A Level Economics 20: Labour Market Basics

 Let's explore the main influences on demand and supply in labor markets, determinants of the elasticity of the demand and supply of labor, and the causes and implications of wage differentials:

1. Influences on Demand and Supply in Labor Markets:

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   • Economic Conditions: The overall state of the economy, such as economic growth, business cycles, and industry-specific conditions, can significantly influence labor demand and supply. During periods of economic expansion, businesses tend to experience increased demand for labor as they expand production and invest in new projects. Conversely, during economic downturns or recessions, businesses may reduce their workforce, leading to a decrease in labor demand.
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   • Technological Advancements: Technological advancements can impact labor demand by replacing certain job functions with automation or increasing the productivity of workers. For example, the adoption of robotics in manufacturing may reduce the demand for manual labor, while the growth of artificial intelligence may create new job opportunities in fields like data analysis and programming.
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   • Government Policies and Regulations: Government policies, such as labor laws, minimum wage regulations, taxation, and immigration policies, can influence labor demand and supply. For instance, an increase in the minimum wage may raise labor costs for businesses, potentially reducing their demand for labor. Immigration policies can affect the supply of labor by either restricting or facilitating the entry of foreign workers into the labor market.
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   • Demographic Factors: Demographic factors, including population growth, aging populations, and changes in workforce participation rates, can impact labor supply. For example, a shrinking working-age population due to low birth rates and an aging population can lead to labor shortages and increased competition for workers.

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3. Determinants of the Elasticity of the Demand and Supply of Labor:

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   • Substitutability: The extent to which labor can be substituted with other inputs, such as capital or technology, influences the elasticity of labor demand. If labor can be easily replaced or substituted, the demand for labor becomes more elastic. For example, in industries where automation technologies can readily replace human labor, the demand for labor tends to be more elastic.
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   • Time Horizon: The time horizon considered influences the elasticity of labor supply. In the short run, labor supply may be relatively inelastic as it takes time for workers to acquire new skills or for firms to adjust their workforce. In the long run, labor supply becomes more elastic as workers can change occupations, undergo training, or enter or exit the labor market.
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   • Occupational-Specific Skills: The specificity of skills required for a particular occupation affects the elasticity of labor supply. Occupations that require highly specialized skills may have less elastic supply as workers cannot easily transition to other occupations without significant retraining. Conversely, occupations with more transferable skills and less specific requirements tend to have more elastic supply.

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5. Causes and Implications of Wage Differentials:

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   • Education and Skills: Wage differentials can arise due to differences in education, qualifications, and skills. Workers with higher levels of education or specialized skills tend to command higher wages due to the scarcity and demand for their expertise. For example, a doctor with extensive medical training and qualifications typically earns a higher wage than an entry-level retail worker.
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   • Occupational Factors: Different occupations have varying wage structures based on factors such as job complexity, physical demands, and required qualifications. Occupations that involve high levels of responsibility, expertise, or risk may offer higher wages to attract and retain qualified individuals.
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   • Market Conditions: Wage differentials can also result from supply and demand imbalances in specific labor markets. If there is a shortage of workers with particular skills or qualifications in a specific region or industry, wages for those positions may be higher due to the higher demand and limited supply. Conversely, oversupplied labor markets may experience lower wages due to increased competition among workers.
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   • Discrimination: Wage differentials can also arise from factors such as gender, race, or other forms of discrimination. Unfair treatment or biases in the labor market can result in wage disparities, where individuals performing similar work receive different compensation based on non-job-related characteristics. Addressing and reducing such wage differentials is an important focus of equal pay and anti-discrimination efforts.

Britain is the Dorian Gray economy, hiding its ugly truths from the world. Now they are exposed

From Tony Blair to George Osborne, our rulers painted false pictures of success while real wealth and wages withered away writes Aditya Chakrabortty in The Guardian 

You know the central conceit of Oscar Wilde’s The Picture of Dorian Gray, of course you do. A lad of sun-kissed beauty is presented with a stunning likeness of himself. Disturbed at the notion that he will grow old while the painting doesn’t, he locks it away – where it is the portrait that ages and uglifies while Dorian stays boyish and beautiful. But perhaps you’ve forgotten what happens next.

