Unions

CFMEU abandons the Left

Poor old Queensland Premier Anastasia Palaszczuk. How could the CFMEU abandon the left wing faction of the Labor Party?

Here is what CFMEU construction division secretary Michael Ravbar had to say:

The leadership vacuum in the left has seen a once powerful voice for working Queenslanders atrophy to the point where today it is little more than a creche for party hacks…In the process, the faction has become little more than a protection racket for dud members such as Jackie Trad, who as former deputy premier bears much of the blame for the failure to look after workers’ interests even on major public projects such as Cross River Rail…

Isn’t it funny how the new party of the workers now lies with conservative governments and progressives with the urban elites?

In the CFMEU’s case, it is a reality that the party has left them, not the other way around.

Goodyear skids off hypocrisy highway

One Team? More internal corporate workplace training nonsense. Police Tribune reports that Goodyear Tire has introduced a “zero tolerance” policy which promotes “intolerance.”

The list of “Acceptable” included “Black Lives Matter” and “Lesbian, Gay, Bisexual, Transgender Pride (LGBT).”

The list of “Unacceptable” included “Blue Lives Matter,” “All Lives Matter,” “MAGA Attire,” and “Political Affiliated Slogans or Materials.”

The employee who posted the photo of the slide said that it was part of the diversity training at Goodyear’s Topeka plant. It apparently originated in the company’s headquarters in Akron, Ohio.

Fascinating to see internal corporate diversity departments think equality is found through active discrimination and suppression of free speech.

Liberal artists cave to the cancel culture days after co-signing a letter condemning it

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Remember those brave maverick left-leaning artists who co-signed JK Rowling’s letter to decry the cancel culture we wrote about yesterday?

Several days later, several have withdrawn their support after surrendering to the threat of being cancelled themselves.

Author Jennifer Finney Boylan tweeted, “I did not know who else had signed that letter…I thought I was endorsing a well-meaning, if vague, message against internet shaming. I did know Chomsky, Steinem, and Atwood were in, and I thought, good company.

Historian Kerri Greenidge also tweeted, “I do not endorse this @Harpers letter. I am in contact with Harpers about a retraction.

So let us get this right. The very people who co-signed a letter highlighting the anxiety of cancel culture over the anxiety that they might be cancelled for being anxious about cancel culture due to guilt-by-association just proved the point way better than JK Rowling’s letter ever could.

So much for free speech. Cancel culture is alive and well.

Do Student Lives Matter?

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Alongside Black Lives Matter (BLM) leaders, the United Teachers Los Angeles (UTLA) union demanded that the police force in the Los Angeles Unified School District (LAUSD) be eliminated to stop white supremacy.

The incoming president of UTLA, Cecily Myart-Cruz stated,

We have to dismantle white supremacyWe must defund the police and bring in the mental health services that our students need.

The police union unsurprisingly pushed back noting they are there to prevent violence, act as peacemakers in school districts where gangs are prevalent

Two years ago we wrote with respect to security in schools:

A 2017 study by the National Center for Education Statistics (NCES) reported the following,

In the 2013–14 school year, 93% of public schools reported that they controlled access to school buildings by locking or monitoring doors during school hours. Other safety and security measures reported by public schools included the use of security cameras to monitor the school (75%), a requirement that faculty and staff wear badges or picture IDs (68%), and the enforcement of a strict dress code (58%). In addition, 24% of public schools reported the use of random dog sniffs to check for drugs, 20% required that students wear uniforms, 9% required students to wear badges or picture IDs, and 9% used random metal detector checks.

Breaking down some of the categories in the chart 5.5% of primary schools use sniffer dogs to check for drugs!! Over half of high schools have random drug searches. 9% of high schools have metal detectors.

In 1994, the federal government began requiring schools to introduce safety programs in an attempt to crack down on violence on school grounds. Many schools introduced metal detectors to check for guns, knives and other weapons. The year after the measures were introduced, violent deaths on high school campuses across the United States halved.

We also wrote a piece debunking the narrative by The New York Times that said that teachers were racially profiling kids at school when it came to discipline.

We remind our readers of a man by the name of Andrew Pollack who lost his daughter in the Parkland, Florida school shooting in 2018. He spoke of his concern of the current push by Democrats in Minneapolis and Portland to get police out of schools.

Pollack said,

My daughter Meadow was murdered in the Parkland school shooting on February 14, 2018. There was a school resource officer on duty. He was a coward and hid. Not all cops are good men. Without a real policeman on duty, the shooter had 11 minutes in a building with 800 kids all to himself…

…What you might not know is what happened before and what happened next.

