It is unambiguous that the Australian economy is in an enviable state. All the key parameters—inflation, unemployment, growth—are more or less where we want them. However, where Australia falls away from being a world leader is in the often forgotten measurement of underemployment.
Most of us would have played the game of musical chairs when we were younger. The game is simple. There is a fixed amount of chairs and there are always more people than chairs. Music plays and the players circle the chairs. When the music stops everybody tries to sit on a chair and those who fail are eliminated from the game. Whilst I have nothing against this game, having derived much entertainment and joy from it as a child, it is problematic when people view the labour market as a game of musical chairs.
The musical chairs analogy came from an Athenian economics professor named Antigone Lyberaki in a recent IQ2 debate on EU immigration. She was arguing against the motion that “Europe should shut the door on immigration” and made the point that most politicians misunderstand the relationship between immigration and employment. Many politicians view the labour market as a game of musical chairs. Lyberaki pointed out that the distinguishing feature is that in musical chairs the number of chairs is fixed whereas the number of jobs in an economy is not fixed.
Economists analyse the oft-quoted remark on the ironic significance of names in the famous soliloquy “What’s in a name … a rose by any other name would smell as sweet”. This is a poetic illustration of the argument that it is not the name of things that matter but rather what they actually are. Whilst it is true that a rose would emit the same volatilised chemical compounds if it were named something else this does not necessarily mean names do not matter.
Take the labour market for instance. Would equally qualified employees with different names receive the same or different treatment when applying for jobs? Furthermore, does this mean there are economic costs and benefits associated with certain names?