The story has come to my mind many times, as the foulness of British politics becomes ever harder to ignore. Genteel liberals wonder how their land of cricket whites and orderly queues could be ruled by a grasping liar such as Boris Johnson and I hear a whisper on the wind: Dorian Gray. The New York Times and Der Spiegel report in bewilderment on a country with pockets of deep poverty and unslaked anger, and again rasps that hoarse voice: the horror was hidden here all along.

Now it’s all out in the open. In one of the richest societies in human history, inhabitants are starting to twig that by 2030 or thereabouts they will earn less per head than the Poles they so recently patronised. Whatever the politicians and pundits may argue, this debacle owes nothing to Jeremy Corbyn or Brexit or any supposedly un-British “populism”. It is homegrown and has deep roots.

Like Dorian Gray, Britain has for too long presented one face to the world while concealing the awful truth. The author of that novel, Oscar Wilde, was the son of an Irish nationalist and a graduate of Oxford, where he became a fine student of the British upper classes and their mellifluous hypocrisy. He would have recognised much of the mess we’re in, because it grew among shadows and cover-ups. From Tony Blair’s Cool Britannia through to George Osborne’s “march of the makers”, our rulers have trumpeted every false success, while ugly facts have been waved away as anomalies: from the former manufacturing suburbs and towns turned into giant warehouses of surplus people, to the fact that 15% of adults in England are on antidepressants. We’re winning the global race, claimed David Cameron, even as the population’s life expectancy fell far behind other rich countries. We shan’t stunt future generations with debt, he boasted, as our five-year-olds became the shortest in Europe.

Or take the housing bubble that politicians pretended was true prosperity – until this week, as the Bank of England hiked rates for the 13th time in a row and the prospect of it bursting began to terrify them. Yet the Westminster classes blew their hardest into that bubble. As soon as estate agents were out of lockdown, Rishi Sunak gave up £6bn of taxpayers’ money for a stamp duty holiday – an act as prudent as pouring petrol on a fire. Many of those he lured up the property ladder will be hardest hit by rising mortgage rates. Analysis done for me by UK Finance suggests that 465,000 house purchases during that tax break were financed with two- or three-year fixed rate mortgages – the very ones running out right now. In other words, nearly half a million households took the chancellor’s inducement; many will plunge into dangerous financial straits; some face losing their homes. They were mis-sold a dream by Sunak. Still, at least the Tories enjoyed a bounce in the polls.

Helmut Berger stars in the 1970 film adaptation of The Picture of Dorian Gray. Photograph: Sargon/Kobal/Rex/Shutterstock


“Sin is a thing that writes itself across a man’s face,” Dorian is told by his portraitist Basil Hallward. “If a wretched man has a vice, it shows itself in the lines of his mouth, the droop of his eyelids, the moulding of his hands even … But you, Dorian, with your pure, bright, innocent face and your marvellous untroubled youth – I can’t believe anything against you.” The picture of Dorian, which would have revealed the grotesque truth, is hidden away. So, too, has the UK avoided admitting its ills. Even now, in a country where patently so little works for people who rely on work for their income, commentators and frontbenchers still blame supposedly all-powerful interlopers: Boris, Nigel, Jeremy. And from Sunak to Starmer, all push growth and jobs as the remedy for what ails us.

Yet growth in this country is falling and not because of Ukraine or Covid or Brexit. Since the 1950s, the growth rate adjusted for inflation has been on a gentle but insistent downward slide. Our economy has become ever more stagnant and dependent on debt. It is fatuous to pretend this is going to turn around through magicking Britain into an AI free-for-all or a jolly green industrial giant. Employment? One in four employees are on low weekly wages – either because the pay is too low or the hours aren’t enough – while the average real wage has flatlined for many years.

Much of this analysis comes from a new book, When Nothing Works, written by a team of scholars. Although specialising in economics and accountancy, what they have produced is an essential text for understanding British government: the polarised politics of a highly unequal and increasingly stagnant society.

Take the issue at the top of today’s agenda: wages. Why can’t you and I take home more money? Because of a lack of productivity, politicians will say. Yet the researchers point to how labour has got a smaller and smaller share of economic output since the 1970s.