The media wanted to use Parkland as an opportunity to attack President Donald Trump and advance their gun control agenda. But as I explain in my book Why Meadow Died: The People and Policies that Created the Parkland Shooter and Endanger America’s Students, the Parkland shooting wasn’t caused by the Second Amendment. It was caused by identity politics.

The Democrat-run Broward school district blamed teachers and school resource officers for racial disparities in school discipline and arrests.So they formally decriminalized misdemeanours (three freebie misdemeanours a year, re-setting every year) and informally decriminalized felonies. They also tied school resource officers’ hands and told school administrators to refuse to cooperate with local law enforcement.

The Parkland shooter committed many crimes in school: he threatened to kill, committed hate-crime assault, trespassed on school grounds after he got kicked out. No arrests. By design. No criminal record.

The school district lied to the public. They stonewalled the press. They threatened would-be whistleblowers. When Parkland parents started to learn the truth, they demanded accountability in a series of meetings at Marjory Stoneman Douglas High School (MSD) with Broward Superintendent Robert Runcie.

Shortly after that, the Broward school district announced a public meeting. Runcie’s deputy sent an e-mail to local black church leaders telling them that the rhetoric they heard at MSD was “vile” stuff like they hadn’t heard “since desegregation orders were enforced.” It was a lie. When challenged, they provided no evidence to back their race-baiting claim.”

Sinister. However, this is what they are pushing for. Do parents really want their kids at risk? Do #StudentLivesMatter?

AOC booted from a union-backed party due to a lack of signatures

Alexandria Ocasio-Cortez, aka AOC, has been booted from the ballot of the progressive union-backed Working Families Party by a judge from Queens. AOC only received 13 of the needed 15 signatures to get on the ballot for the left-wing group. One imagines that her grandstanding against Amazon which cost her constituents the prospect of 1,000s of jobs might be behind it.

Her main Democratic primary challenger, Michelle Caruso-Cabrera said, “AOC has hurt working people of the Bronx and Queens with her votes and creates disunity within our party…No wonder why pro-union forces don’t want her, and neither do our neighbourhoods.

Get woke, go broke?

We shouldn’t forget that she won the seat by a handsome margin. It would require a pretty severe swing to unseat her. Still, the one thing about politics is that history is rarely a guide to the future, especially in the time of coronavirus.

 

Raelene hands back the keys to the Castle

The Giteau Law will be reviewed in 2019. Photo: Getty Images

Rugby Australia’s (RA) board losing faith in CEO Raelene Castle was inevitable. We have long held that RA’s leadership team had no rudder.

FNF Media has openly criticised the lack of performance as its biggest failing – from the ridiculous state of affairs where management had no relationship with the head coach of the core franchise to the focus on “woke” causes which alienated fans (aka core customers). Folau’s saga and broadcast rights could have been handled far more sensibly. They weren’t.

Let’s be clear. COVID19 was a catalyst, not the cause.

Any business must adapt to transitions in the marketplace but never for the sake of chasing popular causes which have little or nothing to do with core competencies. That is where RA went wrong.

Castle commented,

I love rugby on every level and I will always love the code and the people I have had the honour of working with since I took this role…I made it clear to the board that I would stand up and take the flack and do everything possible to serve everyone’s best interests…

“…In the last couple of hours, it has been made clear to me that the board believes my no longer being CEO would help give them the clear air they believe they need…

“…The game is bigger than any one individual – so this evening I told the Chair that I would resign from the role I will do whatever is needed to ensure an orderly handover. I wish the code and everyone who loves rugby nothing but the best and I would like to thank the people I work with and the broader rugby community for their enormous support.

We believe that a fish rots from the head. The lack of decisive crisis management talent has led to this situation. Ultimately the ‘customers’ deserted in droves. We tabulated the differences between the management of RA vs our rivals across the ditch.

RA needs a new leader who has grown up in the game. Who understands the customers. Who understands the investment required at the junior and club rugby level so the professional side can incubate talent. To get to a stage where the regular local competitions don’t lose players to overseas leagues that have ended up hollowing out the ability to run sustainable club competitions.

The new leadership team can start by removing/demoting any staff in positions of authority who laid down threats of walking if Castle was pushed. There is a distinct difference between issuing ultimatums and raising dissenting voices during crises. RA doesn’t need any more poison during a rebuild.

Produce the right product and the fans will return. It’s that simple.

The Fed firemen are also the arsonists

Jim Grant of Grant’s Interest Rate Observer has a great article pointing out the irresponsibility of the US Fed. It criticises the very conditions that made the outcomes of coronavirus way worse than had they administered sensible monetary policies decades ago. FNF Media has been saying this for years. Now we are facing long overdue nemesis. It is true of the overwhelming majority of unimaginative MMT ‘me too’ central banks.

