Productivity and Ideology

As a card-carrying economic rationalist, I've been confused by Howard's claim that dropping the price of labour will increase productivity. How could the output per unit of input (ie each hour of labour) increase when you're just making people work longer for a lower hourly rate? Where's the incentive to invest in proven productivity-boosters like training and technology?

Then Tony Jones, on Lateline last week, quoted John Howard as saying that owners should be able to run their capital investments 24/7, 365 days a year without penalty. That's when the penny dropped: I was thinking like a worker (or economist), not a capitalist.

To an ideologically-driven right-wing politician, the unit of input is a dollar invested, not an hour worked. So, yes, Howard's plan to deliver continuous cheap labour to owners could increase the total output per investment, as the mills and call-centres work night and day. But that's chasing profits at the workers' expense, not lifting productivity!

We need to do more to challenge Howard about the real goals of his reforms.