If the same share of GDP was paid out in wages today as in 1976, the average working-age household would have an extra £9,744 a year. We haven’t lost that 10 grand a year through laziness at work but because politicians from Thatcher onwards smashed up trade unions, undermined labour rights, and crowed over the result as a “flexible labour market”. What they really created was a low-wage workforce, in a low-growth country ruled by politicians with low ambitions for everyone bar themselves.

“The prayer of your pride has been answered,” Basil counsels Dorian, when he finally sees the portrait and its horrific truth. “The prayer of your repentance will be answered also.” When Nothing Works will inevitably be termed pessimistic, but it is no such thing. Realism comes from facing who we are and dropping the pretence that a growth miracle is just around the corner. Instead of trying to boost “the economy”, it is high time to boost our people: to ensure they have the basics they need to live a life free from indignity and free to flourish. This will come from redistribution rather than growth, from replacing extractive businesses with fair ones. Such ideas will not go down well in SW1, where both Tory and Labour are increasingly hostile to pluralism and brittle in their dogmatism. Self-knowledge is the hardest knowledge, as one of the book’s authors, Karel Williams, says. And self-delusion leads eventually to disaster.

Unable to face his loathsome self-image, Dorian slashes that portrait. He is found by servants. “Lying on the floor was a dead man, in evening dress, with a knife in his heart. He was withered, wrinkled and loathsome of visage. It was not till they examined the rings that they recognised who it was.”

Economics Essay 62: Minimum Wage

 With the aid of a diagram, evaluate the likely impacts of statutory minimum wages in labour markets.

A statutory minimum wage is a government-mandated wage floor that sets the minimum hourly rate at which employers are legally required to compensate their workers. Evaluating the impacts of statutory minimum wages in labor markets involves assessing the potential consequences, both positive and negative, on various stakeholders. Here are the key impacts to consider:

1. Impact on Workers:

• Positive Effects: A statutory minimum wage can benefit low-wage workers by increasing their earnings and improving their standard of living. It can help reduce income inequality and alleviate poverty among the working population.
• Negative Effects: Some argue that higher minimum wages may lead to reduced employment opportunities, particularly for low-skilled workers. Employers facing increased labor costs may respond by cutting jobs, reducing work hours, or automating tasks to compensate for the higher wage rates.

2. Impact on Businesses:

• Positive Effects: Proponents argue that higher minimum wages can enhance worker productivity, reduce turnover, and improve employee morale and loyalty. It can also stimulate consumer demand as workers have more disposable income to spend, potentially benefiting businesses, especially in industries reliant on domestic consumption.
• Negative Effects: Increased labor costs can pose challenges, particularly for small businesses and industries with tight profit margins. Some businesses may struggle to absorb the higher wages, leading to potential reductions in hiring, cuts in employee benefits, or increased prices for goods and services.

3. Impact on Unemployment:

• The impact on unemployment is a contentious aspect of minimum wage policies. While some studies suggest minimal effects on overall employment levels, others find that higher minimum wages can lead to job losses, particularly for vulnerable workers with limited skills or in industries highly affected by labor costs.

4. Impact on Inflation:

• Higher minimum wages can potentially contribute to inflationary pressures in the economy. When businesses face increased labor costs, they may pass on the costs to consumers through higher prices. However, the overall impact on inflation depends on the size and frequency of minimum wage increases relative to other factors driving inflation.

5. Impact on Income Distribution:

• Minimum wages can help address income inequality by lifting the wages of low-income workers. However, their effectiveness in reducing overall income inequality depends on the magnitude of the wage increase and the distribution of low-wage workers across different income brackets.

It is important to note that the impacts of minimum wage policies can vary across different contexts, such as the level of the minimum wage relative to prevailing wages, the competitiveness of industries, and the broader economic conditions. Robust monitoring, evaluation, and adjustments to minimum wage policies are necessary to strike a balance between supporting workers' well-being and maintaining a favorable business environment that promotes employment opportunities.

Fallacies of Capitalism 2: The Trickle down Effect

What is the "trickle-down" fallacy, and how does it relate to the distribution of wealth in a capitalist system?