Grant wrote,

It took a viral invasion to unmask the weakness of American finance. Distortion in the cost of credit is the not-so-remote cause of the raging fires at which the Federal Reserve continues to train its gushing liquidity hoses…But the firemen are also the arsonists. It was the Fed’s suppression of borrowing costs, and its predictable willingness to cut short Wall Street’s occasional selling squalls, that compromised the U.S. economy’s financial integrity.

FNF Media keeps on hearing tales about the failure of evil capitalism. When the actions of central banks stifle the free market from achieving price discovery, distorted capitalism will inevitably backfire.

From hereon, sharp pain will be the only effective – and quickest – way to resolve this mess. Governments need to ensure bad companies go bankrupt by rejecting bailout money to zombie companies that will just be a drag on the economy.

Instead of doling out tax dollars, the government should take equity in any business that receives money. Taxpayers deserve a return and by this methodology, it will enforce a mindset that always rejects propping up companies with failed business models. Instead of the government calling the shots, the expertise of commercial lenders should be tapped, a valid point made by Jonathan Rochford.

Unfortunately, this will cause huge short-term disruption and impact large swathes of the community but it will allow markets to clear and provide a platform for risk to be priced appropriately. It is like yanking off a Band-Aid. It stings at first but the recovery becomes far more sound, based on rational economics. Failure to do so will just lead to a protracted Frankenstein economy which will frustrate the majority.

The sad reality will be that Western governments will try to emulate Japan’s lost two decades by crawling on our belly making marginal inches forward. This is somehow seen as superior to hitting the giant “reset” button.

The only major difference being that the Japanese monoculture is experienced and better suited than any other nation to share grief. Western cultures are not remotely close to being able to tolerate such conformity. Japan is not capitalism with warts. It is socialism with beauty spots. It will pay to remember this. In the West, we will demand that others atone for our mistakes. Moral hazard will be the order of the day. This mentality must be stopped dead in its tracks.

Grant reinforced our long-held view on distorting capital markets with this,

The Fed commandeered investment values into the government’s service. It seeded bull markets in the public interest…But investment valuations don’t exist to serve a public-policy agenda. Their purpose is to allocate capital. Distort those values and you waste not only money but also timeLike a shark, credit must keep moving. Loans fall due and must be repaid or rolled over (or, in extremis, defaulted on). When the economy stops, as the world has effectively done, lenders are likely to demand the cash that not every borrower can produce.

We must not forget that post-GFC authorities have been asleep at the wheel even after the introduction of poorly thought out red tape designed to protect us.

Right before the regulators’ eyes, so many blue-chip corporations (e.g. Boeing, GE) binged on ultra-cheap debt to buy back their own shares just to chase short term performance incentives. In recent years, companies like Boeing and GE spent around $45 billion each aggressively buying back their own stock despite being in the midst of severe balance sheet deterioration. Both are trading in a state of negative equity today.

Ford Motor has a junk credit rating. GE & Boeing won’t be far behind them. Over 50% of US corporates are trading one-two notches above junk.

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The financial community has merely taken advantage of all of this short-termism. Where were the financial analysts doing forensic work on companies? All of this balance sheet deterioration was plain to see.  Why couldn’t they see the obvious long term deterioration in cash conversion cycles? How could they miss that aggregate corporate after-tax profitability has been trending sideways since 2012? Where were the biopsies? We will be witness to plenty of autopsies that were preventable.

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For Australia’s part, 28 years of unfettered economic growth has bred untold complacency. Only now will we realise the conceited arrogance of government and industry alike. One day we will realise that all of the onerous regulations dripping in ideology (e.g. climate/environment) to confound foreign investment will blow up in our faces. They will not have forgotten that Australia is an unfriendly place to conduct business.

Australia has behaved like a bloated drunk bishop looking down upon his destitute disciples climbing the stairs on hands and knees putting what is left of their pitiful savings into the collection tin. From now, the roles will be reversed at prices that will be highly unfavourable such will be our desperation. Not to mention our currency could well depreciate to a degree which makes us even more vulnerable to foreign predators. Setting our FIRB at $0 will be irrelevant if we fold to the whims of the first suitor that shows interest. The show will be on the other foot.

In press conference after press conference, we continue to be told that hibernating companies will spring back to life and it will all be a case of ‘keep calm and carry on!’We hate to sound negative here.

