Inflation

[Value Hunter]

immigration has been thing in Australia for 200 years.

Remind me frog where were you born? I was born here but to immigrant parents.

50% of our population is either immigrants or born to immigrants.

the only problem I see is the recent speed, we could idle back a bit in my opinion.

There are 26 jobseekers for every entry-level position in Australia, report finds

Anglicare chief says its survey shows more than 500,000 people are being ‘left behind’, with demand for starter jobs outstripping supply across country

www.theguardian.com

Labour shortages or a shrinkage of the working age population is not even close to being a problem in Australia yet.

If the issue is a shrinkage of the tax base that can be counterbalanced by cutting government expenditure (people will just have to suck it up and expect less services from the government).

If its a problem of labor shortages in most professions we are not even close to there yet. When you start to see the wages of most professions going up at a rate that is a few percent higher than inflation that is the market sending the signal of labour shortages. At the moment there are no broad based labour shortages (of course certain professions there are shortages). Its just business talking their own book to push wages down through an oversupplied labour market.

Most jobs are still getting pay raises below the rate of inflation which tells you that the labour market is oversupplied (on top of the fact that unemployment is rising). So even though the labour market is oversupplied (real wages declining or flat at best and unemployment rising) we need to bring in more migrants to make the labour market even more oversupplied?

 

[Value Hunter]

There are 26 jobseekers for every entry-level position in Australia, report finds

Anglicare chief says its survey shows more than 500,000 people are being ‘left behind’, with demand for starter jobs outstripping supply across country

www.theguardian.com

Labour shortages or a shrinkage of the working age population is not even close to being a problem in Australia yet.

If the issue is a shrinkage of the tax base that can be counterbalanced by cutting government expenditure (people will just have to suck it up and expect less services from the government).

If its a problem of labor shortages in most professions we are not even close to there yet. When you start to see the wages of most professions going up at a rate that is a few percent higher than inflation that is the market sending the signal of labour shortages. At the moment there are no broad based labour shortages (of course certain professions there are shortages). Its just business talking their own book to push wages down through an oversupplied labour market.

Most jobs are still getting pay raises below the rate of inflation which tells you that the labour market is oversupplied (on top of the fact that unemployment is rising). So even though the labour market is oversupplied (real wages declining or flat at best and unemployment rising) we need to bring in more migrants to make the labour market even more oversupplied?

I get what you are saying about the dependency ratio but my solution is to cut government spending rather then keep inflating the population ponzi.

Also the shape of the population Pyramid in most western countries is due to a one time shift. many of the older generations families had 3 - 5 children and that changed to 1 or 2 children so you have this big one off change to the dependency ratio. Once all the people from those older generations die off all the remaining generations everyone only had one or two children then the dependency ratio will start stabilizing rather than continue to worsen.

That is what I meant by the ship righting itself. Basically this skew in dependency ratio occured because the baby boomers (and the silent generation) had lots of kids but their children did not have lots of kids. Once the silent generation and baby boomers die off the dependency ratio will start stabilizing (i.e. the trend will continue to worsen then hit a certain level and stabilise at that level which we can adjust to whatever that level is by cutting government spending).

 

[Value Hunter]

but a ( slightly) shrinking population will take the pressure off the crumbling infrastructure , remember the education system distracts a large amount of the younger work-force there are folks spending 6 to 8 years in university that could have been well on their way to earning their first million ( but accumulated education debt instead )

one could reduce the areas of university education fields available and get some extra workers into the work-force

low birth-rates aren't set in stone ( yet ) they can recover over time ( when couples feel they can support/raise thee-four children adequately ) and maybe the infrastructure bottle-necks can be resolved one the way

That is another great point. If we stopped bringing in all these migrants unemployment would go down and then businesses would be forced to lower their requirements for workers and suddenly a lot of people who are spending many years in further education could just break into those same entry level jobs fresh out of high school and employers would be forced to invest a little more in training employees rather than passing back the burden onto individuals and society as a whole.

Suddenly a whole lot more people have entered the labour pool (without increasing the population) if the young man or woman who was going to go to university full time no longer needs to because they can get starter the job they want straight away fresh out of high school. Because remember labour force participation is only 67.4% in Australia. Obviously it can never be 100% (stay at home mums, etc) but to me for example if we can get that from 67.4% gradually to 75% isn't that a much better way to increase the labour pool (and tax payer base) without increasing population?

 

[Smurf1976]

were his Qualifications recognised here yet?

Not sure, I didn't think to ask that at the time.

I was a bit shocked actually and steered the conversation to another subject but in hindsight ought to have kept it going.