The "trickle-down" fallacy is the belief that when the wealthy and corporations accumulate more wealth, it will eventually "trickle down" to benefit everyone in society. This theory suggests that if the rich have more money, they will invest, create jobs, and stimulate economic growth, which will ultimately improve the well-being of everyone, including those at the bottom of the income ladder. However, this theory ignores several important aspects of wealth distribution in a capitalist system. Let's understand it with simple examples:

1. Tax cuts for the wealthy: Advocates of the trickle-down theory often argue for tax cuts for the rich, believing that they will use the extra money to invest and create jobs. However, in practice, the wealthy may not necessarily invest their additional wealth in ways that benefit the broader economy. They might opt to invest in offshore accounts, buy luxury goods, or engage in speculative activities like stock trading, which may not lead to significant job creation or widespread economic growth.

2. Wage stagnation: Trickle-down economics assumes that as the wealthy accumulate more wealth, they will increase wages for workers. However, in reality, wages for many workers have stagnated or grown at a slower pace compared to the rising incomes of the wealthy. For example, over the past few decades, productivity has increased significantly, but the gains have primarily gone to executives and shareholders, while workers' wages have not kept pace. This demonstrates that the benefits of wealth accumulation often do not trickle down to workers in the form of higher wages or improved living standards.

3. Rising income inequality: Trickle-down economics fails to address the issue of income inequality. Over the past few decades, the wealth gap has widened, with the top earners capturing a disproportionately large share of economic gains. This suggests that the benefits of economic growth and wealth accumulation are not evenly distributed across society. Instead, they tend to concentrate in the hands of a few, exacerbating income and wealth disparities.

4. Lack of investment in public goods: The trickle-down theory assumes that the wealthy will invest their additional wealth in ways that benefit the broader society. However, in practice, a significant portion of wealth accumulation may not be directed towards public goods, such as education, healthcare, infrastructure, and social programs. Instead, the wealthy may focus on maximising their personal wealth through financial instruments, real estate, or other investments that primarily benefit themselves, further exacerbating societal inequality.

In summary, the "trickle-down" fallacy suggests that the benefits of wealth accumulation by the rich will automatically benefit everyone in a capitalist system. However, this theory ignores the reality that wealth does not necessarily trickle down to the broader population. Instead, it often perpetuates income inequality, fails to address wage stagnation, and may not result in significant investment in public goods. Understanding these limitations is crucial for developing policies that promote a more equitable distribution of wealth and opportunities in society.

Are CEOs with MBAs good for business?

 Daron Acemoglu in The FT

Every year, tens of thousands of aspiring young moguls enrol at business school for an MBA, hoping to climb the corporate hierarchy. They are following predecessors who now run many leading companies, from Alphabet, Amazon and Apple to Microsoft and Walmart. 

And the aim of faculty and administrators remains what Harvard Business School’s first dean, Edwin Gay, expressed in 1908: “To train people to make a decent profit, decently”. 

Better knowledge and training can make leaders more innovative and productive, raising the returns to all stakeholders. Better managed businesses can more effectively achieve whatever objectives they set, including helping to tackle the myriad challenges society faces. 

But has the MBA actually achieved these goals? Our recent research suggests a much less encouraging picture. Using detailed data on companies and workers from the US and Denmark, we looked at the effects when a chief executive with an MBA or undergraduate business degree takes over from one without such qualifications. 

We found no evidence that CEOs with such degrees increase sales, productivity, investment or exports relative to the levels the company achieved before. 

The biggest shift when a chief executive with a business degree takes charge is a decline in wages and the share of revenues going to labour, even in countries with different cultures. In the US, wages under business-degree holding CEOs were 6 per cent lower than they would otherwise have been after five years, and labour’s share of revenues was down five percentage points. In Denmark, the figures were respectively 3 per cent and 3 percentage points. 

We found no evidence that these were companies with declining sales and appointed leaders with business degrees to rescue them. The patterns are similar when new MBA managers are appointed following the death or retirement of a previous CEO. Nor was there any indication that by reducing wage growth, chief executives with business education were creating more retained earnings to fund investment, which is no higher in their companies. 

It may even be that, by ignoring broader stakeholders, such managers damage long-term profitability. For example, we found that higher-skilled employees were more likely to leave after the relative wage declines. 

