Readers will know that MB refers to the contemporary left as “fake”. The reason why is that it has lost touch with its class warfare underpinnings and focuses instead upon identity politics. The change is so dramatic, and the social policy fixation so strong, that often this “fake” left has pursued the latter to the detriment of the former, making class warfare outcomes worse for workers. One such case is in the obsession with supporting mass immigration on the basis of race even though it can damage the living standards of workers if not handled correctly.
For years we have fought to get this message through to policymakers. Often, we were stupidly branded racists for that effort.
But, COVID-19 has changed that as very serious authorities have been forced to recognise that mass immigration is not always in the existing population’s interests. In particular, if you have a regime of weak wages growth and lowflation, the permanent supply shock of mass immigration can tilt the playing field unfairly against workers and towards capital. This is exactly what happened in Australia over the last decade.
And so, the “fake” left is slowly but surely being forced back towards becoming the real left. The Labor Party began this slow turning of the oil tanker a few years ago when it mooted big cuts to temporary worker visas. It is still too committed to permanent migration but that was a good start.
This was accompanied by a central bank that slowly realised that if it could not lift wages growth then it had no chance of lifting inflation to meet its targets, though it did everything in its power to avoid the mention of immigration, and sometimes promoted it.
Next, we saw the election of the Biden Administration in the US, a much more traditional left outfit with an explicit goal of doubling minimum wages, as well using tax and spend (or print and spend) to push for full employment.
In recent weeks we have seen the change accelerate in Australia as well. Professor Ross Garnaut’s new book Reset explicitly lays out how the last cycle was unique in the history of the Australian labour market:
“The overall effect was to integrate much of the Australian labour market into a global labour market for the first time”…
“Integration into a global labour market held down wages and inflation during the resources boom, [but] it contributed to persistent unemployment, rising underemployment and stagnant real wages”…
“It contributed to the historic shift in the distribution of income from wages to profits. Increased immigration contributed to total GDP growth, but detracted from the living standards of many Australian working families”…
“Breaches of labour laws on wages and other conditions became common”…
“Immigration now lowers the incomes and employment prospects of low-income Australians.
“Settling early on an immigration program that is moderate in size and strongly focused on valuable education and skills will help us to avoid contentious and divisive political debate at a time when our society and polity are under great stress”.
And, yesterday, the RBA Governor, Phil Lowe finally acknowledged that poorly managed mass immigration is a serious headwind for wages growth as well:
- increased competition in goods markets, which makes firms very conscious of cost increases
- the trend towards more services being provided internationally
- advances in technology, which have reduced the demand for some types of skills and increased the demand for others
- changes to the global supply of labour and regulation of labour markets.
Slowly but surely MB is winning this debate and turning the “fake” left back towards being a real left that defends workers. So much so that centrist policymakers are now on board.
Weirdly, though, we are not getting the support for this push from the economic commentary in the left press. I am yet to see Ross Gittins, Greg Jericho, Jess Irvine, New Daily etc cover it. The ABC has begun to but more work is needed there as well.
In short, the “fake” lefties are still in control of the media narrative even though the intellectual heft has swung back towards the real. This is going to matter very shortly because the Morrison Government is about to demolish an incipiently stronger wage growth cycle by rebooting mass immigration via temporary worker visas.
Time to get on board, guys.
