Business as usual!

Good morning everyone,

As we all know, in recent years there has been an increasing series of financial crises around the world. It started in America, but continued into Europe. Many countries have been forced to bail out their banks and introduce austerity measures in order to rain in debt. The losses that these countries have faced have largely been caused by the wealthy, with their risky business deals and speculation.

Amusingly when the rich cause these crises, it is the people of those countries that have been forced to bail them out, with cuts to welfare, reductions in wages, and the increases of taxes and essential service costs. This has been referred to as the privatisation of profits, and the socialisation of losses.

I think this is an apt description of how our current political system works, as it appears to operate in this manner in almost every country. The rich have much power and influence in the political system to lobby for changes when it benefits them.

I have also been quite disgusted with the way in which big business has progressively attacked the wages and conditions of workers in order to make ever greater profits. A company can pay the minimum wage to its staff, but be making millions of dollars of profit. The staff who work for the company make this money, but essentially do not benefit from the work that they do; they just get a “bowl of rice” as thanks for making the company such profits. The CEOs of course still get their millions for doing such a great job, while the workers are their slaves. The shareholders of course get their cut, though what work “they” do is uncertain!

Perhaps an effective way to regulate this would be to determine the value of the lowest wage in the business and set this as a minimum ratio to the salary of the highest paid in the business. For example a government might decide that the minimum ratio be 1:10. This would imply that if the CEO were paid $1M, the lowest paid would be $100K.

While this isn’t likely to happen in the near future, it is perhaps this sort of policy that needs to be implemented in order to cap salaries of CEOs of those companies that pay such a pittance to those staff employed by them. After all government does regulate the lowest wage, whey not also the highest wage?

Interestingly some of these companies have made staff redundant and moved whole departments offshore in order to save money in wages. Well known examples of this are call centres. By moving offshore to India for instance, the wage of a call centre staff might only be $1.00 per day, as compared to $150 per day in Australia.

By effectively moving staff offshore, this increases profits and allows businesses a greater ability to pay higher dividends to shareholders (and CEOs for their success in making higher profits). These shareholders are predominantly the wealthy. However it must be noted, that some money does filter into the populace’s purse as superannuation funds invest in businesses and are effectively shareholders to some degree.

[This opens up the possibility for further discourse – potentially workers benefiting from shareholdings (in the form of superannuation) of other workers being made redundant for greater company profits…]

With regards to big business moving sections of their business offshore, in recent decades we have seen the type of Australian business shift from a high proportion of manufacturing (I understand around 40% of industry) to a very low level of manufacturing (around 6%). Businesses claim that in order to compete with low cost imports (and often low quality) they have to reduce costs (wages) and move overseas to manufacture; the same applies if a business wants to compete internationally.

If we ever come to a situation where we have to pick up our own manufacturing again in Australia, we will not have the skills in order to do so. It is very short sighted of both government and business to head in this direction. Governments, of course, can only think until the next election (and getting back into parliament), and businesses only think about current profit/loss statements. (Of course I realise that statement is a generalisation)

If we ever have crises in China, India, Philippines etc., Australia (and many other countries around the world) will pay dearly for their short sightedness. You cannot suddenly start to build factories, tools and machinery if there are no skilled staff in order to build them. It takes at least four years for an apprentice to be trained and many more years to become sufficiently experienced to solve complex problems.

If we ever have to increase our manufacturing back to previous levels, it could take ten years or more, and many billions of dollars, to rebuild those facilities with sufficiently trained staff. Could we afford to wait around for ten years if we suddenly needed new machinery, to manufacture food for example, in Australia? This is the potential outcome of this short sighted move offshore.

Another point that is worthy of mention, when it comes to moving whole departments offshore, is that there are many staff that are effectively sacked. In the current economic climate, many of these staff may not find work for some time, particularly if they have very specialised skills, or are older.

If a company has moved offshore to cut costs on wages, companies are likely placing a huge burden on the welfare system that the majority of the public have to foot the bill for. i.e. more of our taxes go towards paying the welfare bill; eventually we will need to pay higher taxes accordingly.

From my experience these companies could have continued to employ those staff, but chose to move overseas so that they could make increased profits – profits that generally benefit shareholders or business owners. Why should the public foot the bill, in the way of welfare payments for sacked staff, so that those companies can make larger profits?

In my opinion, the companies that move offshore in order to pay lower wages, should in fact pay a higher tax in order to cover the welfare bill that is placed onto the public due to their actions of moving offshore.

There is more to come when time permits.

Feel free to comment!



About Blog of Greg

I consider myself a thinker and I like to discuss everything in life with those around me. Mostly I am serious, sometimes I am funny, and occasionally I am rude. I like to wear my heart on my sleeve and say what I feel, or think! It is important to me to be honest about how I feel and why! I detest pretense, big egos and self importance. I believe that I am no more important than you, and similarly that you are no more important than me! [apparently I should reflect on this more often] This blog is a way of engaging people in different aspects of life; its goal is to present a different view of life and contribute to a broadening of our awareness. While this blog is essentially my opinion, I also understand that there are other opinions out there. Though I encourage discussion, I may “delete” comments that I find are unhelpful, argumentative, or offensive towards myself or another person. Often I write about politics – apparently that is an interest of mine – but I also like to write about other more personal things that affect us in our day to day lives. Along with this blog, I also write to politicians and newspapers; I often present a commentary on my blog about following comments or decisions. That way everyone understands what they have said – and sometimes of course how big a buffoon they are:) Please feel free to comment on my posts, as I would like to hear what you have to say. After all…. Your opinion is just as valid as mine!
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One Response to Business as usual!

  1. Pingback: Australia’s health industry and regulation | The Blog of Greg

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