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Society is not economy

By James Moylan

A budget speech is very different to a State of the Union speech in the US in not only tone but also in scope. There is no longer any place for big aspirations or dreams in an Australian Federal Government.

A budget speech is invariably full of highly partisan rhetoric and reductive ideas which seek to condense the whole of our society down to being a simple ‘economy’. Citizens become consumers and communal aspirations become only those things that can be represented in simplistic economic terms.

More money spent equals ‘better’ or ‘worse’. Less money spent equals a ‘saving’ or a ‘cost’. Efficiency equals cheaper. Optimum equals cheapest. When the stock market goes up, it’s good. When the stock market goes down, it’s bad. Debt is bad. Surplus is good. Higher interest rates are bad. Lower interest rates are good. A high Aussie dollar is bad. A low Aussie dollar is good. Etc.

As a result in modern Australia we now largely lack any sort of a ‘big picture’ narrative. After so many years of focusing so intensely on all of the economic indicators, and highlighting these as measuring all that is important about our society, we have so traduced the social mythology of our country that our citizens now find it genuinely difficult to identify any aspirations or dreams that we all hold in common. Our society is now represented to be, first and foremost, an economy. We are treated as if we are atomised and autonomous consumers, investors, and taxpayers. Government is conceived of as being a ‘service provider’ instead of a Commonwealth. Every question is assessed using economic dynamics that are represented as being simple natural phenomena. So in the Aussie lexicon and discourse there is no doubt that the market rules the politics – not the other way around.

So instead of common sense our country has been running on economic sense for the last twenty five years. Yet while this seems to have made all the bankers, financiers, politicians, and big businessmen very happy indeed, unfortunately it also means that we have reached the current ludicrous situation where our leaders seem absolutely blind to the obvious social realities being experienced by the majority. If this was the only problem then it would be of no great consequence. Our leaders have often been well removed from the day to day problems of the average worker. But this time it looks like our political leaders are intent on letting their ‘economic common-sense’ lead our society off a cliff.

Despite what our politicians might want to say, economic activity is not social activity. It is a by-product of social activity. Economic indicators do not measure aspirations or plans. Moreover when you surrender the leadership of a society over to eternally pandering to the health of an ‘economy’ – then the imperatives of the marketplace slowly become national imperatives, and then turn into national disasters. No wonder our PM has his money in a bank in the Caribbean. He can see what is coming. So can anyone with any perspective.

While none of our politicians will admit that we are in the midst of a huge housing bubble: all the market analysts all around the globe are short-selling Australian bank shares. They are as aware as our PM is that we are in a parlous economic situation. No wonder our PM is rushing to an election. When the housing bubble does eventually burst Australia will be plunged into a deep and extended recession and there will be hundreds of thousands of investors left penniless. It has taken decades to dig a pit this deep. So it will likely take a very long time for us to climb out.

In 1975 the average house in Sydney cost $28,000 and so with the average wage of $7,616 any Aussie worker could aspire to own a home or could simply forgo the idea and rent as the cost of housing was relatively cheap across all of our big sunburnt land. Then in the 80’s and 90’s Australia renovated its economy. We decided to become integrated within the ‘world economy’ and, at the same time we replaced our political common sense with economic rationalism. The term ‘socialism’ was abandoned by all sides of politics and (apparently) every Aussie politician took an oath in favour of unfettered capitalism whilst holding a copy of the bible.

Suddenly ‘tax breaks’ were good, ‘tax’ was bad, ‘trickle down’ economics would assure that if the marketplace was happy then we would also be well looked after. A rising economic tide would lift all the boats in unison. So there was no longer any need for outdated concepts like ‘the public good’ and the ‘social contract’. Instead of the unemployed we had ‘leaners’. All the good in the world was now condensed within the persona of the ‘hard working and investing mums and dads’ of Australia.

So, just like in the first celebrated tulip bulb bubble of the 1600’s, our politicians and our society began to move away from common sense and simple morality to thinking and acting in economically rational terms. As a society we have treated our housing stock exactly like the Dutch did their tulip bulbs. We have turned all of our common sense over to the marketplace so it now seems perfectly reasonable for someone within the property market in Sydney to be buying a property forty kilometres from the centre of the city yet still pay more than a million dollars. It seems perfectly reasonable to most Aussies that they might want to borrow a sum equivalent to twenty years of their before tax income just to buy a house.

However while it might seem reasonable to Aussies: the rest of the world is watching in amazement. It is one of the wonders of the modern financial world. The Australian property market has become the biggest Ponzie scheme in history. It takes a rare combination of social mania and lax oversight to allow such a massive bubble to develop.

Most Aussies would consider it ludicrous that a skilled artisan in 1637 in Amsterdam might borrow up to fourteen times his annual salary just to invest in a tulip bulb. Yet the Australian economy has become far more dependent on our housing bubble than was the Dutch marketplace before that very first speculative bubble burst. The Dutch at that time also had a worldwide trading empire. Currently all we have is our bubble.

A whole generation of Aussies have grown up being taught that the marketplace is our society. That the marketplace can and will supply all their requirements from birth until death. None of these youngsters have experienced a recession. They believe that house prices just naturally always go up. They believe it is perfectly natural for a worker on an average wage to borrow more than a million dollars just to be able to buy themselves a house. They believe that interest rates will always be low. They have no longer term perspective.