However, shareholders gain from the appointment of a CEO with a business degree — at least in the short term. Share prices increase, and we see more share repurchases in the US and higher dividends in the US and Denmark. Business-educated managers are also paid more. 

The reason for the relative decline in workers’ wages and shareholders’ gain is clear. Companies run by CEOs without a business degree share increases in revenues or profits with their workforce — typically one-fifth of higher value-added. This ceases when a business-educated leader takes over. The wage impact is greater in concentrated industries. 

It is impossible to know for sure why business-educated leaders have these effects, but our work provides clues. One reason could be the legacy of the economist Milton Friedman’s doctrine from 1970, which stated that “the social responsibility of business is to increase its profits”. 

The idea that good managers raise profits is common in business schools and economics departments. Many courses advocate “lean corporations” or “re-engineering businesses” using digital tools to cut costs. It is possible that these ideas encourage leaders to take a tougher stance and ensure higher corporate profits are not shared with employees. 

Another factor may be that the majority of business degree students interact closely with each other and often have little contact with blue-collar and clerical workers. As CEOs, they may not see the viewpoint of the rank-and-file or consider workers as stakeholders. 

So is the current business school system broken? Not necessarily. First, only a small fraction of students become chief executives. Many work in other managerial positions, where their training may have very different implications. 

Second, the majority of the chief executives in our sample received their degree before 2000. Business schools today may have evolved, but there are not enough CEOs with more recent degrees to judge the effects. Indeed, schools do appear to have changed rapidly this century. Many now have ethics courses and prepare their students for diverse careers, including in government service and non-profit organisations. Many students learn about corporate environmental and governance responsibilities. 

Being aware of what managers with business degrees used to do is an important step in reflecting on how we can build better programmes. 

Third, and most importantly, there is nothing hard-wired about business degrees. What MBAs mean and achieve will change, often prompted by students themselves. If they demand an experience that is richer than the Friedman doctrine and that prepares them for today’s societal challenges, most schools will adapt. 

The change will have to start with what is taught in business schools, but it cannot stop there. The whole business school experience may need to be rethought, including how students socialise, form networks and gain experience. It will also have to involve a broader discussion of the social responsibilities of corporations and their business leaders.

A Strong Labour movement Raises everyone’s Living Standards

Owen Jones in The Guardian

Respect for tradition, we are told, underpins the Conservative party. But there’s one tradition for which it has unwavering contempt – strike action: a part of our culture and heritage it has ferociously and instinctively demonised as an antisocial attack on the general public. Tories are known to extol the virtues of rugged individualism, but it seems the collective suddenly matters when industrial action is declared. Then, it seems, society – which in previous Tory eras was doubted to even exist – becomes a totem to be protected from sinister forces, from a malign and externalised striking rabble.

Strikes bring inconvenience. Of course they do. They disrupt our normal life, our plans, our expectations. But the concentrated attempt to stigmatise the very notion of the strike is something that must be resisted. The strike – and the threat of striking – should be celebrated precisely because it underpins many rights and freedoms we now take for granted. Union struggles in the 19th century played a pivotal role in shortening the working day, and in the 20th century, in creating the weekend. In the postwar heyday of union power, they drove up incomes. Strikes are a profound social good.

Yet how little this argument is heard. Anti-union sentiment is profoundly embedded in our political culture. When the Tory chairman, Nadhim Zahawi, suggested on national television that the upcoming nurses’ strike would aid Vladimir Putin by worsening inflation in the west, it was yet another crude illustration of this very British phenomenon, echoing Margaret Thatcher’s denunciation of striking miners as the “enemy within” in the 1980s. This hostility has a long pedigree and, historically at least, the Tories have been known to be candid about their real intentions.

RMT picket at Slough railway station, 8 October 2022. Photograph: Maureen McLean/Rex/Shutterstock

As the 20th century dawned, the Tories defended a legal ruling making unions financially liable for profits lost to strikes, leading the Conservative prime minister Stanley Baldwin to later confess: “The Conservatives can’t talk of class war. They started it.” In 1926, they introduced a raft of anti-union laws in the aftermath of the general strike, including the banning of solidarity industrial action.