He was Indian or at least looked to be.

 

[Value Hunter]

Living standards rose greatly in the aftermath of the black plague in Europe as wages increased substantially (and working conditions improved) due to labour shortages. A strong argument against those who advocate for population growth.

How the Black Death made life better

history.wustl.edu

Also on a related topic I personally think women entering the workforce has been a net negative for families and individuals (while being a win for governments and corporations - more taxpayers and cheaper labour).

If you increase supply of labour (as happened when women started entering the workforce en mass) then the price goes down (real wages started stagnating although other factors such as removal of the gold standard, increased dominance of large companies etc were also in play).

Also because of "economic rent" absorbing a lot of the productive gains of society (Henry George and Fred Harrison et al explain the topic very well) a lot of the increased household income has simply gone to bid up the price of land which is limited in supply. Basically when single income households became double income households people took out larger mortgages and bided up house prices to higher levels offsetting the benefit of extra household income which now went to servicing higher mortgages/rent. So now you had the situation where there is no full time stay at home mother to look after the kids and maintain the household but people don't have more disposable income either because bigger mortgages or higher rents soaked up most of the extra income. So people's standard of living actually went down.

 

[Value Collector]

I think you aren't thinking about the fact that societies and civilizations change over time. Just because birth rates are declining now it doesn't mean they cannot or will not ever reverse gear and start increasing in the future. Often times history moves in long cycles.

Maybe, but I can’t see a situation where the modern women want to start having more than 2 kids again on average.

Remember if each woman has only 2 births, the population shrinks, because it takes 2 children surviving to adult hood to replace their parents, and not all children make it.

but at the moment 2 births seems to be the most common, with many choosing just 1 and some choosing none.

 

[Value Collector]

I get what you are saying about the dependency ratio but my solution is to cut government spending rather then keep inflating the population ponzi.

Also the shape of the population Pyramid in most western countries is due to a one time shift. many of the older generations families had 3 - 5 children and that changed to 1 or 2 children so you have this big one off change to the dependency ratio. Once all the people from those older generations die off all the remaining generations everyone only had one or two children then the dependency ratio will start stabilizing rather than continue to worsen.

That is what I meant by the ship righting itself. Basically this skew in dependency ratio occured because the baby boomers (and the silent generation) had lots of kids but their children did not have lots of kids. Once the silent generation and baby boomers die off the dependency ratio will start stabilizing (i.e. the trend will continue to worsen then hit a certain level and stabilise at that level which we can adjust to whatever that level is by cutting government spending).

If every family only has 1 or 2 kids, the dependency ratio will not be solved because you have a shrinking population. You would need migration to build it up to an average of 2

 

[Smurf1976]

usinesses would be forced to lower their requirements for workers and suddenly a lot of people who are spending many years in further education could just break into those same entry level jobs fresh out of high school and employers would be forced to invest a little more in training employees

I won't rubbish the concept of tertiary education where it's directly linked to a trade or profession. As a society we're going to be in a world of pain if we don't have properly qualified people doing such work.

I do think it's crazy though that we have what amounts to an arms race in education for the sake of it and for that I blame business. It's simply ridiculous that we've created a situation where an individual needs a degree in order to be employable in even the most basic administrative job. Doubly so when it results in employing someone with a degree of no relevance to the work in question at the expense of some other candidate with far more relevant knowledge and experience but no degree.

To the extent there's a solution to the skills shortage it's not simply about numbers and nor is it about education in the generic sense. It's about training people for the jobs society actually needs doing.

 

[mullokintyre]

reading the discourse between the two Values immediately brought to mind one of Oz's great all time bands, Hunters and Collectors.
And yes I agree, this post os totally off topic.


Mick

 

[qldfrog]

reading the discourse between the two Values immediately brought to mind one of Oz's great all time bands, Hunters and Collectors.
And yes I agree, this post os totally off topic.


Mick

Mike,
It is part of the sauce you need in a nice meal to highlight and improve the experience, a very valuable off topic addition to the thread indeed

 

[Value Hunter]

I won't rubbish the concept of tertiary education where it's directly linked to a trade or profession. As a society we're going to be in a world of pain if we don't have properly qualified people doing such work.

I do think it's crazy though that we have what amounts to an arms race in education for the sake of it and for that I blame business. It's simply ridiculous that we've created a situation where an individual needs a degree in order to be employable in even the most basic administrative job. Doubly so when it results in employing someone with a degree of no relevance to the work in question at the expense of some other candidate with far more relevant knowledge and experience but no degree.

