Our first speaker was Peter Kriesler. Work was not something to exist in economic tension, but was rather an end in itself, and full employment a worthy goal. Work provides dignity for the individual - mental, spiritual and physical health; it defines their role in society. A human right is to full employment and just remuneration.

Unemployment generates social disruption; it has a human impact well above the mere fact that someone's productive potential is wasted.

The market will not naturally generate full employment; if it does, it is a fluke more than a natural outcome. As wages drop, so does does demand and we have a vicious circle. Demand is linked to wages, and demand determines employment (a bit circular, but not necessarily a problem). Hence, the conclusion is that the supposed "self-corrective" effect of lowering wages does not take place.

Brad challenged this, saying that as wages diminish, an employer can employ more people. There was some discussion; Peter said it depends on what you keep constant; the idea that dropping a wage increases employment assumes the rest of the economy is constant. But if you reduce everyone's wage, then the economy is no longer a constant; we cannot assume the demand for labour will be a constant.

It is difficult to know which effect will dominate. In reducing everyone's wage, the total money paid to employed people might go up, down or remain constant, depending on how many more people are employed. Assuming Brad's approach to be correct, the total money going to waged people could remain constant, with more people employed with less money going to each. Still, we've necessarily assumed that there are unemployed to take up the slack. If employment is "full", then Peter's position necessarily holds.

Which effect will dominate ? It depends on whether employers will employ enough additional people to compensate for the declining money going to current employees.

But, one criticism of Peter's sorta rings true : declining wages may increase employment, but even assuming it does, there's no necessary link to full employment. It might well minimise unemployment, but that's a separate notion.

Rae Frances, Associate Professor of History at UNSW, tells me by email that there were no minimum wages in the UK during the convict era ... while there was gross unemployment, a gross underclass was forced into crime.

Rae suggests there could be a fixed amount of work to go around, rather than work being a function of gross wages and purchasing power. I suspect that there is a fixed amount of work - even as the wage approaches zero, you only need so many people to dig a hole - beyond a given number, they get in each other's way.

Assuming those supply and demand curves are correct, and there's full employment, this slides over a moral judgement about the quality of life available to those earning the market minimum wage. Further, you wonder if employment increases till the finite demand for work runs out, and at the bottom end the wage drops to minimum sustenance levels, a la the socialist nightmare. See later, there was some discussion on this "race to the bottom".

John Bentley gave a talk on how we might move to full unemployment. John challenged the idea that we need to "work" - rather, many of us have a desire to do challenging, rewarding and creative things - and there is no need for this to be done in an "economic" context. People would receive a guaranteed minimum income (GMI), regardless of whether they had a job or not, and could then pursue personally worthwhile (and potentially worthwhile for society) activities. Work would not then be the defining characteristic of someone - more something along the lines of - what is your hobby ? - or maybe - do you have a hobby which is doing good in the world ?

Peter challenged this approach as difficult because of the necessary funds for the GMI, and because we are obliged to export a great deal for imports which we do not make ourselves.

This suggests a multi-pronged approach - automate industries which generate exports - develop and then automate export replacing industries - so you finally have minimum unemployment and can still source any necessary residual imports.

This means severing ourselves from global trade. Yes, global trade and mutual specialisation do mean extra wealth. But the justification here is that we are wealthy enough that we can afford to sever ourselves from global trade - that we can direct our increasing wealth to something which genuinely changes the world we live in - rather than pissing it against the wall as we do at present.

In answer to the practical difficulties of his approach, John restated the worth of a goal even though it might be difficult. John did feel that there is too much dull work with people as wage slaves - and it would be good to give employers an incentive to make work more worthwhile and attractive.

Ian Bryce noted that historically, tax reforms were floated like designated taxation where you state where your tax is going, and something like the GMI with flat taxation.

Ian Woolf noted that people are like caged animals, and don't know how to respond to lots of leisure, though it can be uplifting and enabling.

Ian Woolf in his talk outlined the welfare system - one which he described as "complex and abusive". He outlined the unusual placement of thresholds, and the fact that there is a negative income tax - an disencentive to work while you're on the pension.

If you've bouyant demand for labour, it would make sense to have people needing a pension partly employed - they have the benefit of work, society has the benefit of their labour. And otherwise ... well, it would be nice to have pensioners get some self worth through work. But, it seems that the Government wants to have a "black/white" scenario - either you are fully functional or cannot work at all. Such an approach seems limiting in my view - it is more realistic to cope with shades of grey.

(Needless to say, John's approach of a GMI gets rid of a lot of these issues - but it depends on whether you're blowing the current paradigm out of the water or not. Ian is clearly operating within the framework of "we have employment and we have welfare - let's try to make the welfare fair and the relationship equitable".)

The government is trying to give the impression that increases in pensions are the result of more "spongers", but in fact the trend seems to be the result of an aging population being more susceptible to age related diseases while they are short of the "official" pension age.

Ian also noted that in a time of increasing wealth, increasing surplus, it makes little sense to be petty with welfare.

One issue with this complex system is that it makes it difficult to appreciate how generous we are as a society to those needing welfare. Certainly, the government seems to be putting a spin on this rather than genuinely engaging with the issue. And, the criteria Ian describes to get onto welfare seem severe and unrealistic or uncompassionate.

But, a bigger question is, how generous should our welfare system be ? Clearly, with the thresholds as severe as they are, it should more generous than it is now. But ... the bigger question is ... how much ?

