The inflation we did not need to have
Australia is experiencing the impact of runaway inflation which is a product of poor economic management by the Liberal Party.
Because the pandemic shut down supply lines for a period of time, a government with an even a semblance of economic understanding would have foreseen that once the world came out of lockdowns, demand would exceed supply because production had either been shut down totally or not producing at its pre-pandemic rates, therefore inflation would not just increase, it would run out the gates (in layman’s terms). This inflationary pressure could have been avoided if action was taken by the Federal Government even twelve months ago to address the foreseeable danger of inflation. This is a simple point of Keynesian macroeconomic principle which even a market economist like Milton Friedman would have to agree with.
The unemployment data going below 4% is a sign there is a problem with labour demand across the economy, because employers will not increase wages. This fact adds to the economic crisis we are now witnessing in relation to inflation, as the Liberals have allowed wages to stagnate for the past nine years. Nevertheless, there is more to this sad story of economic mismanagement than just wages.
Mr Morrison in his usual bullying style has previously accused Mr Albanese of being more left-wing than Gough Whitlam, whatever that inarticulate and illogical statement is meant to mean, a statement which by the way has been made by a man dismissed from Tourism Australia and reported to have caused problems which were reviewed at New Zealand Tourism before he backstabbed his way into the seat of Cook. Along with his distasteful behaviour over the past week of trying to weaponise Senator Kitching’s death, Mr Morrison’s slur against both Mr Albanese and the late Mr Whitlam is just another desperate statement made by a Prime Minister who has no future economic plan for this country, and whose only electoral plan is to try and pork barrel his way through an election, again.
The Australian Labor Party (‘Labor’) and Mr Albanese have an economic plan, a plan which will address this unnecessary inflationary pressure. Mr Albanese wants to rebuild Australian manufacturing, like we used to manufacture and sell, which will address our supply line problems and the now skyrocketing inflation, because amongst other matters we will not be so reliant for our tertiary level of purchasing of goods manufactured in China or India, as they are reaping the benefits of secondary good manufacturing made from Australian primary materials.
As an example, during the pandemic crisis we ran out of PPE; a product which we were not manufacturing in Australia, and which we should have been manufacturing had it not been for this misconceived economic practice of market economics which has been so feverishly embraced by the Liberal Party over the past 70 or so years. There is no sound business or economic case for PPE not being manufactured/produced in this country, and it astonishes the minds of sound economists such a simple product which every hospital, doctors’ surgeries, dental surgeries, and any other medically aligned undertaking in Australia required for their daily use prior to the pandemic.
Indeed, the poor economic management cuts deeper than just PPE. Our car industry was destroyed by the Liberal Party’s application of market-based economics. Mr Albanese wishes to restart the manufacturing of electric cars by this country, and once again there is no sound business or economic case to refute this sound economic plan. In Australia we mine every single element which is used to manufacture electric cars and batteries. You may recall Ms Cash and Mr Morrison saying during the 2019 Federal Election electric cars will be the end of the weekend and tradies. That statement was nothing more than an economic naivety which was untrue, and more importantly, has wasted three years of building Australian electric car manufacturing, so that we would be by now world leaders in that field.
It makes no economic sense whatsoever for Australia to export its primary resources to other countries for them to manufacture that primary resource at the secondary level of electric car production, and then for that country to reap the benefits of exporting that product back to Australia to be sold to us at the tertiary economic level. We should already be phasing out fossil fuel-based technology for transportation. Instead, we are left in this vulnerable economic conundrum of being at the mercy of the supply of fossil fuels; a cost which is skyrocketing and causing economic hardship to most Australian families.
The Liberals try to argue paying proper wages for workers would inhibit the production of electric cars in this country, but that is a baseless argument in the scheme of economics because when you have the primary resource to call upon within your own country for secondary production, the costs of production are insignificant when you make quality secondary goods which will be within the means of purchase at the tertiary economic level of not just the local market, but also the international market. Once again, this macroeconomic policy which Mr Albanese has referred to as being a Labor initiative will address the supply problem of inflation which the Liberals have unnecessarily caused with their decades-long blind devotion to market economics.
