Wednesday, October 24, 2007

Retailing your country

Gerry Harvey is the Australian billionaire retailer who runs the Harvey Norman computer and furniture stores. A few days ago he called for a two-tier wage system in Australia, one for locals and another for a new breed of low-paid foreign guest workers.

How did he justify such a measure? He couldn't argue that high wages were harming the economy, as the economy has been doing well. So he argued instead that prosperity itself was the problem, as it has led to labour shortages. According to Mr Harvey, there are countless people overseas who would happily move to Australia to work here at half-pay.

The logic of this position is less than impeccable. If there are people willing to move here to work at half-pay to fill labour shortages, they would presumably be even more willing to work here at full-pay. In other words, you don't need a two-tier wage system to overcome labour shortages.

Nor, as Mr Harvey has already admitted, do you need low pay to keep the economy going. The economy is doing well with current wage rates.

So there's no necessity for a two-tier wage system. It's probable that Mr Harvey is pushing the idea simply because he likes the prospect of a mass of low-paid foreign workers; perhaps he thinks he can use them as cheap labour in his stores.

It's interesting that Mr Harvey endorses the situation in the US, in which illegal arrivals from Mexico make up a cheap labour force. I've been reading a series of posts from Face Right, which cover some of the social fallout from exactly this policy:

LA: The Reconquista gets ugly

More prosecutions in the SoCal race wars


  1. I think I read that he wanted to employ them on his horse stud. Presumably they subsequently could be retrained to sell video cameras once they'd mastered the horse. Less than impeccable logic indeed.

  2. A horse stud? I expect Mr Harvey prefers to call it a hacienda.

  3. The Dutch tried out a guest worker scheme in the 1960s and 70s. They now have the major social problem of "disaffected youth".

    There's a story here about riots in a suburb of Amsterdam - riots which took place despite generous spending to try to alleviate social problems in the area.

  4. The Europeans are idiots. How can you have sympathy for somebody who shits in their own bed and then complains about the smell?!

  5. Throughout the 1950 and 1960s, when the West was in a strong economic position, businessmen complained about labour shortages.

    In the late 1960s, governments responded by increasing immigration. However, in the 1970s, most western countries slipped into recession due to factors such as East Asian competition, rising oil prices and the cost of the Vietnam War.

    Not only did immigration fail to keep the good times rolling, but it actually slowed down the recovery by putting a greater burden on the state.

    Whereas western states should have been investing money in areas like research and development to make the West more competitive with East Asia, they had to divert more resources into welfare, educatiom etc to deal with the needs of immigrants, who were, not surprisingly, struggling to integrate and find jobs in the middle of a recession.

    A classic example of this was where the uk government encouraged Pakistani immigrants to move into Yorkshire and Lancashire to work on the mills which were just about to close.

  6. One wants to ask Mr. Harvey: why, exactly, does he object to a labor shortage? What does he think that a labor shortage is? Does he not understand that the opposite of a labor shortage is a labor surplus, otherwise known as unemployment? One is tempted to suppose that Mr. Harvey pined for the bad old days when fifty resumes reached his desk for every open position, but let us be kind: surely Mr. Harvey is merely confused.

    The principal object in building a strong national economy is to avoid shortages of everything but labor, precisely to bring labor into short supply and thereby broadly to force wages up. Whether this is what Australians want is for Australians not me to say, but if it is what they want, then one hopes that they will soon teach Mr. Harvey the error of his ways.