In fact our communal economic delirium is so pronounced that even while it normalises the most ludicrous of financial propositions, it also assists in providing governments with reasons to dismiss or ignore actual dangers. For example the mantra of the marketplace actively promotes the idea that we must continue to burn fossil fuels, and dig up and export more of the same, for the sake of the economic good health of the nation. Similarly we have seen the drive to privatise state assets send electricity prices soaring and our focus on economic rights has seen the establishment of two tiered education and health systems and promoted a widening gap between the rich and the poor. And despite living in an economy rather than a society (or more likely because of it) the amount of disposable income in the pockets of Aussies has been shrinking for just as long as the housing boom has lasted.

In the Netherlands in the mid 1600’s their tulip bulb mania eventually collapsed when the bubonic plague caused them to suddenly realise that they were actually paying vast sums of money for something that was ludicrously overpriced. Perhaps when the effects of climate change cause vast numbers of highly leveraged houses to be submerged under a few feet of water then it might have a similar effect?

However I suspect that the housing bubble will burst well before we get our feet wet.

Overseas analysts all agree that Aussie property prices will fall at least 40% when the crunch finally comes. They expect it any day. When it comes it won’t harm our politicians though. They have a guaranteed pension for life.



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  1. wam

    lower prices? lower capital gains for the pollies like xenophon et al and their double figure house investments.
    Arguably the greatest man in history, Sir Isaac Newton, fell prey to the Tulips. So delirium is in us all and with a little timely bounce and belief in the bouncer:
    We must come undone!
    By newtons observation ‘ what goes up must come down’

  2. stephentardrew

    Yes, yes and Yes. Meanwhile the public sleep in hope that these fools know what they are doing. L-NP and Labor need to challenge economic orthodoxy or they will all sink with the ship. As sure as eggs they will all be blamed for a lack of action on housing afford-ability.

  3. Hugh Jurgen

    Good article. Closer to us than the Tulip Bubble is the crash of 1891, which I feel is just around the corner.

  4. Jexpat

    Tulip mania aside, public budgets are among other things, policy documents and their presentations are similar in that sense, to policy priorities in a State of the Union speech.

  5. Jaquix

    With respect, our PM is not rushing to an election because he “knows we are in a parlous state” but simply because he saw his popularity slipping and wanted to lock himself in to the job he’s always wanted, and which provides all the limelight he could wish for, before that popularity evaporated.

  6. Sean Stinson

    Just an aside, can anyone point to the time when “morals” became “values”?

  7. Jake

    I have just watched the brilliant series House of Cards.We need a Royal Commission intoThe Housing Rort. Like we need one into one into The Dodgy Company CEO over paid salaries rort. All this Crap comes from America.We are so stupid in this country.
    Let the market rip with HOMES. means let the market rip with crime.
    To make a get rich scheme out of residential property is one of the most disgraceful periods I have ever lived in in this country.
    It’s pure greed and is soul destroying many.It will come down like a pack of cards.
    Politicians and their mates will sell their properties and will be the first to sell as they will be in the know as to when the downturn is coming.
    But as long as these crooks have got their hands on the levers they will extend it for as they can.Or just time to bring in the 2nd Amendment.

  8. totaram

    Jim: Everything you have written is true. But you have not really explained how this came to pass. The first thing to notice is that this state of affairs benefits a certain section of the population.

    “our focus on economic rights has seen the establishment of two tiered education and health systems and promoted a widening gap between the rich and the poor.”

    This has happened by design and not by accident. Right wing “think-tanks”, together with whole “schools” of economics, well funded by the rich and powerful, have been hard at work over the last 50 years to bring this about. You now have text-books on economics spouting the neo-liberal macro-economic dogma based on completely invalid assumptions about how the macro-economy works. Currently all political parties adhere, more or less, to this neo-liberal macro-economic mythology. Until those doctrines are opposed and demolished, we can not have meaningful change.

    There is plenty of literature exploring this history. An example which you can download for free:

    Norbert Haering and Niall Douglass: Economists and the Powerful: Convenient Theories, Distorted Facts, Ample Rewards”

    Google is your friend for more.

  9. Anomander

    A rising tide may lift all boats, but it’s not much good it you’re chained to pier, as is the case with most low-income workers who are already up to their neck with consumer debt, just trying to survive.

    You are absolutely right about our focus shifting from society to economy. Gone are the days of camaraderie, when Australians thought about their fellow Aussies struggling to make ends meet, offering a helping hand, or even being prepared to contribute toward social programs and investing in infrastructure that makes society more equitable for all.

    Our society now mirrors that if the US, where we are all taught that the only way to get ahead is to out-compete each other. Collective bargaining and unions are to be disparaged and demonised. Governments performing works or providing services for the social good are portrayed as weak and money squandered, when it could instead have been given to individuals to decide how they use it, independently. Mostly this is used to buy disposable crap that feeds back into the economic-centric consumer model, but adds zero value to our lives or society as a whole.

    Charity has become a private thing. Welfare is a dirty word that equates to wastage. Governments should not intervene in the operations of “the market”. Only the market is good and in its infinite wisdom, it can solve all of our problems.

    They are convinced that the only way to survive is to clamber all over your workmates to get that extra dollar, before someone else beats you to it. A dog-eat-dog society where only the most cunning or ruthless survive, and those unable to keep up are tarred as “not working hard enough” and cast as “leaners”.

    How we change it? I don’t know, particularly when vast portions of our society are oblivious, or so focused on their own trivialities or interests and have succumbed to the consumerist mantra, they simply don’t devote any thought to anyone else.

    Until enough people are adversely affected, and are prepared to stand-up and fight, I fear we are on a downward spiral.

  10. Jane

    Anomander re: Charity has become a private thing. Salvation Army run many of the Job Network agencies.And what about all the Corporate Type Churches and Charities who run the Opp Shops.They provide a beautiful Front for many a politicians indulgences. And they don’t pay Tax

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