But while unions were hobbled in the 1930s, a spirit of collectivism nurtured by wartime sacrifice helped their rebirth. The three-decade social democratic consensus established by Clement Attlee’s Labour government led the Trades Union Congress in 1968 to boast that it had grown from a “small debating assembly” into a body that shared “in the making of government policies, taking part in administering major social services and meeting on equal terms with the spokesmen of the nation’s employers”. This was the era in which Britain enjoyed its highest ever sustained period of economic growth, which – thanks in part to strong unions – was more equitably distributed, boosting the pay of ordinary workers.

When the oil shock of the 1970s sent prices surging, unions mobilised in an effort to match wages with the cost of living. The grand climax – the winter of discontent – was successfully spun by Thatcher to label unions as national bogeyman for a generation. Her successors took up that framing as well. When Tony Blair became prime minister in 1997, he promised that his government would “leave British law the most restrictive on trade unions in the western world”. And David Cameron assailed Ed Miliband as “taking his script from the trade unions”, and turned the screw further, with even more restrictive laws.

But today this anti-union approach jars with political reality. One poll has suggested that nearly six in 10 voters back the nurses’ strike, and another found that more people backed the rail strike than opposed it. After an unprecedented fall in living standards, the default position of millions whose pay packets are shrivelling in real terms has become “well, fair play to them, at least someone is taking a stand”.

While earlier generations of Tories may have used the language of class warfare openly, their modern cohort is savvier. They seek to isolate striking workers from the wider public, portraying them as somehow separate from society at large. Rishi Sunak denounces strikers as a threat to “hardworking families”, as if nurses, paramedics or transport workers are excluded from that category. But this attempt to separate striking workers from society at large collides with the reality people see every day. The withdrawal of strikers’ labour is so noticeable precisely because of how central they are to our way of life. Rather than a middle-finger salute at the general public, it is one part of society crying for help from another.

 

Despite all the talk of monstrous disruption, for most the real inconvenience is struggling to pay bills and feed their children, rather than the irritation of a postponed train journey. Real wages are projected to be lower in 2026 than they were in 2008.

Indeed, a fundamental reason for wages being so low and conditions so poor in the UK is because of the dilution of union power. According to one study, the “changes in bargaining power” suffered by unions explains half of the decline in the share of the economy going to wages over four decades in several rich countries, including Britain. Rather than union action inconveniencing everybody else, the decline of unions has dragged down the wages of non-unionised workers, too, according to a US study. A strong labour movement, in other words, brings up everyone’s living standards.

A strike, then, isn’t antisocial behaviour, on a collision course with the interests of the wider public. By neutering the threat of strike action with authoritarian laws, the Tories have succeeded only in weakening a mechanism with a proven record in raising the living standards of all workers. Despite the mythology, no one goes on strike on a whim. A worker forfeiting a day’s pay isn’t just a sacrifice for the sake of their own interests, it’s a gamble and a sacrifice. Indeed, one of the government’s fears is that a victory for nurses or railway workerswould embolden the pay claims of other workers – an anxiety that is well founded.

Union membership should be honoured not just as a democratic right, but as a cornerstone of collective prosperity. Even many union sympathisers have retreated from such an argument, instead blaming bosses and government for any regretful breakdown in industrial relations. But to strike isn’t a sin, or antisocial or an act of mendacity: it’s a key to a society less beset by injustice than our own.

Hypocrisy's Penalty Corner

Jawed Naqvi in The Dawn


THERE’S been severe criticism, primarily in the Western media, of the gross exploitation of migrant workers in Qatar’s bid to host football’s World Cup that began in Doha last week. There’s more than a grain of truth in the accusation, and there’s dollops of hypocrisy about it.

FIFA President Gianni Infantino brought it out nicely by calling out the Western media’s double standards in what is tantamount to shedding crocodile tears for the exploited workers.

The CNN, unsurprisingly, slammed Infantino’s anger, and quoted human rights groups as describing his comments as “crass” and an “insult” to migrant workers. Why is Infantino convinced that the Western media wallows in its own arrogance?

It is nobody’s secret that migrant workers in the Gulf are paid a pittance, which becomes more deplorable when compared to the enormous riches they help produce. As is evident, the workers’ exploitation is not specific to Qatar’s hosting of a football tournament, but a deeper malaise in which Western greed mocks its moral sermons.

