Compiled from: RBA Table H5 Labour Force; online, June 2014
The moral problem is concerned with conflict between individual interest and the interest of society - Joan Robinson
In western societies, economic morality should lie at the heart of economic policy. That was the case until post 1971 when economic theories from the eighteenth/nineteenth century replaced post War economics of Keynes. The loss of post World War II policy values is encapsulated in the current furore over the Abbot Governments announcement that unemployed people must seek a specified number of interviews per day. The best Labor can do is argue that the number of job applications is too onerous. Since 1971, all major political parties lost their way with respect to the moral question in economics. Individual interest has triumphed over the interests of society.
Post World War II
Governments should accept the responsibility for stimulating spending on goods and services to the extent necessary to sustain full employment
White Paper on Full Employment 1945
Australia was a signatory to the 1944 international monetary system negotiated and signed at Bretton Woods. Policy objectives of the Bretton Woods agreement were balanced trade, full employment, and high levels of real income. Prime Minister Curtain's White Paper on Full Employment formally committed post War Australian politicians to pursue policies consistent with international obligations which were designed to prevent a return to unemployment levels that had characterised the Great Depression years. In effect the White Paper became a "transition program" to move the Australian economy from war time production to peace time production.
The 1945 White Paper defined full employment as "employment for all those capable and willing to work". In 1965, the Vernon Report defined full employment as a range of unemployment lying between 1% and 1.5%. Whilst Curtin initiated the White paper, Sir Robert Menzies' 1951 election speech boasted to the electorate that the Australian economy enjoyed over full employment. Full employment was a value important to all major political parties.
Bretton Woods collapsed in 1971; and, combined with two oil crises of 1974 and 1978 created immense difficulties for national governments to maintain full employment. In 1976, Article IV of the IMF Charter was altered to place emphasis on domestic price stability. Australia and other signatories to the IMF, effectively accepted full employment as a second order policy objective.
Bretton Woods Collapse
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