shellbacked reactionary like Hugh Morgan to step up and assert the biblical notion of serfdom or some such. The govt can’t take a trick.
I quite agree Mark, but even going back to straight instrumentalist problems with Serfchoices: non-unionists have always greatly outnumbered anti-unionists.
This is another key failing of Serfchoices; its pissed off the large group of workers who weren’t union members, but happily freeloaded off the union to negotiate and set their wage rises and conditions etc (hence the bargaining fee idea, which outrages many, though I have no idea why. When else do you get something for nothing?).
This group aint pro-union, but have just lately realised they arent anti-union either. They’re worried by the legislations impact on unions, and hence their own jobs.
When discussing declining union membership, its worth bearing in mond this group. It wouldnt surprise me if they were 25% of the workforce, juding by the palces Ive worked in.
I suspect well over 60% of the workforce relies on union negotiated EBAs and awards. Its just that only 30% actually pay for it to happen.
Ingrates! Join up!
Ken is wrong. Work is an economic transaction, and people regard it as such. Of course, every work contract has provisions in it in regards to families, leave, overtime, etc - but those provisions are economic in nature.
Imagine walking into your workplace, and asking everyone there to shift to contracts where they do the same work, with overtime, weekend work, etc - for no money.
Good luck with that!
TimT, I think you’ve failed to read most of Ken’s post. Obviously a just reward for labour is a basic expectation. But he’s arguing that there are many other factors which make “leaving a job for another one when the boss is a bastard” a completely unrealistic proposition, no matter how tight a labour market may or may not be (and it’s not uniformly tight!)… The point is that work is involved in multiple social webs - including people’s identities, friendships, locations, routines, skills, etc, etc.
Work is, or is not, an economic transaction.
Seems a pretty simple proposition to me. I was just taking Ken at his word.
Either/or doesn’t cut it for me. I would suggest that the sets of relations and practices in a workplace involve the economic, but are also irreducible to the economic. I think part of the critique that is being elaborated here is based simply on that: there is a strong sense in which the economic is not enough, and is never enough, to explain what we call ‘work’, unless you stretch it’s definition so far that it becomes a very different concept.
I am having a bad moustache day,and feel like dropping a bucket of activated turd on everyone here.Now I can sympathise and be friendly to both Razor and LeftyE.,or I could point out how similar you are as animals.The union movement postulates it wont do any work for those other than members,fully realising others non-unionised have and will be doing work for them.Many occupations in small business do exactly that,and some of the hardest work for the consumer worker.You do not have to eat fruit and vegetable thats anyones choice ,yet components of manufactured food are unionised workplaces..I am not saying this shouldnt be.There are voluntary workers who do so out of necessity and penalty by government..I am saying here this should not be.Profit means nothing when compared to buying power,even small business people can see this.Franchises are small businesses,we have now in this country franchised bookkeepers doing work for people who cut the grass.A small business is essentially only able to operate as such by legal rights,the opinions about any matter including worker advantages is essentially only worthy if a government makes it worthy.There is only destruction at the end of the road where people push their own views as valid and never concede,something like this..no-one would dare vote or make comments about others if they liked the human beings and knew them fairly well.To call oneself an a activist under psuedonymn is farcical.Razor maybe a pleasant enough person,let not axes to grind find complete trees,and be careful Lefty..your appeal disregards the experience people may have had and still maybe having with less than perfect motivations of those who are ready to claim they really represent.
Sorry Philip, no idea what any of that means.
But, per Ignatius Reilly, let me say “peace to all men [and women] of goodwill!”
R:
I don’t give a d*mn what flowery words grace this marvellous document or that - it’s what happens out in the real world that counts.
As Derrida Derider said
and as Ken said [quoted by Mark]
Like it or not …. the take-it-or-leave-it and the-nose-to-the-grindstone attitudes do exist out in the world of work; they are increasingly popular and rewarded substitutes for effective management …. sooner or later we will all pay the heavy price for allowing such stupid backward attitudes to flourish. Think for a moment - why did all those great sugar-cane plantations with their crowds of blackbirded labour in Queensland collapse within a decade of coming up against individual farmers and against farm workers on paid wages? L-O-L
‘Ken is wrong. Work is an economic transaction, and people regard it as such’
I feel sorry for you TimT, you must really hate your job.
Newsflash Komrades. This is twenty first century Australia NOT Victorian Manchester.
Do try to keep up.
Essentialist Razor eulogises Rein for her cold-blooded ripping off of workers, but I wonder if the boss had been male and the workers female whether she would have applauded so willingly, coercive behaviour.
Or does she just think it’s OK for ALL bosses to screw over ALL workers disempowered, as they are by Reaction inscribed in Law, from being able to defend themselves?