Shelves of books in the last ten years wondering why the flowers of liberal democracy have come to this. Branko Milanovic would probably be close to the answer with his 'Capitalism: Alone'.
Kenneth Minogue could offer clues in 'Alien Powers: The Pure Theory of Ideology'.
Martin Krygier has recently co-edited 'Anti-Constitutional Populism', could be worth a look.
'But the “cost of living” was not a big issue because wages were indexed under the Prices and Incomes Accord. Some small reductions in real wages were compensated for by the reintroduction of Medicare and improvements in superannuation.'
The introduction of Medicare in 1984 (actually the re-introduction of Medibank) was not, and was not intended to be, compensation for real wages not being fully indexed. Under the terms of the original Accord, such improvements to the "social wage" were intended to be in addition to full wage indexation.
The commencement of 3% compulsory superannuation in the mid-1980s was certainly a trade-off against the unions' 4% productivity-based wage claim at the time, although the situation in relation to the Accord and its various renegotiations was more complex.
"A rapid reduction in inflation, achieved by holding real wages below their pre-pandemic level suits the institutional interests of the Reserve Bank, which are centred on its primary objective of price stability."
What is the mechanism for "holding" real wages at some level?
Does this imply that the RBA has an inflation target that is not real income maximizing? That at its target, given normal shocks and price stickiness, some markets so not clear? Or is it that RBA is not flexible enough to allow enough temporary inflation to facilitare adjustment for relative prices to extraordinary shocks?
"Such an adjustment [wages keeping up with COL], it is claimed, could set off an inflationary spiral."
??? That implies that the RBA does not have an inflation target. Or is it a claim that for the period under consideration the "adjustment" would cause some labor markets not to clear implying unemployment, "forcing" the RBA to allow the other prices to rise enough to restore full employment?
[Sorry about so many questions, but I'm trying to understand the differences in how RBA works compared to the Fed.]
a) why mortgage interest (mortgage principle?) but not rent
b) It is claimed about the US at least that COL is considered a PROBLEM even if their "own hard work and skill" means"\ that their wage has risen even more.
The only way to affect wealth distribution is to break the obsession held by many Australians that land ownership is a need. Renting and long term leasing are better options for a fairer wealth distribution in Australia. Instead of giving land owners tax concessions, a universal land tax regime should be imposed. This wealth tax may deter many from land ownership. It should certainly deter absentee land owners and those who leave land assets idle. Paper assets may get tax concessions for political reasons. But this should be capped to deter hoarding of excessive paper assets. As for superannuation there should also be limits to stop the very wealthy parking large amounts in trust funds. The hoarding of wealth must be discouraged. That means that hiding wealth in tax free countries must be severely penalised. But the biggest problem is negative wealth. There should be a negative wealth tax concession. If a taxpayer has negative wealth then taxable income should be reduced until wealth ownership is positive. Land tax receipts can be used here to redistribute wealth.
All in all our politicians need to stop living in the 1980s and 1990s and formulate wealth distribution strategies that will improve matters and not make them worse.
Unfortunately, it is a global issue too, for the same reasons. For us there are some reasonable safety nets. Many other places, it has come down to going without food and other necessities for a growing cohort.
BTW, do you think the stage 3 tax cuts should not proceed?
Good article PJQ. You got plenty of interest on X. David Pocock 'Big picture read on cost of living.' , Ben Eltham, Julie Smith ANU @JohnQuiggin nails it. #auspol ‘ “cost of living” + many more. How's the other platforms going?
Is there a typo here? Should 'suits the institutional interest of the Reserve Bank, which are ...' be 'suits the institutional <I>interests</I> [plural] of the Reserve Bank, which are ...'?
Shelves of books in the last ten years wondering why the flowers of liberal democracy have come to this. Branko Milanovic would probably be close to the answer with his 'Capitalism: Alone'.
Kenneth Minogue could offer clues in 'Alien Powers: The Pure Theory of Ideology'.
Martin Krygier has recently co-edited 'Anti-Constitutional Populism', could be worth a look.
John, you write:
'But the “cost of living” was not a big issue because wages were indexed under the Prices and Incomes Accord. Some small reductions in real wages were compensated for by the reintroduction of Medicare and improvements in superannuation.'
The introduction of Medicare in 1984 (actually the re-introduction of Medibank) was not, and was not intended to be, compensation for real wages not being fully indexed. Under the terms of the original Accord, such improvements to the "social wage" were intended to be in addition to full wage indexation.
The commencement of 3% compulsory superannuation in the mid-1980s was certainly a trade-off against the unions' 4% productivity-based wage claim at the time, although the situation in relation to the Accord and its various renegotiations was more complex.
Thanks for correction on this. I'll check back on the history and rewrite
"A rapid reduction in inflation, achieved by holding real wages below their pre-pandemic level suits the institutional interests of the Reserve Bank, which are centred on its primary objective of price stability."
What is the mechanism for "holding" real wages at some level?
Does this imply that the RBA has an inflation target that is not real income maximizing? That at its target, given normal shocks and price stickiness, some markets so not clear? Or is it that RBA is not flexible enough to allow enough temporary inflation to facilitare adjustment for relative prices to extraordinary shocks?
"Such an adjustment [wages keeping up with COL], it is claimed, could set off an inflationary spiral."
??? That implies that the RBA does not have an inflation target. Or is it a claim that for the period under consideration the "adjustment" would cause some labor markets not to clear implying unemployment, "forcing" the RBA to allow the other prices to rise enough to restore full employment?
[Sorry about so many questions, but I'm trying to understand the differences in how RBA works compared to the Fed.]
"In the neoliberal context, any benefits given to one group of wage earners or welfare beneficiaries must be offset by costs imposed on another."
That must be using the double secret no tax codicil of "Neoliberalism." I recommend getting rid of it. :)
Not to take away from the larger point, but
a) why mortgage interest (mortgage principle?) but not rent
b) It is claimed about the US at least that COL is considered a PROBLEM even if their "own hard work and skill" means"\ that their wage has risen even more.
The only way to affect wealth distribution is to break the obsession held by many Australians that land ownership is a need. Renting and long term leasing are better options for a fairer wealth distribution in Australia. Instead of giving land owners tax concessions, a universal land tax regime should be imposed. This wealth tax may deter many from land ownership. It should certainly deter absentee land owners and those who leave land assets idle. Paper assets may get tax concessions for political reasons. But this should be capped to deter hoarding of excessive paper assets. As for superannuation there should also be limits to stop the very wealthy parking large amounts in trust funds. The hoarding of wealth must be discouraged. That means that hiding wealth in tax free countries must be severely penalised. But the biggest problem is negative wealth. There should be a negative wealth tax concession. If a taxpayer has negative wealth then taxable income should be reduced until wealth ownership is positive. Land tax receipts can be used here to redistribute wealth.
All in all our politicians need to stop living in the 1980s and 1990s and formulate wealth distribution strategies that will improve matters and not make them worse.
Unfortunately, it is a global issue too, for the same reasons. For us there are some reasonable safety nets. Many other places, it has come down to going without food and other necessities for a growing cohort.
BTW, do you think the stage 3 tax cuts should not proceed?
Good article PJQ. You got plenty of interest on X. David Pocock 'Big picture read on cost of living.' , Ben Eltham, Julie Smith ANU @JohnQuiggin nails it. #auspol ‘ “cost of living” + many more. How's the other platforms going?
Is there a typo here? Should 'suits the institutional interest of the Reserve Bank, which are ...' be 'suits the institutional <I>interests</I> [plural] of the Reserve Bank, which are ...'?
Well spotted. I'll fix this