C'est nous qui brisons les barreaux des prisons, pour nos frères, La haine à nos trousses, et la faim qui nous pousse, la misère. Il y a des pays où les gens aux creux des lits font des rêves, Ici, nous, vois-tu, nous on marche et nous on tue nous on crève.

Monday, 18 August 2008


This blog will be doing very little for the next three months, as I'll be doing some travel.
Whilst I won't be writing very much, I will be checking in frequently, and keeping an eye on other people's blogs whenever possible. Please feel free to continue leaving comments/suggestions/witty abuse in the comments, or at my email address, the_happy_revolutionaryAThotmail.com

Wednesday, 13 August 2008

The Myth of Prosperity

Almost a month ago, I wrote briefly of the need for the environmental movement to be united with workers' movements, particularly in the current context of possible economic downturn. Lo and behold, like Piers Akerman at a table of hors d'oeuvres, I have a fanatic repeatedly popping up at my blog. This fanatic is thrashing about like a fish out of water, gasping for air, and claiming to have 'pwned' me.
The said fanatic claims that the past few years, namely, the Howard years, could not possibly be viewed as anything but prosperous. This narrative is pretty common, particularly in the News Ltd cheersquad. So we see a series of fairly blunt statements in the comments thread, as follows:

[L]iving standards in Australia will continue to rise. If they fall, it will be due to a Greens-model carbon trading scheme.

Inflation isn't that high, particularly when compares to rising wages. As I pointed out on my blog recently, Australians tend to be a bunch of whiners when it comes to prices.

Like most lefties, your economic illiteracy speaks volumes. Go read about 'real growth' over at Wikipedia.

Whiners, eh?

Any discussion of wage rises and 'real growth' ought really to make mention of a well-established fact, namely, that Australians work a very high number of hours compared to other countries; the 40-hour working week is 'dead'. Furthermore, Australia's labour force has become casualised (a whopping 1 in 3 workers are employed as casuals), meaning that more Australian households suffer from uncertainty in terms of future income, as well as no sick or recreational leave, and difficulties in securing credit.

With this in mind, there are two areas I'd like to touch on where the prosperity narrative has been clearly undermined, to all but the most ardent of true believers.

Firstly, as a result of a number of factors, we have seen the emergence of widespread 'mortgage stress'. This latter notion is determined by the number of households for whom 30-35% of income is spent on mortgage repayments.

In 2001, the term mortgage stress applied to about 1 in 10 Australians. According to the ABS, in 2007, this figure was 47% for Australians below the median wage of about $53,000. Or take this (June 2008) article, for instance:

‘The number of households struggling to meet mortgage repayments jumped 15% to 784,000 in May and is likely to reach 923,000 by September, Martin North, head of Fujitsu Consulting, predicted.’

This is in the context of broader economic difficulties for Australians:

‘…The new figures were released as the Australian Bureau of Statistics revealed that household wealth fell by 15%, or $7500 per person, in the three months to March and the debt-to-asset ratio surged to a record 138%.

"The ratio shows that households do not have sufficient readily liquid assets to cover outstanding debt, highlighting a degree of vulnerability to an economic downturn," said Craig James, CommSec's chief equities economist.’

As one can see, 'prosperity' has been selective in terms of who has received its blessings. Despite Australia's much-vaunted growth during the Howard years, and despite rising wages, many Australians, particularly the most vulnerable, are clearly and significantly disadvantage by the cost of housing.

In addition to increased mortgage stress during the allegedly prosperous years, poverty has also increased. Between 1994 and 2004, the number of Australians living in poverty rose from 7.6% to 9.9% of the population. If a lower threshold is used to define 'poverty' (i.e. if it is defined as living on 60% of the median income), then poverty levels increased from 15.9% in 1994 to 20.4% in 2004, a clear indicator of growing inequality in both relative terms. In absolute terms, Australia's most poverty stricken and vulnerable have been demonised by the Howard government, and their financial lot has not improved.

Despite calls by Rudd for 'wage restraint', and the hand-wringing of the business community, the modest rise in wages for Australia's lowest-paid workers are insufficient to lift anybody out of poverty, particularly given that recent wage increases were below the rate of inflation (i.e. constituted a wage decrease in 'real' terms). This article also contains many useful references on this topic.

In sum, let the fanatics bray with fawning imbecility for 'fiscal conservatism' and Howard. Mortgage stress and rising poverty undermine their thesis, and this is before we have examined inflation, and the soaring cost of fuel and food. Whiners, indeed.

Thursday, 7 August 2008

Hayek versus Brezhnev

The libertarians picked up on a recent speech by Rudd, in which he had the temerity to question one of the foremost 'philosophers' of liberalism:

We simply don’t have to choose between Hayek and (former Soviet president Leonid) Brezhnev,” Mr Rudd said.

Of course, the Russians had a poll last year to assess which leader (of the past century) was the best, and which was the preferred era in which to live. The Hayekians might have hypothesised that free market, anti-communist, fire salesman Yeltsin would have got over the line. On the contrary, he was overwhelmingly trounced in popularity by Brezhnev (preferred by 31% as opposed to Yelstin's 1%). Hell, even Stalin got 6%.