Brad in his talk said that labour markets have long been regulated, under the assumption that markets left to themselves generate low wages. However, he suggested that the labour market operates as you does any market, and you sell your labour as you would any possession, and you are not obliged to enter into a contract.

When prices are fixed in a market, this is where you generate surpluses and shortages. When wages are fixed higher than the market, you have less employment as a result.

A fundamental problem with wage fixing is that it is one size only - they hit towns harder than cities, because towns have different economies.

(This does not, however, argue against wage fixing in principle; Brad's other arguments do this; this point argues that wage fixing should be regionalised, with adjustments based on the scale of the local economy).

Brad noted that where a group was marginalised, wage fixing could act against it - if a group was marginalised without wage fixing, it would have a lower wage, and because it had a lower wage, a self corrective effect would make them a more attractive proposition for employers. However, a fixed wage would keep them out of employment all together.

(Of course, its a bad thing that a group is marginalised in the first place - but it perhaps better that a marginalised group has some entry into the job market, if at a lower rate, than not at all - it's a difficult moral choice. But Brad's argument does make some sense as perhaps the "least worst option".)

But similarly to the "marginalised group", Brad suggested that unions acted to increase the wages of those in work at the expense of those out of work.

A major discussion point was over people's wages declining when left to the market - the so called "race to the bottom". Brad challenged this, saying that employees were in demand by employers, and the ability of employees to change jobs would prevent this from happening.

Brad does have a point about employers needing employees - he felt that the notion of the cigar chomping, moustauche twirling capitalist was a caricature. Indeed, employers do need employees - and any sensible employer will appreciate this. They will try to be good to their employees to keep the good ones. However, a problem is that some firms are run by inept people, who just manage to stay afloat and linger for many years. I've heard stories and they can't be total distortions. And how do people know whether they're working for a good firm ? Do they know they have a choice ? Brad does have a point for skilled labour in firms which are run by reasonably competent people, the problem is with generalising the point.

Brad also asserted that there a market price, and no amount of trying to play car dealers against each other would get the price below a fixed limit.

Peter suggested that while there was less power difference between small businesses and employees, it was a lot more pronounced with larger firms. Further, negotiations are not just about wages - but other conditions as well.

Certainly, for skilled employment where there is only frictional unemployment in that profession, Brad's arguement makes sense. However, for unskilled labour where there is unemployment, and no welfare safety net, the idea of the "race to the bottom" does seem possible and ominous. An issue then becomes how much of employment we can identify as "skilled" compared to "unskilled". Further, extending the argument, while it's easy to see a developing economy increasing the wages of skilled labour, it's difficult to identify what increases the wages of unskilled labour.

I'd be relaxed with a generous Guaranteed Minimum Income and no minimum wage - in this case, the "competition" from the Guaranteed Minimum Income would mean employers would not be tempted down the "race to the bottom".

We have some approximation of this situation at present - except the unemployment benefits are not as generous as the GMI would be.

Peter also suggested another "race to the bottom" - between employers who were competing with each other, where if one employer reduced conditions to sell at a reduced price, other employers would also be forced to drop their conditions. This does sorta make sense. We need to assume that the generous employers are not just being generous - they are paying their employees extra because they are worth keeping, which is something other employers cannot see, rather than just paying them extra because there is a market distortion. But you also need to assume that the employers cannot get decent wages with other "reasonable" employers and so vote with their feet against the employers who are lowering their wages.

It does depend on whether you see labour market as "bouyant". Possible, but it is a difficult call.

Brad suggested that whether money is spent by yourself or the government via tax, it is still money which enters the economy. He questioned the idea that money spent by the Government was different.

Graham suggested that Government can spend money on projects such as the Snowy Mountains Scheme, and could do better things than private citizens spending their money on cigarettes. Brad had problems with the idea that the Government could consider itself wiser than citizens.

(I noted that individuals could have shares in companies which built infrastructure projects. Infrastructure projects have gone really awry lately; I suspect this is the result of a lack of transparency in Government and the development of the contracts; the point is that in principle private citizens could share in larger projects. However, there is the point of view that whenever the boundary between Government and Private operations is blurred, you're going to have problems.)

Peter noted that the wealthy put money into "investments" rather than feeding it into the economy. He saw a difference between private "investment" and economic "investment" which creates jobs. The resource boom did not generate a boom in employment - in fact there were mergers reducing jobs.

Peter also suggested that the Government can print money; and this need not necessarily cause inflation.

Brad said the market imposed a discipline on inefficiency; Peter said the voting public imposed a discipline on Government. Brad claimed that voting diluted the intensity of the discipline - people had to vote on a plethora of things, and particular government inefficiencies might get lost in the wash.

This assumes that the only discipline on Government is election; there is no potential that review, ministerial responsibility etc. etc. represent a discipline from the public between elections. You can debate how effective this between election review is.

I can't see a reason to assume that "market discipline" or "election discipline" is better.

Ivette questioned where the environment fitted into all this. John suggested that moving away from the whole "employment grind" would reduce the vigour and environmental impact of the economy. Peter suggested that markets would not capture externalities. Brad noted that developed economies in fact had less impact on the environment.

I noted that we were talking about the trade off between people living satisfying lives through work, and the environment. We were mostly talking about how we might configure things so that more people had satifying lives, based around work or otherwise; a separate issue was how we traded this goal off against the associated environmental impact.

Our meeting endeded a bit past 9 and all the speakers ended up at the Strawberry Hills Hotel for dinner - there seemed to be a lot of vigourous discussion.