Nearly 100 years ago Henry Ford made the observation that by giving his employees reasonable conditions (no more than a 40 hour week) and good pay, he was effectively creating a market for his own products: as long as employees worked excessive hours and received minimal pay, they would have no time or money for luxuries like automobiles.
He encouraged fellow industrialists to follow his lead, arguing that everyone would be better off.
It seems so obviously true, that one has to wonder why we should need regulation to ensure workers are paid adequately and not forced to work excessive hours, when it’s in the employers’ interests to do so.
The problem is that such voluntary “self-regulation” is prone to the “prisoner dilemma” scenario: each individual employer logically looks at the situation and sees that they could benefit by lowering pay or increasing hours, despite the fact that all employers would be better if they stuck to better pay and reasonable hours. Because any individual employer stands to benefit if they break from the tacit agreement, there will be a certain percentage that succumb to the temptation and do just that (as we’ve just seen with the 25,000 reported cases of failing the “fairness test”). The only way to solve the dilemma is to ensure that there is a direct penalty for breaking ranks: whether that’s fines, or jail terms, or whatever. Which is exactly what labour market regulation is: a system to ensure that all employers “play by the rules” and create the best outcome for all.

Of course, clearly you can have misguided regulation that sets minimum wages too high, meaning, for example, Australian businesses can’t stay competitive with overseas operations, thus putting people out of jobs etc. So getting it right is a delicate balance. But to argue that the best result would be gained from having no regulation at all is to ignore basic human psychology as demonstrated by numerous real-world cases.

Next: why having the rich pay higher taxes makes economic sense.

You've pretty much outlined the basics of it pretty well wizofaus.

For my two bob, in relation to the privatisation issue - privatisation can work for service delivery corporations, but when it comes to infrastructure it's a different ballgame.

As a prime example:

The reason why the Telstra privatisation has failed so miserably is because conflicting demands are being placed on them.

Telstra is being asked to:

a) Provide cheap access to competitors to its infrastructure
b) Maintain the aforementioned infrastructure
c) Maintain and extend the network in unprofitable areas
d) Ensure cheap service delivery
e) Be more profitable than companies that do not have these responsibilities.

Essentially you can't logically have one company in charge of the infrastructure, but have to make arrangements for competitors to access the network - you can't just let the company dictate the prices as it would in a normal market. They have a monopoly.
On the other hand, you can't dictate what they can charge - that won't be governed by market forces and will ultimately fail.

They probably could have privatised a service provider element of Telstra, but quite frankly, given the nature of Australian communications, the infrastructure element was always going to be a monopoly, or have needless duplication probably funded by the taxpayer (think Opel).

So the infrastructure corporation should have remained in government hands - ultimately, that's what it comes down to. Anything that is needed or desired by the public, that isn't likely to be profitable, should remain in government hands.
The same goes for issues of quality control - such as water provision.

"that doesn't automatically mean that a bunch of competing private firms will do any better"

It certainly means that the fundamentals are there, for those
who do, do better, to thrive. Its one of the major changes that
I am seeing in the Australian economy right now, compared to
say 25 years ago.

Two things hit me at that time, when I compared an economy
like Australia, to one like Switzerland. Firstly I felt
that Australian companies in general, not all, were extremely
badly managed, because so many companies were in cosy duopolies,
protected by high tarrifs. There was no need to change anything.
Secondly the traditional British industrial relations system
of worker hates boss and tries to get even, boss despises worker
and tries to screw him.

Its a lose-lose situation and I think that in much of central
Europe, the thinking is far more sophisticated then the old
British system which Australia inherited.

A country like Switzerland has little union involvement, but
has always had higher wages then Australia. Most employers
realise that its the best workers that earn them the most
and are most productive, so it pays to retain them and higher
wages is just one great way to do it. Workers realise that if
they make the company money, they can justify a higher wage,
so rather then screw the company, they try to make the company
money. In the end, you have a win-win situation.

As to PE doing better, its starting to show everywhere.
Remember when Woolies was virtually broke? Now Coles,
due to bad management, is about to be sold off and I think
that the Wesfarmers business plan will turn them around.

People forget that these companies actually work on fairly
small nett margins, 3-4.5% perhaps. Cost is the big issue.
So efficiency of logistics, ivory tower management, are all
huge issues. Today, if a business is not performing, its
sold off or reorganised, whilst in Govt they plod on
relentlessly, there is no incentive to change.

