The United Nations Human Rights Declaration states "Everyone has the right to work, to free choice of employment, to just and favorable conditions of work and to protection against unemployment." Since 1975, the Australian Government has not honoured its responsibilities as a signatory and has been abetted by the economics profession, obsessed with the Market. Individual greed has replaced overall community welfare as the goal of both.

The diagram depicts the aggregate unemployment rate since 1861. The period from 1940 to 1975 was special because it was the only time that there has been strong public sector involvement. We enjoyed full employment as a result. In other periods, the unfettered private market has never consistently delivered low unemployment rates. Prior to the Great Depression, the role of government in stabilising economic fluctuations was non-existent. The market system was highly unstable with the unemployment rate rarely below 5 per cent. Economists of the day believed that mass unemployment was impossible because the Market would always adjust prices to ensure full employment. This is despite very high unemployment in the 1890s. The Great Depression taught us that free market policies, like cutting wage rates, did not solve mass unemployment. In 1936, an English economist, John Maynard Keynes, argued that monetary policy (adjusting interest rates) and fiscal policy (changing tax and government spending levels) could offset economic fluctuations in private sector investment and maintain low unemployment. The mixed economy was born - the Market attenuated by a strong public sector. From that period up until 1975, Australia maintained full employment and declining inequality because the collective will and shared values became stronger than the market emphasis on the individual. This required and allowed the government to play a key role to act on our behalf to distribute resources more equally to maintain low unemployment rates.

Since 1975, economists imbued with a conservative market-oriented zeal have swept back into influence despite their ideas being discredited during the Great Depression. Most governments adopted economic rationalism - a belief that the Market should be allowed to operate without government regulation or involvement and that individual greed should be pursued above community goals. This is despite the failure of academic research to find empirical evidence supporting the central propositions of the rationalist approach. However, the lack of empirical substance has not stopped the ideologues trampling over the fabric of our society.

The other side of rationalism is the belief that individuals are responsible for their own outcomes. So poverty and unemployment is due to laziness - a failure to work or pursue sufficient education to guarantee non-poverty wages. The mean-spirited Mutual Obligation policy currently being pursued is based upon this view of the individual. The fact that employers can get away with paying wages that leave a full-time worker poor or that the Market does not provide enough work for all is never questioned.

Rationalists argue that all assets should meet the market test of profitability and therefore must be in private hands. The resulting privatisations have merely handed over public wealth to private well-off minorities. There is scant evidence of efficiency gains. The insistence that public institutions should pursue the goals of a private corporation is never questioned? Rationalists merely sneer at the notion of public service.

The result has been increasing inequality, increasing poverty rates, persistently high unemployment, increasingly insecure and fractional employment opportunities, destructive cuts to tertiary education, and a failure to invest in the future. The harsh public sector cutbacks are myopic in the extreme and will lead to Australia slipping in world economic rankings in the period ahead. For example, it is palpable that Australia has one of the lowest rates of public investment in information technology network infrastructure. We have also witnessed the hypocrisy of government underwriting of inefficient private operators, as in the case of the recent private health fund subsidies.

Continued reliance on the Market will worsen economic inequality and maintain the persistently high unemployment levels. It is essential that the balance between the public sector and the private sector be restored to the levels that gave us the low unemployment after the War. The Centre of Full Employment and Equity advocates the introduction of a Job Guarantee, which would be consistent with the United Nations Human Rights Declaration. This would allow the public sector to restore the capacity of an employer of last resort to the economy. It would mean that those disadvantaged by the private sector's inability to generate enough employment for all would be given job opportunities at the living wage. There are a range of unfulfilled community and environmental needs that could form the focus for these jobs. It would be non-inflationary because the wage paid would be at the bottom of the current private sector wage structure. A range of social wage initiatives would support the Job Guarantee.

Under a Job Guarantee, the dole would be abandoned. There would also be a host of other savings (for example, the reductions in costs of the health system, the family court system and the criminal justice system alone would be significant). Taking these into account, the Centre computes it would cost of $7.2 billion over one year to employ 1 million unemployed (and hidden unemployed) workers under the Job Guarantee. The cost would vary with the fluctuations in private sector employment. In the context of the current budget surplus (over $12 billion), the cost of the Olympics ($8 billion), the corporate welfare handouts to private companies (over $14 $14 billion per year), and the tax cuts given to the high income groups to accompany the GST ($6.5 billion), the initial cost of the Job Guarantee should hardly raise an eyebrow. The returns of having everyone in meaningful employment would be substantial.

The Olympics made us all feel good. We rediscovered a sense of community, shared values, and the collective will. Despite having placed our faith in the Market for several years, the Olympics showed us the effectiveness of the public sector in delivering goods and services and allocating resources in a socially efficient manner. Much of the organisation reflected planned outcomes aimed at delivering public services rather than allocations driven by expectations of a market return. Maybe there is hope after all that this destructive and divisive period of economic rationalism will pass.

A longer version of this Educational Brief is also available.

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