As their earnings with hard labour abroad fetch them more than what they would get at home, the workers become unwitting partners in their own abuse. This has been the unwritten law around the generation of wealth in oil-rich Gulf countries, though their rulers are not alone in the exploitative venture.

Western colluders, nearly all of them champions of human rights, have used the oil extracted with cheap labour that plies Gulf economies, to control the world order. The West and the Gulf states have both benefited directly from dirt cheap workforce sourced from countries like India, Sri Lanka, Pakistan, Bangladesh and the far away Philippines.

Making it considerably worse is the sullen cutthroat competition that has prevailed for decades between workers of different countries, thereby undercutting each other’s bargaining power. The bruising competition is not unknown to their respective governments that benefit enormously from the remittances from an exploited workforce. The disregard for work conditions is not only related to the Gulf workers, of course, but also migrant labour at home. In the case of India, we witnessed the criminal apathy they experienced in the Covid-19 emergency.

Asian women workers in the Gulf face quantifiably worse conditions. An added challenge they face is of sexual exploitation. Cheap labour imported from South Asia, therefore, answers to the overused though still germane term — Western imperialism. Infantino was spot on. Pity the self-absorbed Western press booed him down.

Sham outrage over a Gulf country hosting the World Cup is just one aspect of hypocrisy. A larger problem remains rooted in an undiscussed bias.

Moscow and Beijing in particular have been the Western media’s leading quarries from time immemorial. The boycott of the Moscow Olympics over the USSR’s invasion of Afghanistan was dressed up as a moral proposition, which it might have been but for the forked tongue at play. That numerous Olympic contests went ahead undeterred in Western cities despite their illegal wars or support for dictators everywhere was never called out. What the West did with China, however, bordered on distilled criminality.

I was visiting Beijing in September 1993 with prime minister Narasimha Rao’s media team. The streets were lined with colourful buntings and slogans, which one mistook for a grand welcome for the visiting Indian leader. As it turned out the enthusiasm was all about Beijing’s bid to host the 2000 Olympics. It was fortunate Rao arrived on Sept 6 and could sign with Li Peng a landmark agreement for “peace and tranquility” on the Sino-Indian borders. Barely two week later, China would collapse into collective depression after Sydney snatched the 2000 Olympics from Beijing’s clasp. Western perfidy was at work again.

As it happened, other than Sydney and Beijing three other cities were also in the running — Manchester, Berlin and Istanbul — but, as The New York Times noted: “No country placed its prestige more on the line than China.” When the count began, China led the field with a clear margin over Sydney. Then the familiar mischief came into play.

Beijing led after each of the first three rounds, but was unable to win the required majority of the 89 voting members. One voter did not cast a ballot in the final two rounds. After the third round, in which Manchester won 11 votes, Beijing still led Sydney by 40 to 37 ballots. “But, confirming predictions that many Western delegates were eager to block Beijing’s bid, eight of Manchester’s votes went to Sydney and only three to the Chinese capital,” NYT reported. Human rights was cited as the cause. Hypocritically, that concern disappeared out of sight and Beijing hosted a grand Summer Olympics in 2008.

Football is a mesmerising game to watch. Its movements are comparable to musical notes of a riveting symphony. Above all, it’s a sport that cannot be easily fudged with. But its backstage in our era of the lucre stinks of pervasive corruption.

Anger in Beijing burst into the open when it was revealed in January 1999 that Australia’s Olympic Committee president John Coates promised two International Olympic Committee members $35,000 each for their national Olympic committees the night before the vote, which gave the games to Sydney by 45 votes to 43.

The Daily Mail described the “usual equanimity” with which Juan Antonio Samaranch, the then Spanish IOC president, tried to diminish the scam. The allegations against nine of the 10 IOC members accused of graft “have scant foundation and the remaining one has hardly done anything wrong”.

“In a speech to his countrymen,” recalled the Mail, “he blamed the press for ‘overreacting’ to the underhand tactics, including the hire of prostitutes, employed by Salt Lake City to host the next Winter Olympics.” Samaranch sidestepped any reference to the tactics employed by Sydney to stage the Millennium Summer Games.

This reality should never be obscured by other outrages, including the abominable working conditions of Asian workers in Qatar.