However, we believe that we are merely being realistic about what is to unfold. The coming depression will force us to become truly appreciative about just how well we have had it while governments have distorted our markets. Had we truly reflected on decades of prosperity instead of wailing about how life has never been worse, things might have turned out differently. We are about to get a true taste of the latter.

On reflection, some positives will come out of this tragedy because we will focus on things that matter rather than getting enmeshed in the theatre of the absurd – identity politics and the cancel culture.

Coronavirus might be a black swan event to the global economy but we have been complicit by allowing our lawmakers and regulators to play slalom with the icebergs. We all knew our overloaded ship was in danger of listing before we left the safe harbour but it was simpler to be suckered into the weather forecasts that predicted endless sunshine and eternal millponds. The engines have now stalled because the tanks are empty. We find ourselves in the middle of a pitch-black, stormy night with howling gale-force winds and a 40-foot swell. Some continue to cling on to the blind hope that the incumbent crew can bail fast enough to avoid the economy capsizing.

It will be all in vain because the ship’s crew left a tape recorder playing on a loop over the tannoy promising passengers to stay in their cabins while they secretly slipped away in the early hours on the only lifeboats available.

Central banks had one mission – create confidence. They have been complicit in the failure. They doubled down on all of the same policies that got them in trouble in the lead up to GFC. They had a simple task of telling governments to embark on structural and tax reform. Instead, they appeased their masters by endlessly cutting rates.

Never again must central banks be allowed to use QE to rescue the economy in a downturn. Central bank balance sheets should be forced to unwind all QE assets. Interest rates must be allowed to set at normalised rates which allow positive returns but avoid reckless borrowing.

While a lot of this piece might sound pessimistic we simply view it as being a realist with experience.

Never let a good crisis go to waste

Never let a good crisis go to waste. Democrats have been doing their utmost to show partisanship during coronavirus. Instead of trying to help their fellow citizens, they see it better to throw in some irrelevant nice to haves which will do nothing to help Americans fight the economic impacts of coronavirus as bargaining chips.

Here are 20 examples.

  1. Corporate pay statistics by race and race statistics for all corporate boards at companies receiving assistance.
  2. Corporate board diversity targets
  3. Bailing out all current debt of postal service
  4. Required early voting
  5. Required same-day voter registration
  6. $10,000 bailout for student loans
  7. For companies accepting assistance, 1/3 of board members must be chosen by workers
  8. Provisions on official time for union collective bargaining
  9. Full offset of airline emissions by 2025
  10. Greenhouse gas statistics for individual flights
  11. Retirement plans for community newspaper employees
  12. $15 minimum wage at companies receiving assistance
  13. Permanent paid leave at companies receiving assistance
  14. hiding the citizenship status of College Students from the Census Bureau
  15. expanded wind & solar tax credits
  16. $100,000,000 for NASA’s environmental restoration group

While it is fair game to question the contents of a $1.8 trillion rescue package, none of the above will help Americans combat coronavirus. So the Dems have upped it to $2.5 trillion to include the above, including $1.5k in aid per individual; as much as $7.5k for a family of 5.

We suppose when the central bank has committed to endless QE, what does an extra $700bn on top of $1.8 trillion matter?

A reminder of where Aussies are employed

Graph 7: This graph shows the proportions of forms of employment, by industry. Construction has the highest proportion of independent contractors while agriculture has the highest proportion of other business operators

It is worth reflecting on which industries the bulk of Aussie jobs sit. This schematic is from the Australian Bureau of Statistics (ABS).

We have the heaviest tilt toward healthcare and social assistance at over 1.7 million jobs. Retail trade comes in at a shade over 1.2 million jobs. Construction at 1.15 million. Education 1.1 million. Accommodation/restaurants/bars etc at 900,000. Manufacturing another 900k.

There are 13.1 million Australians employed as of February 2020. Full-time employment amounted to 8,885,600 persons and part-time employment to 4,124,500 persons.

That means in the six aforementioned sectors, 53% of Australians in the workforce are employed.

Note that since 1978, Australia has had a 1.74x increase on Full-Time employment and a 4.6x jump in Part-Time in that time. That means the ratio of FT jobs has fallen from 84.9% to 68.3% and PT rose from 15.1% to 31.7% over the same period.

PT employment for men has surged by 6.9x to 1.31 million and female PT jobs have grown 3.9x to 2.8 million.

FT employment for men has increased 1.5x for men to 5.53 million jobs and for women, it has grown 2.8x to 3.35 million.

There are also 708,000 workers aged 40-64 who have multiple jobs. This is up from 646,000 in 2011/12. Total people working in multiple jobs has increased from 1.85 million in 2011/12 to 2.105 million in 2016/17.

