Slashing and burning housebuilding and investment today will inhibit inflation a little in the short-run at the price of diminishing long-term supply – a sure way to breed more long-term inflation.
This is not an anti-inflation policy. It is a cynical transfer of income from people who did not cause the problem to people who are, in fact, profiting handsomely from it. And it is an excuse for further acts of vandalism on some of Australia’s important institutions.
“You plebeians are borrowing too much money”. “We are not getting paid enough and need to borrow money to survive”. “Our solution is to make your repayments higher so you need to borrow even more money to survive!” “…” “Why are you borrowing even more money to survive!?”
Those who took on too much debt shouldn’t hold the rest of the nation to ransoms.
Aus is an affluent country used to having a high disposable income. They will likely all keep spending.
They need to start taking the medicine. The ironic lucky country is being realised here
Aus is an affluent country used to having a high disposable income.
There is significant wealth inequality in Australia. Many, many people do not have a high disposable income. Should they “take the medicine” of job precarity, housing unaffordability, and price hikes? How would that improve the situation?
housing isn’t unaffordable because of rate hikes, its unaffordable because of cheap money and constrained supply, it’s what “we” voted for.
this is a 50 year slow moving shit storm, tweaking rates 50bpd here or there matters nought when you have nothing to begin with but inflation matters a lot.
How would that improve the situation?
these many many have fucked around and now they’re finding out, they’re adults, with agency… this can only get worse for them because nearly everything we do in terms of neo liberal economic policy takes us this way, and they vote for it they’re accompolocies not victims… we literally eat the future and how they vote will make it even worse for themselves, we see the same shit in the US.
As to the many many… new car sales are at a record, 75% of them are ICE ffs, over seas travel is at a record, inflation adjusted spending keeps increasing. I go out anywhere and observe cafes and restaurants over flowing (I don’t eat out because i cant afford it) i live near a tourist town that drowns in tourists that require vast amounts of energy to get there, fuck any Hormuz crisis it seems. We’ve just seen record numbers of people pay ridiculous amounts of money to watch strangers run around in shorts chasing a ball (bread 'n circuses)
I am not saying it will improve, i think its inevitable a lot of people will get hurt, those without likely. However a lack of common awareness is a big issue. Australia is affluent. Do people spend money easy…take a look at westfield most weekends, and tell me i am wrong. But she’ll be alright is used like an excuse to not deal with clear issues.
I know that there is disparity, been calling if for a long time but most people have been ok with this because their house price went up. The can has been kicked and kicked but debt has to be paid eventually. Thats the medicine.
I am not rich, I cannot afford a home in Aus, but I am also not ignorant to the conditions of those who struggle.
So you say that Australians
need to start taking the medicine
yet when asked how that will improve the situation, you say
I am not saying it will improve, i think its inevitable a lot of people will get hurt, those without likely.
So, I’m not seeing why those without “need to start taking the medicine”. If it’s inevitable they will get hurt whether or not they “take the medicine”, I think they’d be right to say: no we don’t and bugger off for saying we need to.
I think it’s not inevitable (as in: cannot be avoided) that a lot of disadvantaged people will get hurt. That can be avoided, because it will happen only by the choices the powerful make. It can be avoided, if we collectively choose to avoid it.
You realise if all the people, normal people go broke it won’t be good for anyone.
Ordinary people can’t afford their house then they don’t go but coffee then the people working at the coffee shop lose their jobs and everyone falls down.
We shouldn’t be trying to bring the country down we should be trying to lift everyone else up.
I sure as shit don’t know how but that’s what we need to do
I don’t disagree. But this is not a problem that has just arrived. Its been a long time building, with so many people could see it, and voiced it. But people voted for house prices to the moon, meaning more debt for everyone. Meaning less investment to businesses. The can got kicked and kicked. No one wants to see the country in a downward economy but its likely that the result is baked in now. I didn’t make this mess, I cant fix the mess, i’m just the person who points out that its been a long time coming and the consequences need to happen.
I’m too high for this, which direction are you supporting?
I think they’re in favour of people going broke
No i am not.
We’re seeing another facet of the generation lump that is boomers
No i’m not “blaming boomers”. I’m pointing out that once again the size of that generation compared to those before and after is causing huge issues with systems that weren’t designed for it.
Much like we had to bring in superannuation when cooler heads realised the pension math was not mathing, we need a radical new idea to deal with the economic pressures caused by a significant cohort that are not overly affected by debt, nor particularly incentivised to save.
The RBA rates lever is not going to work here. Find a better way.
Find a better way.
This is the tricky part, and in a way - is not within the scope of the RBA’s remit.
We thankfully have award wages tied to the CPI - so having higher inflation (over 2%) isn’t as bad for us as it would be in less developed countries (cough 🇺🇸).
In a sense, we can ride out moderate waves of higher inflation periods that are outside of our national control (such as now, with the Russia/Ukraine and US/Iran wars).
The issue becomes ensuring that a rising tide lifts all boats - so that our most vulnerable aren’t left to drown - eg. lifting Government payments in-line with CPI, rather than letting them fall behind.
government payments should at the very least be tied directly to, or even catagorised as a minimum wage award.
Some (eg. disability payments, carers, pension) absolutely should.
But having for example unemployment benefits match the minimum award runs the risk of disincentivising work, which ultimately will have a significantly negative impact on social cohesion, and our wider economy.
Having it sit somewhere (where? not sure TBQH) below the minimum wage as a safety net, ensures people can keep a roof over their heads and food in their stomachs while they search for gainful employment.
“disincentivising work” is a null concept though. Covid proved that. People want to work on the vast majority - and they certainly want to earn more money. Yeah you’re gonna have outliers but you always do and need to accept them.
Having it below minimum wage does not afford a safety net. People can’t afford to live on minimum wage right now. You know what causes a significant negative impact on social cohesion? Keeping people at half starved for reasons that when probed, utterly fall apart. It feeds resentment, disengagement and makes people prime fodder for the next shithead who promises them candy and unicorns
I think we largely align, so please don’t mistake what I’m trying to say.
Unemployment benefits should be enough to afford people to live. Minimum wage should be higher, and afford people the ability to thrive.
The implicit incentive being to get out and find employment, as that contributes greatly more to social cohesion than anything else we’ve discussed.
See this is where I’m jamming. People don’t need to be “incentivised” to find work. They seek it on their own. This has been proven in multiple studies. Politicians saying they need “incentives” have just found a weaselly way to say being hard up should be punished.
EDIT:
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Finnish UBI experiment gave a bunch of citizens a living wage per month with no obligation to seek employment. They found recipients worked essentially the same number of days as the control group. Employment rates between both groups were virtually identical
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Research by Marinescu, Jones, and Harvey (2018) analyzed decades of data from Alaska’s unconditional yearly cash dividend. They found that guaranteed cash payments had zero negative effect on overall employment.
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Randomised controlled trials in Kenya and other developing nations conducted by MIT and Harvard evaluated cash transfer programs across multiple countries. The cross-country synthesis published by the World Bank and NBER found no systematic evidence that unconditional cash transfers reduce work effort or increase leisure time.
And then you get the sociologists involved and again and again they find that people seek work regardless of financial coercion or benefit cutoffs, Covid was the big whopper, a lot of people - especially in the US, granted - were receiving more “support payments” than their actual wages. They still went into work when possible. Likewise, country after country found that when they cancelled off teh support payments started during lockodwn, the employment rate did not increase in any meaningful manner
so threatening people with low money “get a job” is just…cruelty based on nothing but bias.
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