Economy

Jun 13, 2018

The neoliberal solution to low wages growth? Cut wages further!

For neoliberals, every problem can be fixed by cutting wages and conditions and reducing the size of government. Even low wages growth.

Bernard Keane — Politics editor

Bernard Keane

Politics editor

Is there any problem that neoliberals can't fix with industrial relations deregulation and shrinking the size of government? Apparently not. Today, former Deutsche Bank economist Adam Boyton takes to the pages of the Financial Review to offer his take on wage stagnation. "Given some of the commentary on this issue you could almost be forgiven for thinking there is a conspiracy of sorts holding wages back," Boyton argues. But against these tinfoil-hatted loons, Boyton makes his case: wage stagnation is because workers aren't working hard enough and government is too big. 

"Given the importance of productivity growth in sustaining higher real wages, if there is little or no growth in one it shouldn't be too surprising to see little or no growth in the other," he insists, pointing out relatively weak productivity measure growth in the national accounts. "Increasing the size of government is also popular these days ... Australia has, for nearly a decade now, seen total government spending above 40 per cent of GDP following a step up during the GFC. If modern economies are driven by creativity and innovation, then bigger government and more regulation is likely to be the problem, not the solution."

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10 comments

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10 thoughts on “The neoliberal solution to low wages growth? Cut wages further!

  1. brian crooks

    Its the neo con trickle down lunatics like this that are the problem with todays economists, bunch of university produced clowns with no real life experience and glued onto their masters coat tails just mouthing their instructions on a working poor trailer park residents U.S style economy, thankfully no one listens to them any more, no one of any substance I mean, maybe a few one nation uneducated clones still have`nt developed enough brain cells to understand what these bastards are trying to do to ordinary workers and their families but the majority are on to them now.

    1. klewso

      A problem amplified X their control of the media bull-horn.
      “Informed debate”? How can we have that in this climate of drizzling BS.

  2. Rameses

    It is generally agreed by executives that paying themselves huge bonuses improves company results. The opposite seems to be the case with the rest of the workforce. Productivity bonuses would be wasted on them.

    1. Rais

      Yes if you gave the workers a pay rise they’d only waste it on luxuries like food, clothing, paying off the mortgage and school fees.

    2. Culture Warrior

      As they say, “to make the rich work harder you pay them more; to make the poor work harder you pay them less”.

  3. Miranda

    The ‘trickle down’ theory should be more accurately renamed the ‘flood up’ fact.

    1. klewso

      “The Golden Shower Doctrine”.

  4. klewso

    The Fin Revue – with their chorus line of high-kicking “BCA Glove Puppet Conservative Commentator Economic Expert” hoofers, from Screaming Lord Stutch to Patrick to Hewett and up?
    …. Where was the GFC when they first noticed it – too busy scourging Labor to notice?
    ….. That were so certain a banking RC was unnecesssary – because it was a Greens/Labor (“How could they be right?”) idea?
    Busy peddling this “company tax cuts = higher wages/bugger facts” barrow for the Limited News Party government : and that if that doesn’t happen then it must be someone else’s fault – like “Labor’s”?
    With their record, how could they be wrong about this?
    ….. The wonder is that Sloan and Kryten aren’t performing there too?

  5. covenanter

    Hate to harp on about Adam Smith, but he analysed all the machinations of the economy, and at all boiled down to this: capital couldn’t care less about the actual economy, it, they merely act to ensure the highest return on that capital, and the lower the share of wealth accruing to the labour part of wealth creation then the higher the returns to the capital part of wealth creation.
    Low wages =higher returns to capital, hence the neo-liberal solution to low wages growth, of more low wages is a deception in pursuit of further profit, and to hell with the economy.
    In his explanation of what nation actually was ( a necessary precursor to writing about the source of the wealth of nations) Smith showed took the example of any national treasurer allowing such a distortion of the economy to take place effectively taking the head off the king in the ensuing public unrest. ( The Historical Method in Economics)
    The new Chinese emperor faces the same problem, and as for the sovereignty of the Australian people; long gone, replaced by the headless mob as represented by One Nation, for example?

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