Comments on: How novel are Per Capita’s ideas?

By: Club Troppo » Mutually assured tribalism

Club Troppo » Mutually assured tribalism — Sat, 01 Nov 2008 04:28:47 +0000

[...] Source. [...]

By: derrida derider

derrida derider — Thu, 28 Aug 2008 12:55:50 +0000

Per Capita won’t make an impact until it is confident enough to question the “smelly little orthodoxies” of its own side. For example, I’ll believe it is useful when it starts prescribing interventions to reduce educational inequality that the teachers’ unions won’t like (eg good teachers are simultaneously awarded a large pay rise and compulsorily posted to disadvantaged schools). Though ennui is right about the harm done by naive performance pay systems.

I disagree with most of what the CIS produces, but I do think its independence is its best feature and really raises the level of argument. The contrast in quality of output with, say, the IPA is very clear.

By: ennui

ennui — Thu, 28 Aug 2008 05:47:39 +0000

To be fair, I was having a dig at JC’s rather cumbersome phraseology in endeavouring to explain his concept of productivity. Actually , productivity is a far more complex concept than the simplistic construct JC depicted – both in causes and measurements. (I did allude to some of these above.)
Re your statement that linking payment to performance can only enhance productivity. Intuitively you might think that would be the case but the literature suggests that it is not necessarily so.
Having personally spent close to 15 years as a consultant installing performance management systems in the mining and chemical industries (and occasionally in government departments) I can assure you such a simple direct linkage does not exist. Unfortunately, most performance payment systems are not effective – with the exception of piece-work and profit sharing arrangements.
A more effective “incentive”system seem to be those associated with good performance measurement tied into goal-setting and review arrangements. Not particularly exciting (or faddish) but nevertheless effective.

By: Rafe Champion

Rafe Champion — Wed, 27 Aug 2008 12:46:06 +0000

In the same way that the average productivity of the workforce is reduced by putting on marginal workers, the average income of a room full of people increases when Bill Gates walks in the door!

By: Rafe Champion

Rafe Champion — Wed, 27 Aug 2008 11:03:29 +0000

JC’s point is that putting on marginal (inexperienced and unskilled) workers is a positive, even though it lowers the average productivity of the workforce (other things being equal). This is a situation where the average is a meaningless figure. Indeed it is worse than meaningless because it can be used uncritically to imply the opposite of the reality.

The total productivity of the nation is increased, the productivity of the newly employed workers is increased (from zero) and as they gain experience and skills on the job their productivity increases further.

BTW Is anyone seriously prepared to argue that linking payment to performance will not tend to enhance productivity? Clearly the proportion of the workforce on AWAs is too small for productivity improvements due to AWAs to appear in aggregate figures, especially in view of the multitude of other factors that influence productivity.

By: ennui

ennui — Wed, 27 Aug 2008 06:07:11 +0000

I don’t know about Spiros, but JC’s view that regulatory changes in the workplace don’t impact “the productivity of workers that were there before and after the new laws were introduced” is a trifle mysterious – perhaps only understood and appreciated by JC.
There are, of course, many factors affecting productivity growth – both macro and micro in nature – which makes it extremely difficult to isolate the contribution of one particular factor. That we have had much improved productivity performance in the 80s and 90s as a result of microeconomic reforms is not really in dispute, but any attempt to draw a direct link between particular reforms and economy-wide improvements tends to be a little problematic.

However, there seems to be little doubt that deregulating the labour market – in particular, implementing enterprise bargaining in ‘93 – was a significant factor. What is extremely doubtful is the existence of any real linkage between individual employment contracts which underpinned Work Choices and improvements in sectoral or national productivity!

Reducing labour costs – yes.
Reducing unemployment – probably yes
Productivity enhancement – no evidence in support – probably a mitigating or negative factor.

By: Michael Cooney

Michael Cooney — Wed, 27 Aug 2008 02:00:42 +0000

G’day Andrew and friends,

Enjoying following the conversation.

Following on from Sinclair’s remark, I thought I’d alert you all to the five Per Capita papers published since last October:

The Full-Cost Economics of Climate Change (Hetherington) July 08

Union Futures (Coats) June 08

Quality of Work and a New Politics of the Quality of Life (Coats) June 08

Unlocking the Value of a Job (Hetherington) May 08

Memo to a Progressive Prime Minister (Hetherington, Cooney) Nov 07

Cheers,

Michael Cooney
Policy Director,
Per Capita

By: TerjeP (say tay-a)

TerjeP (say tay-a) — Tue, 26 Aug 2008 21:06:14 +0000

Per Capita is a catchy little name. Perhaps they could look at trends in the real per capita cost of government (ie tax revenue) and recommend a price inquiry. After all if tax is the cost of civilisation we should be concerned that civilisation is becoming more expensive.

By: Jc

Jc — Tue, 26 Aug 2008 12:35:08 +0000

and slowed productivity growth.

You really don’t understand economics, do you Spiros. Of course productivity would look like it slowed all things being equal. Adding marginal workers would adversely effect the aggregate. However it would have no impact on the productivity of workers that were there before and after the new laws were introduced.

By: ennui

ennui — Tue, 26 Aug 2008 11:04:27 +0000

Rafe, I may have misinterpreted your wording – and for that I apologise – however that does not alter the thrust of my comments re Howard’s cynical political immorality.

However, if we take a moment to examine Work Choices in the context of both economics and the then government’s credibility then again the evidence mounts against Howard.
You would no doubt recall Howard (and ACCI) advertising the ‘ïndependent’ research carried out by Econtech stating that the scrapping of Work Choices will cause interest rates to increase by 1.4%,business investment to fall by $11 billion and Oz standard of living to fall from 8th to 14th in the world. The central feature of this statement is not the substantive part- which itself is highly problematic – but its blatant dishonesty. Econtech was asked to model the scrapping of ALL industrial relations reforms back to ‘93 – not modelling the scrapping of Work Choices. Note that the Keating government in 1993 changed the IR system from centralised wage determination to one of enterprise bargaining. The actual conclusions from Econtech indicated that much of the economic benefits of labour market deregulation came from the introduction of enterprise bargaining not Work Choices. Also note that the report was commissioned by Peter Hendy of ACCI – ex Peter Reith staffer!
Quite apart from the substantive aspects of this statement what concerned and dismayed me – and I’m sure many other people – was the blatant dishonesty demonstrated by Howard.

I believe Howard’s capacity for (political) dishonesty is incontestable – but that in itself should not prevent sensible debate re the merits of his government’s policies.

In light of that, my personal view is that, on balance, Work Choices probably increased employment levels, reduced labour costs and slowed productivity growth.