Des Moore set out HRNS’s entire ‘econ. case’ for free labour markets; Why the ACTU is pleased with their good work. Michael Kroger’s “Brains Trust “(3)

        The HRNS’ failure in labour market reform is not simply the errors already summarised (1). It has only conceded the entire ACTU case against labour market reforms, and damaged much else besides. No wonder the ACTU is having a jolly time of it attacking the Cabinet. An electrifying paper by Des Moore to the HRNS’ 23rd annual extravaganza conference, sums up what the HRNS have done (2).

        The paper’s doubled subject is ‘welfare effects’ of ‘minimum wages’ (not effective minimum wages), and “why Card and Krueger are wrong”. He should have left both well alone. Moore declares, “minimum rates’’ might be inadequate to maintain living standards. Governments, he continues, should maintain them by transfers. For, minimum rates delivers unemployment, and not having a job is worse than lower consumption.

        Moore seems to reduce welfare to merely having a job. If an employer were to offer, say, $1 an hour, a job seeker should be grateful for it? Never mind, says Moore, the Govt.(!) can pick up the tab for the difference between a pittance and the market rate (though Moore, doesn’t have a clue about market rates).

        So, Moore pronounces, a minimum wage rate yields unemployment, and it is having a job that counts. Never mind about the reason why so many get up every day and work in enterprise, government will take care of that. (The ACTU must have really enjoyed reading this.)

        Moore’s mutterings on transfers, amounts to another moralising demand for redistribution (income transfers), which may delight the left but few others. Yet, there is a troubling exception:

        Unemployment ‘benefits’ are compensation to all those made unemployed due to the imposition of effective minimum rates. Moore has nothing to say on this, nor against those responsible for 100% cuts and the need to compensate the victims, the ACTU, and compliant politicians and bureaucrats. (Economists, frustrated at the HRNS wrecking the free labour market case, are equally disgusted with Federal Cabinet Minister Joe Hockey calling the victims of the Unions ‘dole-bludgers’ and telling them to tramp all around Australia, as so many vagabonds, in search of a job. (3) )

        Moore is oblivious to: Capital delivers ‘living standards’ (’welfare’, ie. consumption), and capital accumulation raises them. Moore doesn’t see Govt. transfers don’t do the work of capital accumulation.

        Moore also conceded another false claim employers have a balance of power over employees. Is this why Moore decided to show “why Card and Krueger are wrong,” in a trivial, inchoate, lengthy ramble on monopsony. Well, Moore did manage to copy down the standard textbook definition of monopsony.

        Apart from other troubles, Moore didn’t spot a crucial qualification that Bellchamber and Gregory attempted to obscure. Jackson lifts it out in a swift stroke:

        “…Card (et al)…only suggest … when the minimum wage is ‘low’… rises will have little effect on employment. Nowhere did Card actually say that raising wages above the market level will not cause unemployment.” (4)

        A rise in the minimum (not the effective minimum rate) that leaves it an ineffective rate is not destructive. Jackson has written further devastating assessments of Bellchamber, Harcourt, and Card and Krueger.

        Another problem is the notion of monopsony rests on the fallacy of perfect competition, against which Jackson has also written (5). Another excellent paper is by Block and Barnett II (6).

        Moore concedes the ACTU false claim of “balance of power”, which is pinned to the error of indeterminacy of rates. The ACTU latched onto Card and Krueger in an attempt to lend credence to it.

        Moore, in ceding indeterminacy, and asserting that ineffective minimum rates are destructive and should be eliminated, ceded the ‘power’ claim. That is what t.v. viewers saw, when Hugh Morgan, told Australians, ‘you are being paid to much’ (because the “ratio” is too high (7)).What has he said but this:

        Employers should be free to drive down rates, and deny employees ‘just’ wages’.

        He has only managed to give every ACTU ‘reason’ for:

        1. Effective minimum wages.
        2. Unionised closed shops.
        3. Institutional regulation of markets.
        4. Union ‘protection’ of employees from ‘exploitation’ by unscrupulous thugs – employers.

        It hasn’t gelled with Des Moore that in free markets there is neither monopsony, nor oligopsony. That, neither employer nor employee has power, there is no power to be balanced – competitive markets and the marginal productivity of labour explains why, and why labour is justly paid.

        Moore’s paper shows laziness. Compare the extensive references Jackson has supplied in Labour Wars, and the bibliography in the Block and Barnett paper. Those gentlemen are abreast of the literature, and case studies; Moore is not. Yet, this only a part of Moore’s, and the HRNS’ overall incompetence.

        Moore has felt important waxing long on grave matters others have merely treated soundly and with precision. Moore has set out what the HRNS has been saying for some 20 years now. No wonder the ACTU likes the HRNS – they are advocates of the ACTU’s entire anti -free labour market case. Brilliant!

      1. The HRNS errors summarised in Michael Kroger and His “Brains Trust” – The HR. Nicholls Society, but for thorough explanation, Gerard Jackson, Labour Wars, linked in that item.
      2. Des Moore, Minimum Wages: Employment And Welfare Effects, Or Why Card And Krueger Were Wrong, HR Nicholls Society XXIII Conference.
      3. Joe Hockey, Federal Cabinet Minister for the Department of ‘Human Services’. Besides other schemes, Hockey and the Dept. are responsible for administering unemployment benefits.
      4. G. Jackson, Labour Wars, p.17.
      5. G. Jackson (eg.) Monopsony versus labour: our right wing lets us down again. Brookesnews. Also in Labour Wars.
      6. Walter Block and William Barnett II, An Austrian Critique of Neo – Classical Monopsony Theory. Block and Barnett II draw the same conclusions as Jackson. They also engage in a thorough examination of the false assumption on which monopsony, and oligopsony rests, ‘perfect competition’, to show monopsony is pseudo economic theory.
      7. ‘Ratio of the minimum wage to the median wage’: when it is too high, unemployment ensues (positive correlation). The ‘ratio’ is the HRNS’ ‘solution’ to the (false) dilemma of indeterminacy, and why unemployment.

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