The World Upside Down

by Jim Stanford

I’ve now been in Melbourne Australia for one month of my 12-month sabbattical. It’s always interesting for an economist to live somewhere else and compare the micro-minutae of life. It’s a sure-fire way to drive your travelling partners nuts.

Here are my main impressions of economic life on the bottom side of the planet so far:

1. Even though I’ve been standing upside down for a month now, the blood is not rushing to my head. Wierd.

2. Some things are more expensive than in Canada, some things are cheaper (now that’s a profound discovery). Bananas, get this, are $15 (A) per kg. Wow. That’s because the well-connected right-leaning banana-growing lobby (based in Queensland) has pressed the Howard government to restrict imports of bananas (as usual, free trade is in the eye of the beholder), despite a typhoon that wiped out most of Australia’s own crop. Dairy products, meanwhile, are cheap. (I confess, however, the milk tastes funny — though I will never admit that to my daughters who are currently refusing to drink it).

3. A higher minimum wage does not mean the end of capitalism as we know it. Australia’s minimum wage is currently graded according to skill levels; the LOWEST level is $12.75 (A) per hour (or about $11 Cdn). I think this explains why eating out is a bit more expensive than it is in Canada (a mid-range meal for 2 with a most excellent bottle of Australian wine will cost about $75). That doesn’t stop people from doing it, however: as far as I can tell, there are more cappuccino shops than people in Melbourne. (Fast food restaurants are relatively rare, however, suggesting that McDonalds & Co depend on starvation wages as the foundation of their economic model — another profound discovery.)

4. The labour and progressive movements are fighting for their lives everywhere. John Howard (whose advisors worked on Stephen Harper’s last election campaign) has launched an all-out attack on unions and labour market regulations. The fact that even the OECD now admits that union membership and minimum wages have no empirical connection to unemployment doesn’t matter. (Like free-trade, the “authority” of international bodies like the OECD is in the eye of the beholder.) Anyone in Canada who believes that “there isn’t much difference between the Conservatives and the Liberals” should come down here and see what changes John Howard has wrought in a decade. And the left is “going tough” (as they say here) in its effort to stop his 5th re-election in 2007.

5. Sabbatticals are great. Everyone should try one.

Here’s a link to the recent submission of the ACTU (Australia’s version of the CLC) regarding the need for a still-higher minimum wage.

And here’s a link to a recent paper from the Australian Manufacturing Workers Union (Australia’s version of the CAW) on the crisis in manufacturing and the risks of putting all one’s eggs in the basket of currently-overpriced resources (sound familiar?).

One comment

  • The other strange thing about eating out in Australia is that there is no tipping. Servers are paid a decent wage, not minimum wage plus whatever they get in tips. I’m not sure how this affects their “incentives” though in my time down under I did not notice poorer than Canadian service.

    As for minimum wage, $10 an hour would be a good start for Canada, with a move up to $12 over a couple years.


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