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As Joe Biden moves to double the US minimum wage, Australia can't be complacent

Van Badham in The Guardian

When I was writing about minimum wages for the Guardian six years ago, the United States only guaranteed workers US$7.25 an hour as a minimum rate of pay, dropping to a shocking US$2.13 for workers in industries that expect customers to tip (some states have higher minimum wages).

It is now 2021, and yet those federal rates remain exactly the same.

They’ve not moved since 2009. Meaningfully, America’s minimum wages have been in decline since their relative purchasing power peaked in 1968. Meanwhile, America’s cost of living has kept going up; the minimum wage is worth less now than it was half a century ago.

Now, new president Joe Biden’s $1.9tn pandemic relief plan proposes a doubling of the US federal minimum wage to $15 an hour.


 
It’s a position advocated both by economists who have studied comprehensive, positive effects of minimum wage increases across the world, as well as American unions of the “Fight for 15” campaign who’ve been organising minimum-wage workplaces demanding better for their members.

The logic of these arguments have been accepted across the ideological spectrum of leadership in Biden’s Democratic party. The majority of Biden’s rivals for the Democratic nomination – Bernie Sanders, Elizabeth Warren, Kamala Harris, Pete Buttigieg, Amy Klobuchar, Cory Booker and even billionaire capitalist Mike Bloomberg – are all on record supporting it and in very influential positions to advance it now.

In a 14 January speech, Biden made a simple and powerful case. “No one working 40 hours a week should live below the poverty line,” he said. “If you work for less than $15 an hour and work 40 hours a week, you’re living in poverty.”

And yet the forces opposed to minimum wage increases retain the intensity that first fought attempts at its introduction, as far back as the 1890s. America did not adopt the policy until 1938 – 31 years after Australia’s Harvester Decision legislated an explicit right for a family of four “to live in frugal comfort” within our wage standards. 

As an Australian, it’s easy to feel smug about our framework. The concept is so ingrained within our basic industrial contract we consume it almost mindlessly, in the manner our cousins might gobble a hotdog in the stands of a Sox game.

But in both cases, the appreciation of the taste depends on your level of distraction from the meat. While wage-earning Australians may tut-tut an American framework that presently allows 7 million people to both hold jobs and live in poverty, local agitation persists for the Americanisation of our own established standards.

When I wrote about minimum wages six years ago, it was in the context of Australia’s Liberal government attempting to erode and compromise them. That government is still in power and that activism from the Liberals and their spruikers is still present. The Australian Chamber of Commerce and Industry campaigned against minimum wage increases last year. So did the federal government – using the economic downtown of coronavirus as a foil to repeat American mythologies about higher wages causing unemployment increases.


 

They don’t. The “supply side” insistence is that labour is a transactable commodity, and therefore subject to a law of demand in which better-paid jobs equate to fewer employment opportunities … but a neoclassical economic model is not real life.

We know this because some American districts have independently increased their minimum wages over the past few years, and data from places like New York and Seattle has reaffirmed what’s been observed in the UK and internationally. There is no discernible impact on employment when minimum wage is increased. An impact on prices is also fleeting.

As Biden presses his case, economists, sociologists and even health researchers have years of additional data to back him in. Repeated studies have found that increasing the minimum wage results in communities having less crime, less poverty, less inequality and more economic growth. One study suggested it helped bring down the suicide rate. Conversely, with greater wage suppression comes more smoking, drinking, eating of fatty foods and poorer health outcomes overall.

Only the threadbare counter-argument remains that improving the income of “burger-flippers” somehow devalues the labour of qualified paramedics, teachers and ironworkers. This is both classist and weak. Removing impediments to collective bargaining and unionisation is actually what enables workers – across all industries – to negotiate an appropriate pay level.

Australians have been living with the comparative benefits of these assumptions for decades, and have been spared the vicissitudes of America’s boom-bust economic cycles in that time.

But after seven years of Liberal government policy actively corroding standards into a historical wage stagnation, if Biden’s proposals pass, the American minimum wage will suddenly leapfrog Australia’s, in both real dollar terms and purchasing power.

It’ll be a sad day of realisation for Australia to see the Americans overtake us, while we try to comprehend just why we decided to get left behind.