To the extent there's a solution to the skills shortage it's not simply about numbers and nor is it about education in the generic sense. It's about training people for the jobs society actually needs doing.

I think we are broadly on the same page. Nobody wants to see a society where there is an civil engineer without a degree but does a journalist or marketing person really need a degree?

 

[Value Hunter]

If every family only has 1 or 2 kids, the dependency ratio will not be solved because you have a shrinking population. You would need migration to build it up to an average of 2

Which goes back to the point I mentioned earlier about only importing enough migrants to maintain the population at the existing level.

 

[Value Hunter]

Also linking it back to inflation population growth although it need not necessarily be inflationary in Australia it tends to be inflationary and we just ending up pushing rents and land prices through the roof making life much harder for younger people. I think less migration would help the inflation situation.

Also our migration system is designed to benefit employers and the government at the expense of individuals.

In my mind its better to bring a migrant with $2 million of capital who wants to start his own construction company or restaurant in Australia rather than bringing in another guy who wants to work in IT or as an accountant and compete with locals for a limited number of jobs. Linking this back to inflation although stopping the oversupply of the labour market won't reduce inflation it will increase people's wages helping them to tolerate/manage the inflation better.

 

[Value Collector]

Which goes back to the point I mentioned earlier about only importing enough migrants to maintain the population at the existing level.

Yep, and I slightly corrected that saying we need to not just maintain the population but maintain the working age population.

I also said slow growth is not a bad idea for various reasons,but we are probably growing to fast at the moment.

buy I think I am done on this topic for now.

 

[SirRumpole]

In my mind its better to bring a migrant with $2 million of capital who wants to start his own construction company or restaurant in Australia

You have to check that they actually start and maintain that business.

This sort of 'incentive' is wide open for money laundering.

Get a resident visa, buy a house, leave it empty, sell it at a profit and wacko you have laundered your money because the Australian agencies are too lazy to check that you have actually done what the purpose of the visa is, ie, running a business.

 

[Value Hunter]

Yep, and I slightly corrected that saying we need to not just maintain the population but maintain the working age population.

I also said slow growth is not a bad idea for various reasons,but we are probably growing to fast at the moment.

buy I think I am done on this topic for now.

To increase the labour pool you can either increase the working age population or you can increase the labour force participation rate. The labour market is currently oversupplied and less migration therefore means more unemployed people will enter (or re-enter) the labour force due to less competition for jobs. This will push up the labour force participation rate thus increasing the number of workers even though population has not grown.

 

[Value Collector]

To increase the labour pool you can either increase the working age population or you can increase the labour force participation rate. The labour market is currently oversupplied and less migration therefore means more unemployed people will enter (or re-enter) the labour force due to less competition for jobs. This will push up the labour force participation rate thus increasing the number of workers even though population has not grown.

There are some very key huge labour shortages. Google “Australian doctor shortage” for just one example of an industry facing real problems.

there are also shortages of Many different Trades and labourers.

332 Jobs Types in shortage

and it’s not as simple as just giving Microwave Jenny some incentive to cease being an unemployed florist’s assistant and become a doctor or engineer.

 

[qldfrog]

There are some very key huge labour shortages. Google “Australian doctor shortage” for just one example of an industry facing real problems.

there are also shortages of Many different Trades and labourers.

332 Jobs Types in shortage

You have to give incentives to working simple and easy...but need political courage: less taxes, less welfare more freedom of movement..stamp duty on house moves, uniform legislation among states for all tickets, uniform education cursus, childcare spaces so that moving with kids is not an issue
Etc etc
Mobility improves productivity, reduces inflation and labour shortages

 

[Value Collector]

You have to give incentives to working simple and easy...but need political courage: less taxes, less welfare more freedom of movement..stamp duty on house moves, uniform legislation among states for all tickets, uniform education cursus, childcare spaces so that moving with kids is not an issue
Etc etc
Mobility improves productivity, reduces inflation and labour shortages

As I said said Micro wave Jenny isn’t going to all of a sudden become a doctor or engineer just because you lower stamp duty.

she is going to hold out for another job as a florist, where she can continue her passion for making her fake flowers.

 

[SirRumpole]

There are some very key huge labour shortages. Google “Australian doctor shortage” for just one example of an industry facing real problems.

there are also shortages of Many different Trades and labourers.

332 Jobs Types in shortage

and it’s not as simple as just giving Microwave Jenny some incentive to cease being an unemployed florist’s assistant and become a doctor or engineer.

Well, we just have to direct universities and TAFE's to provide courses for which labour is needed and not waste resources on courses for barristas or artists and other useless occupations.

It's a matter of getting the priorities right.