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The “Invisible Hand” of the Free Market?

5 January 2012 1 comment

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The latest evidence of the inability of the “invisible hand” of the Free Market to cope with  the modern complexities of 21st Century society and economy. From an article by Richard Meadows,  in  todays Faixfax website;

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Despite unwillingness to hire, New Zealand businesses paradoxically saw the lack of a skilled workforce as a major impediment to growth in 2012.

Grant Thornton New Zealand partner Peter Sherwin attributed the apparent discrepancy to an overall caution among employers after ”a couple of false dawns”.

Firms did signal concern about the availability of skilled workers 39 per cent, which was 12 per cent higher than the previous period in 2011, he said.

”We have unemployed people but do they have the skills for the jobs that are going to be available? This gets back to one of the real challenges for New Zealand, which is to get a better match between tertiary education and industry.”

Sherwin said there was ”a clear disconnect” between what the education system was producing and industry demands, and he called for a collaboration between industry, the education sector and government to improve the ”connection’‘.” – Source

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What?

Since when does the “invisible hand” of the free market required assistance from the State?

At what point did Business decide that it requires Central Government to fulfill it’s needs?

Since Roger Douglas implemented his neo-liberal “reforms”, the State was to be rolled back and private enterprise allowed to get on with it. We were told time and again;

  • business is more efficient than the state
  • business can meet its own needs
  • the State cannot meet the needs of an economy – that is the role of  business
  • Business = good, Government = bad
  • Business does not need subsidies
  • etc, etc, etc.

In which case why is private enterprise not training and upskilling it’s own workforce?

Why is the “invisible hand” of the free market not providing a skilled workforce, according to laws of Supply & Demand?

Because, my dear fellow, New Zealanders; like the “trickle down” theory, the “Invisible Hand” of the free market is bollocks.

The “free market” an  ideological scam; a confidence trick fed to the public to justify rolling back the State; cutting social services; implementing User Pays; and reducing taxes for the rich. Like a carefully constructed religious cult, the New Right scammers have their loyal  followers who have been sucked into this little ‘game’, to spread the “Gospel of Greed”.

Every so often, though, aspects of the truth appear and we glimpse the reality behind the facade.

The reality is that a modern state cannot function without government; an effective civil service; and social services that are available to all citizens regardless of their material wealth (or lack, thereof).

The reality is that taxes cannot be cut without cutting something in return;  healthcare; education; public transport; and the back-office support staff that allow these services to function.

If we cut the back-office support staff – as this government has done in the last three years – be prepared for some serious stuff-ups. As Anne Tolley discovered recently to her discomfort.

And ultimately, we will see more of this,

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Full Story

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National handed out two tax cuts – April 2009 and October 2010 – and that money had to come from somewhere. Much of it was borrowed from overseas (at $380 million a week) – and the rest was achieved by cutting back on social services.

Like education.

And jobs training.

Which means businesses complaining about a lack of skilled workers;  “Despite unwillingness to hire, New Zealand businesses paradoxically saw the lack of a skilled workforce as a major impediment to growth in 2012.

As BERL pointed out in December last year,

A new study suggests the country could lose between $7.2 and $15.1 billion dollars annually if the Government withdrew its investment in industry training.

The study by the Business and Economic Research Limited (BERL) sets out to quantify the costs and benefits of industry training both to businesses and to the country.

According to one model, it found a cut in all public funding towards industry training would result in a loss in gross domestic product of 0.6 to 1.8 percent by 2014, and between 2.9 and 6 percent by 2021.

That equated to a loss of between $1.2 and $3.7 billion annually in the short-term and between $7.2 and $15.1 billion in the long term.

BERL said under such a scenario, the loss of skilled labour would have a detrimental effect on the export sector, crimping its capacity and reducing its competitiveness as industries competed for a smaller pool of talent.

The report, commissioned by the Industry Training Federation, said the results underlined how the country’s skill levels could ”positively impact on the quality and value of the goods and services produced, and the standard of living in New Zealand”.

However, it also noted the economy was complex and warned that ”any attempts to prioritise or isolate particular industries, sectors, occupations or skills as being more or less important are economically unsound”.” – Source

Because many of our skilled workers have had a gutsful and left for Australia.

And around and around and around it goes…

Why? Because relying on the “free market” to achieve certain outcomes is akin to waiting for The Rapture to arrive. Folks, it ain’t never gonna happen.

Eventually the good people of New Zealand are going to realise that National is spinning us a yarn, and is simply relying on ideological dogma for better times.

Personally, I’m putting my money on The Rapture coming first.

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Acknowledgement

To Fear Facts Exposed for source.

Additional Blog Entries

Greed is Good?

“Building better public services” – Really?

Further Reading

Greed of boomers led us to a total bust

Rich list shows rich getting richer

New Zealand’s wealth gap widens

Industry training has billions in benefits – study

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