We don’t think that the RBA’s latest 0.25% + QE, nor federal/state spending in the current climate can see off mass unemployment. We have written about this in previous posts. We wrote a larger tome on the dire straits facing central banks here.

Nothing to be proud about

Biz Ivest

Flipping through the latest RBA Chart Pack, it is no surprise that business investment keeps sliding off a cliff. As a % of GDP, it has slid from a peak of 18% off the short-term trough of 14% (GFC) to 11%, which now puts it at 1994 levels. It proves the old adage that businesses don’t invest because interest rates are low, they invest because they have confidence in the cycle.

Our government should be looking at this with alarm bells. It doesn’t take too much imagination to work out that political instability has played its part.

Australia was once regarded as the vanguard of political stability in the region which made it a sensible investment choice for domestic and international investors as a place to do business. There was a comfort in knowing that there wouldn’t be revolving door prime ministers and flip flops on policy positions. After all, much business investment takes years to get to the production stage.

The Howard years saw our business investment surge. Sensible fiscal policy was a feature too. While Rudd can be forgiven for GFC causing a slump in business investment it resumed until political instability put the mocker on business confidence.

We have been running deficits ever since and cranking up the national debt (we wrote about it here) because it is clear we don’t have sensible free-market conditions to self sustain direct investment at anywhere the levels we need.

Instead, we kowtow to radical activists who try to stop investment in projects like Adani and conduct illegal secondary boycotts on businesses like Greyhound Australia and Siemens without repercussions.

Whether coal is evil or not is irrelevant. The problem is such activism, which is further supported by ideologically corrupted government environmental departments – that push their own agenda on granting approvals – doesn’t endear domestic industries or foreigners to invest in us. These are dangerous precedents. All of this tokenism when we only need look at the realities of what will happen down the line.

Don’t take our word for it. Even our domestic businesses are leaving.

Thanks to Australia’s ridiculous energy prices, Aussie company Bluescope confirmed the expansion of capacity in Ohio. In Feb 2019, the company CEO said, “much cheaper energy in the United States is a major driver of the company’s preparedness to invest in a $1 billion expansion in Ohio.”

In 2017, Tomago Aluminium reported, “We have to grow to be competitive and to be ahead of the curve, but when the spot price went to $14,000 [per megawatt hour] we had to take that load off. It’s just not sustainable. You can’t smelt at that price. We have had to curtail or modulate the load [on occasions] or we get hammered by the price…We cannot continue to keep paying those prices. We have to find a solution. The prices are crippling”

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Unfortunately, 28 years of unfettered economic expansion has made us complacent. We think this economical miracle has no off-ramp.

None of this is remotely surprising.

Can we honestly say that the impact of higher electricity prices hasn’t been a factor in pushing away investment in engineering and manufacturing? So this mad push for renewables will not alleviate this pressure. Germany is the perfect beta-test crash dummy. It predicted flat prices. They doubled from those forecasts.

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Yet our political class is playing with fire.

We never thought Australia was realistically going to have a surplus when it was announced. Secretly there must be a sigh of relief in Treasury that the impacts of the bushfires and coronavirus will provide a convenient scapegoat to miss those targets under the premise of ‘doing the right thing.’  And no that does not mean the government is glad those two catastrophes have happened from a humanistic approach.

We need proper reforms. We need to ditch these notions of political correctness in public policy. We are as unimaginative as many other governments around the world. Living on a low-interest rate fuelled debt bomb. Kicking the can down the road simply does not work. Why aren’t politicians convicting their cases with evidence rather than folding to ideological positions held by fringe dwellers on Twitter?

When we visited Israel on a business delegation in 2018, Israeli PM Benjamin Netanyahu uttered the only 4 words that mattered for investors – “we want your business.” The innovation nation knows what it is good at and is prepared to back it to the hilt.

It would be so nice if our government spent some time in Israel to discover that we have it all wrong. Because we are only storing up a rude awakening. When our economy does suffer from the eventual ramifications of all of that lack of investment, the public will be howling that they can’t pay their mortgages, that they can’t get decent jobs and they can’t keep the lights on. None of that would have been necessary if they had been more open to business.

The ultimate result will be that we’ll put ourselves deeper into debt to fund some monster infrastructure projects that will provide short term relief, not long term solutions.

The foreign investors that could have helped had we treated them in a more dignified fashion will just buy our assets at fire-sale prices instead. Then we’ll have another moment to howl at the moon.

That will be the true price of our complacency. Experience is a hard teacher. You get the test first and the lesson afterwards.