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.
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.
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:
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
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.
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.