Another example of the Liberal Party’s economic mismanagement may be found in the history of solar panels, the manufacturing of which now occurs in China. The primary resources for solar panels are now exported by us to China for secondary level manufacturing to then sell back to us as a tertiary-level good. This should never have happened as solar panels were originally developed and manufactured in Australia.
Regarding the issue of quality, let us just cast our minds back in time to the 1960s when Australia used to manufacture most of the clothing worn by Australians. The quality of Australian menswear was of such a standard people from overseas would compliment us about the quality of our manufacturing of clothing because buttons didn’t fall off shirts and zippers didn’t malfunction on trousers. That is not long ago in the scheme of history to demonstrate we as a country are able to produce quality secondary goods to sell at the tertiary level to the local and international markets.
We should not, as a country rich with a variety of primary resources, be now left in this supply chain crisis of relying upon other countries to manufacture most of our products and sell them back to us as tertiary goods. The irony of this poor economic management by the Liberals is gobsmacking as it is a basic principle of economic theory.
The cynical mindset of the application of market economics by the Liberals caused this inflationary crisis and many other economic problems, as they purely focussed on short-term economic costs rather than the long-term economic benefits of producing from our primary resources at a secondary level such products as the examples referred to herein of solar panels and electric cars. The pursuit of cheap labour by the Liberal Party and vested interests has only resulted in Australia missing out on the full economic benefit of all three layers of economic production, including renewable energy modes of transportation which are not subjected to the costs of operation of the fossil fuel market.
It has been flagged by some banking commentators that monetary policy should be implemented to address the runaway inflation problem. That is an economically unsound step to take as the use of monetary policy is like striking the economy with a blunt sword. The economic proposal put forward by Mr Albanese is the sensible economic approach to addressing our inflationary problems, as the adoption of local manufacturing and renewable resources, including renewable transportation, will reduce the cost of goods from the farmgate to the table, to coin a phrase.
It’s time for an economic change, whilst we still have time.
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8 comments
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New England Cocky
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Jack Cade
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Stephengb
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Phil Pryor
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leefe
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Kerri
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B Sullivan
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leefe
Return to home page”It’s time for an economic AND POLITICAL change, whilst we still have time.”
NEC
We had time in 1972, and that ended badly. I thought we had time with Kevin07…And the same saboteurs went to work.
I spent my childhood watching cowboy films, thinking newspaper reporters were on the side of the goodies.
What a fool I was…
Michael Springer
You spoilt a good article by describing the current inflationary pressures as – “runaway inflation” – as “running out of the gate” as “skyrocketing inflation”.
This is mere hyperbolic speculation, the fact is that inflation is always present, that inflation can become “runaway” is an emtirely different issue.
“Runaway or skyrocketing inflation” is the agragate increase of prices of the aggregate of products. We are not anywhere near this scenario. Yes there are inflationary pressures, but these are temporary and relatively low.
We might observe inflation carefully, a little more now, but soon it may worsen. We expect a little each year because of the “money illusion”, whereby people expect to get a little more from wages, earnings, receipts; so, one to two percent is “built in.” Even printing money is not necessarly inflationary, if it works as a bond and circulates quickly and fairly. The USA paid for WW2 with up to 26% p a, in money printing, over bonds and taxes.
Stephengb:
Fuel prices increasing by over 50cpl just this year is your idea of “low” inflation?
Supermarket prices increasing by over 10% just this year is your idea of “low” inflation?
Supply chain issues are compounded not just by the disjunction between demand and supply, but also by the increases in fuel costs and the difficulty of maintaining necessary staff levels during an ongoing pandemic.
I married into a family that had historically run a manufacturing business that mostly worked from Australia.
We fought for years to try to maintain a viable workforce in Australia but ultimately had to turn to overseas production. The competition was just too fierce and the quality took a huge downwards slide.
We sold the business.
