Thursday, 30 October 2014

Self-imposed corporate regulations control workers but choke productivity

Two new industries have emerged in this neo-liberal era. The first is what I call the ‘unemployment’ industry, which operates to case manage the unemployed that poorly crafted fiscal policy has deliberately created and entrenched into our modern societies. A whole parasitic array of private providers get paid by the government to coerce and threaten the unemployed under the guise of retraining them for jobs. I wrote about this scandal in this blog – Why we should close the ‘unemployment industry’. In the last few days, a new industry has been identified which employs over a million people in Australia, making it one of the largest sectors, although no official data is published on it. This sector has been labelled in the press this week – the ‘red tape’ industry or the ‘compliance sector’. It is growing faster than any other industry in Australia and probably elsewhere, although there is no data available that can tell us that. It is largely unproductive because it undermines the productivity of other workers. Red tape, compliance, must be the public sector once again imposing its heavy hand on private endeavour, right? Wrong, the neo-liberals not only created and expanded a moribund and dysfunctional financial sector but has also created the red tape industry as it seeks to control workers down to the smallest degree. Hilarious really if it wasn’t so wasteful and hypocritical.

You can read Bill Mitchell's blog post here: http://bilbo.economicoutlook.net/blog/?p=29364
Also, I want to add Neil Wilson's reply to the aforementioned blog post:

“There hasn’t been much reaction today from the moocher class in Australia to the report.”

Isn’t it the case though that this is exactly what is to be expected when you have a system that requires the private sector to create *all* the jobs, yet the private sector only improves productivity and output if it is optimised towards *eliminating* jobs by automating them away.

I’ve spent a lot of time in the past on business systems and the inefficiency of operation isn’t a public/private sector divide at all. It is a large/long lived operations vs. young/short lived operations – with the latter having the most efficient structure.

In the former you get a build up of entropy over time that eats away at efficiency. If we want optimal output, then perversely we need to have a system where operations are destroyed and reconstructed on a regular basis.

Unfortunately that requirement bangs right up against the natural human loss aversion problem. We don’t like to see firms fail and operations change.

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