As to your comment about efficient appliances, once again that’s a global
issue. Manufacturers are hardly going to develop energy efficient equipment,
just for the Australian market. As it stands, other countries already pay
quite a bit more for energy then we do, but the equipment you speak
of has not yet been developed for them.

The global warming thingy might now trigger those sorts of developments,
but it’s a very recent issue in political terms. 10 years ago, when you saw
pictures of China, you saw mainly bicycles, 5 years ago Gottliebson was
only just predicting the China boom. Now we suddenly have another
2 billion people chasing our lifestyle and its become an issue globally,
but very recently.

It still amazes me that nobody has developed a solar powered air conditioner.
When its 43deg outside, one would think that somebody would come up
with a way to use that heat energy for efficient cooling. Air conditioners
used to be a luxury, now they are becoming standard, like plasma screens.

I doubt if people will go back to doing without. They will simply demand
a payrise, to compensate for the higher price of energy.

As to a regulated labour market, that’s a can of worms that we can discuss,
but one point is the dilemma it creates. Workers want permanent employment
and security. But many businesses simply cannot provide that, due to the
nature of their business. They can tender for a job and win it, so have extra
labour requirements in the short term, or miss out, in which case people
would be standing around picking their noses on company time. Once
you put too many conditions on hiring and firing staff, as they have done
with say young people in France, the result is that nobody takes the risk
of hiring them in the first place. They then complain about unemployment
or move to Britain, which is more flexible. So were all your regulations
really such a great idea?

TurnRightThenLeft,

Thnks for you r interesting post.

The topic of Telstra was raised on another Forum at http://forum.onlineopinion.com.au/thread.asp?discussion=1040#18752

Also you might find some useful information on a web site concerning Telstra, which I have maintained. It's neglected and somewhat dated, but you may still find it useful. The original site is off-line due to a problem with the Domain Name Server. However I have created a mirror. It has the ungainly URL of http://candobetter.org/citizensagainstsellingtelstra.com/html/news.html

Our case is at: http://candobetter.org/citizensagainstsellingtelstra.com/html/ourcase.html

... and our submission to a Senate Inquiry of 2003 is at http://candobetter.org/citizensagainstsellingtelstra.com/html/resources/cast-senate-submission-Oct-2003.html

When the DNS problems are fixed all of that will be found within http://citizensagainstsellingtelstra.com

It's noteworthy that 70% of Australians opposed privatisation when the full privatisation bill was passed through the Senate in September 2005, and this opposition to privatisation has been consistent throughout the years. One Liberal Senator Brett Mason who voted for privatisation practically boasted that 95% of the constitutents who contacted him at the time opposed privatisation. Evidently, he thought that others would see voting in this way against the overwhelming wishes of his own constituency as true strength of character.

Yabby again, your posts are largely addressing points somewhat tangential to mine. I would love to see Australia lose the "workers vs employers" ethos too, although I have to say it's not something I've ever come across in the software industry, which has never had union involvement, and never needed a minimum wage etc. Unfortunately I think WorkChoices (and the predictable reaction against it) has given a significant boost to that ethos, perhaps because it was pushed through parliament without consultation with unions and other employee representatives.
Hence achieving that goal isn't simply done by removing or loosening existing regulations - after all, Switzerland still has labour market regulation, including maximum workings hours, and collective bargaining arrangements that effective control minimum wages. Switzerland also has fully government-funded tertiary education, and spends almost 6% of its GDP on education and research, compared to less than 5% in Australia.

Regarding appliance/consumer-goods efficiency, absolutely, it requires a global adoption of energy market regulation to give this a boost. But you raise a good point: how come New Zealand, population 4 million, has Fisher&Paykel; Singapore, pop 4 million, has Creative Technology, Sweden, pop 5 millon, has Asko and Electrolux; Denmark, pop 5 million, has Bang & Olufsen; Finland, pop 5 million, has Nokia; The Netherlands, pop 16 million, has Philips, whereas Australia, population 21 million, has no household name manufacturers of any electronic/electric goods that I can think of...at least, since Electrolux bought out Email, which some have blamed partly on deregulation and tariff reduction. There really is no reason Australia could not have a high-tech consumer goods manufacturing industry, but it would require examining what sort of government policies exist in previously mentioned countries that do support such an industry, and if that means, for instance, import tariffs to allow the industry to get off the ground, then this needn't be seen as automatically a "bad thing" because it goes against neoliberal ideology. After all, the international manufacturing playing field is far from level, and sitting around waiting for it become so is not really doing Australia any favours in the mean time.