If we couldn’t compete by keeping Australians employed and manufacturing goods that were robust it wasn’t worth it.
“The cynical mindset of the application of market economics by the Liberals”
There is absolutely nothing cynical in the mindset of the application of market economics by the Liberals. Absolutely nothing.
Please AIM Network and its followers. If you want to maintain a vocabulary of dissent, please stop using the term cynical until you know what the word means and you know how to use it appropriately.
The word literally means ‘dog-like’ because it was originally used to describe people who lived in Ancient Greece who chose to live their lives as austerely as was humanly possible (similar to Buddhists), owning as little as possible because incredibly, it made them feel much happier than the normal civilised practice of accumulating wealth and relying on slaves to take care of all their needs and desires so that they could devote themselves to living an idle life in the pursuit of indulgence and excess which was the way their fellow citizens sought to achieve happiness. The cynics were disparaged by their critics who thought that the lives these people lived were wretched and no better than that of a dog and so they labelled them cynics. The cynics happily embraced the term, pointing out that a dog was a man’s best and most trusted, loyal friend.
How on earth can the Liberal mindset be appropriately described as cynical? They might advocate austerity for people they consider inferior, but they never voluntarily embrace it themselves with the aim of becoming happier, not even with the encouragement, assurances or warnings of their god. They indulge to excess and they measure success by the accumulation of material wealth, which they derive from the toil of other people who they value as lesser beings. That is not cynical.
If something is described as cynical the implication is that it is the simple honest truth and not a complex tangle of lies. Cynics have the utmost respect for the simplicity of truth, something Liberals are keen to avoid. If confronted with an undeniably true observation that they object to, they dismiss the observation as ‘cynical’ not worthy of discussion, thus disputing truth when they are inadvertently acknowledging it.
When the Ancient Greeks coined the word barbarians to disparage foreigners as ‘others’ simply because they spoke a different language, the cynics argued that we are all essentially the same and expressed the thought by coining the word cosmopolitan. Cynics (and modern geneticists) recognise that we are all fellow citizens of the same world. The Liberals see the world in terms of us and them, and woe betide those who are not for us.
The ruling class doesn’t just rule over people, it rules over the language. From his personal experience of working in British propaganda, George Orwell felt compelled to warn us that dissent could effectively be stifled by depriving us of a vocabulary of dissent. This is achieved by constant misappropriate use of this vocabulary so that instead of expressing dissent they become terms of derision imbued with contempt and derogatory meaning.
Just recently Anthony Albanese’s PR campaign insisted that Albo was not ‘woke’. The term woke only just entered our vocabulary of dissent a short time ago and (not unlike the now obsolete term ‘hip’) was meant to describe a person who was awake and aware of what is really going on in the world instead of being asleep, oblivious and indifferent to the injustices being perpetrated at the behest of the ruling classes. In practically no time at all that word has been turned into a derogatory term regarded as so contemptable that now Albanese feels the need to deny that he is woke. He’s just what we need. Another PM asleep at the wheel.
Look at how many words I have had to use to try to convey what the word ‘woke’ was supposed to mean. Why can’t I just say woke and be done with it, leaving the listener with no doubt about its meaning as a term of dissent and not a term of derision? Why, because the word is no longer part of our vocabulary of dissent. Dissent has been stifled by persistent misuse of the language.
It happened with political incorrectness, which was transformed into political correctness so that it could be accused of going too far. You can express the idea of PC gone mad. No one ever describes the present state of rape culture or misogyny in Federal politics as political incorrectness gone mad. Yet that is the appropriate vocabulary to describe the insane tolerance of these situations.
This article advocates that Australia should be more self reliant. Cynicism advocates self reliance, but if you try telling your readers that Australia should be more cynical do you think they would get the point? Especially after you’ve been telling them how cynical the Liberals are.
B Sullivan:
Almost all words in modern English are far removed from their etymological roots. Whatever meaning ‘cynical’ once had, it has – and has had for a considerable time – a very different meaning these days.
Seriously, would you apply the same nit-picking over every single word in this article?