I wrote the following piece after a speech given by Australia's Reserve Bank deputy governor that unemployment needed to rise in order to keep inflation down. The piece was submitted to Melbourne's Age and the Guardian, but was not accepted for publication. I still think it's a pretty good piece, so publish it here below.
Recent hand wringing over interest rates has given us a peek at how the unemployment sausage is made. When inflation is too high, interest rates are raised, thus reducing demand in the economy and increasing unemployment. (Interest rate hikes have lifted unemployment from 3.5% to a current 4.1%). There is a sweet spot in this balancing act, officially called the “non-accelerating inflation rate of unemployment”, or NAIRU for short. It’s where unemployment is not too low to put pressure on inflation, but not too high that the economy is slipping into recession. The RBA currently guesses everything is just right at an unemployment figure of 4.5%. Zero percent unemployment, surprisingly, is not really full employment. Full employment is how much the economy can bear without causing inflation.
This all begs the question, should the unemployed somehow be reclassified as essential workers? While for decades it has been received wisdom to think of dole recipients as a drag on the community, the opposite may be true.
I confess to having been unemployed for a period in the early nineties, during what then treasurer Paul Keating described as the “recession we had to have”. Unemployment hit eleven percent. No one thanked me for being one of the government’s foot soldiers, bravely holding the nation’s precarious economy together. In fact, I experienced the opposite. I saw my stocks plummet to junk bond status when I told a real estate agent I was unemployed.
Unemployment, it could be argued, is in the eye of the beholder. In anthropologist David Graeber’s book, Bullshit Jobs, he posits the theory that John Maynard Keynes’ 1930s prediction that automation would usher in a 15 hour work week has largely come to pass. Graeber speculates that modern economies now create fake jobs consisting of useless busywork. “Automation did, in fact, lead to mass unemployment,” he writes. “We have simply stopped the gap by adding dummy jobs that are effectively made up.” The book quotes testimonials from people who have found themselves in mind numbingly pointless jobs and cites a British pollster who found that 37% of respondents thought their jobs made no meaningful contribution to the world.
My own career has had its fair share of these dummy jobs. In the public service I sat in a dingy room reading D.H. Lawrence because there was nothing to do. When I landed a job at a prestigious university, I was thrilled. But it soon became clear there was also nothing to do and I was sent on long walks through the university to kill time. Over a decade in the world of finance did require real work, but it also had its fair share of bread and circuses. There were training sessions where the team building activities seemed more appropriate for a kindergarten, not a room full of adults; productivity initiatives involving dress ups, live performances and spinning fortune wheels; and propaganda sessions where the company fed us gobbledygook about its mission and performance.
If the “Bullshit Jobs'' thesis holds true, could this problem also plague our executive class? Recent high profile cases have called into question the performance of some of the country’s top CEOs. Prime minister Anthony Albanese called one recent CEO’s performance a “shocker” and “epic fail.” But if this is failing, it’s failing upwards, with huge paypackets and eye watering bonuses.
Our business elites should perhaps be considered more of a ceremonial class, there to give confidence that the economy is being guided by the hand of men and women of supernatural ability. The tangible output of this class, beyond giving speeches, enjoying long lunches and commenting on market conditions, is hard to quantify. A baker at the end of the day produces a loaf of bread. But could Alan Joyce fix a plane engine?
How do we decide what work is valuable or not valuable? Does a big paycheck really mean you’re a useful member of the community? Could voluntary or unpaid work be more important? In Australia, unpaid work, performed mostly by women, is valued in the hundreds of billions per year. A women’s strike would bring the nation screeching to a halt. Disgruntled taxpayers may wonder how the unemployed are spending their days. Most likely they are busy scavenging cheap food, making repairs to desiccated clothing and running to appointments on foot, to save the train fare. They are not partying.
Politicians have made a meal of demonising the unemployed. Paradoxically no government or central bank really wants full employment, as it would set off inflation. A lot of time and energy are wasted in dancing around this truth. Instead we opt for dubious work for the dole schemes and Robodebt scandals. Surely we could better spend our efforts by accepting reality, raising the dole to a living wage and creating a more ennobling nomenclature for those given the unenviable job of balancing the nation’s economy.
by Chris Saliba - April 2025
