The old rules of thumb about the economy do not seem to be working and I have a theory as to why. But let’s look at the evidence first.
Company profits are high. Unemployment is low. But wages aren’t growing.
Factors contributing to this include significant underemployment, job insecurity, exploitation of temporary visa workers, the rise of labour-hire firms, and the undermining of unions…and the greed of those who think they are entitled to a larger return on investment than those who actually work for a living.
Interest rates are at record lows but investment has not been forthcoming.
This is partly due to uncertainty about government policy but also largely due to a lack of demand. People aren’t spending.
Despite the most generous property tax concessions in the world, construction is decreasing, there is a lack of affordable housing, and 120,000 people are homeless. Investors drove up house prices and then took advantage of the scarcity to charge high rents.
When money was rolling into government coffers during the Howard era, he decided that he would give people who didn’t work and didn’t pay tax, but owned shares, a tax refund of what the company had paid in tax. That is patently unsustainable, especially when we are in deficit, yet the recipients are fighting tooth and nail to hang onto something they must surely see is not fair.
When we had carbon pricing, polluters paid and the government redistributed that revenue through a higher tax-free threshold, increased pensions, and various other payments to welfare recipients to alleviate any costs passed on by business. Businesses paid for research and development of new technologies to help them reduce emissions.
Now, the government pays billions to polluters and emissions keep rising every year.
We have signed various free-trade agreements but, in every budget, they have been reported as a cost through lost tariffs and cheap imported competition for many local industries. The free trade agreements combined with government refusal to extend subsidies saw the extinction of our motor vehicle industry and the many thousands of jobs it provided.
The government is promising lots of money in the future for treatment of various ailments but little towards prevention. Despite primary healthcare being much cheaper than hospitals, funding has been frozen leading to increased costs for consumers that make them less likely to have regular tests and to see a doctor early when there may be a problem.
Funding for community groups that help with crime prevention through early intervention and support has been slashed resulting in shocking incarceration rates, particularly for Indigenous Australians.
We spend a fortune on anti-terrorism yet hundreds of people die each year in a domestic violence epidemic.
There is an enormous cost to our economy and our society from alcohol and gambling addiction, yet we see some of our politicians think it appropriate to go on a giant pub crawl around the nation, and to wind back gambling reform laws and advertise horse-racing on the sails of our Opera House.
So now to my theory (well everyone’s really) as to why the good economic figures are not translating into good outcomes for society.
Wealth concentration.
Scott Morrison wants to tell you how much tax the top 10% pay but he will never tell you how much wealth they own.
As fewer and fewer people own an increasing proportion of the world’s wealth, they are strangling the very people they rely on – their workers and their customers.
It seems greed wins for now. But sooner or later, they will realise that we either play as a team or we perish.
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