What a wonderful headline to wake up to!
this post was submitted on 05 Mar 2024
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As far as I can tell we've been in a recession for a long time but nobody wants to admit it.
The reserve bank/etc are burying their heads in the sand and hiding behind external factors like the price of resources overseas that artificially inflate official figures... even though they have almost no bearing on the lives of people here in Australia.
I guess those exports are good for our superannuation but that's about it. As a young person with a family I'm not worried about how much money I will have when I retire - I'm worried about how to pay for the roof over my head right now... and unless something changes soon there's a good chance a lot of people will be draining their super to pay for housing. If too many people reach for that bandaid it will cause both short term and long term economic problems.
I'm not sure what needs to be done - but it seems to me like whatever it is, it's not going to happen if we ignore the problem.
If I were to pick an answer though, I'd probably go with some kind of severe tax on anyone who owns a home that they do not live in. Something high enough to force those people to sell and drive housing prices down to something affordable on a typical income. Use the boost in tax revenue to increase welfare funding across the board.
We have been in a per capita recession for ages. The govt avoids a technical recession with mass immigration.
Think of "the economy" as "rich people's yachts" next time you hear a politician or bobble headed reporter talking about something (like immigration) being good for the economy.
Immigration can be good for the economy. If it’s carefully controlled, planned and, used to increase the productive capacity of the nation. Right now it's being used to bludgeon the bargaining power of labour and inflate the housing bubble.
Better solution is communism
We're already in a recession.
sounds like it can get worse 😭
Could any any of this have been avoided if we hadn't (and continue to) ruthlessly persued neoliberal economic policies? Nahhh.
We left the recession?
That period during 2020 was the first time in ages I'd felt positive about the economy. Due to the immigration tap being turned off demand in my industry increased and pay and conditions got better.
After Labor decided to open the immigration flood gates, the shoe is obviously on the other foot again as far as employer vs employee relationships go. Pay has flat lined and conditions like WFH are getting wound back. Thank you Labor for living up to your liberal lite™ tag.
Remind me, what else happened in 2020? Was there any particular reason why the 'immigration tap' was turned off?
Same here, they were almost at the stage of giving us a pay rise (we were essential workers, so they were allowed to not give us the yearly for some reason) as staff shortages were hitting the industry hard.
When factoring in inflation, I'm basically making about $1 more than when I started in my job 7 years ago , and that's with moving up to one of the more senior positions possible in the industry.
You xenophobe.
I'm suffering from the recession too but I don't blame immigrants, because they're coming into an economy just as bad as I live in. That means where they're coming from is even worse. And besides, complaining about immigration is hypocrisy unless you're aboriginal.
If the government had any sense they'd tax the rich and use the money to increase infrastructure spending. That'd create more jobs and improve all our lives. Imagine high speed rail from Melbourne to Perth, going at speeds comparable to a plane. Imagine how many jobs a project like that could provide. And what about solar and wind power? Government should be hiring thousands of people to build solar farms. That's the sensible thing to do with a surplus of immigration; use that productive power to make the country better. Any money paid to immigrants goes straight back into the economy when they buy stuff, so in a functioning economy it should be no problem.
It's not about blaming the immigrants themselves, it's the rate at which the government has chosen to bring them in. We can't build housing at anywhere near that rate to accommodate them.
All that happens is those at the bottom end of the socioeconomic spectrum end up not being able to get a rental and living in their car or a tent.
Those in the next few rungs up end up with reduced standard of living also. Meanwhile the 1% laugh at us losers calling each other names and squabbling amongst ourselves instead of pointing the pitchforks at those who orchestrate it.
The government is building housing as fast as they want to build housing. They're providing subsidies to external developers to build suburbs zoned for residential only. You know how fast the Soviet Union built housing when they put their minds to it? It's just a matter of taxing enough from the rich, and investing in government run industry instead of relying on corporations.
Money in the accounts of the rich is static. It doesn't move through the economy, it sits there are gets leveraged so they can take more. Money in the hands of the workers moves. We spend it on rent and groceries and doctors visits. The cause of a recession is simple: we don't have enough money to spend past the essentials. If there are more workers in need of money, so what? Build them houses and give them the benefits of taxes. Ideally paying them to build houses and killing two birds with one stone. The reason the government hasn't done this is they don't want to. They're in the pockets of big business.
@exocrinous @Longmactoppedup I think there's a few big pieces of this puzzle that you guys are missing.
Housing is too expensive.
Why? Australia doesn't have enough housing.
To build more housing, we need skilled tradies, structural engineers, etc.
But there's a problem.
Australia has skills shortages in those areas.
Okay, so we'll bring in more skilled migrants to fill those skills shortages to build more housing.
Those skilled migrants need somewhere to live.
But there's a problem.
Australia doesn't have enough housing.
So we need more houses for the skilled migrants we need to build more houses to fix the problem of not enough houses.
It gets worse.
For around two years during the pandemic, the Department of Foreign Affairs and Trade needed more staff for things like hotel quarantine and border pass applications.
So DFAT basically took all staff off examining skilled migrant visa applications.
The problem is that when the borders reopened, there was a roughly two-year backlog of skilled migrant applications.
Also, Vlad decided to invade Ukraine, which meant most Western countries blocked Russian exports.
The problem is that a lot of — for example — the timber for the formwork used in concrete came from Russia. So the countries that had domestic supplies were hoarding them, while the rest of the world was scrambling to find alternative supplies.
So developers were waiting weeks or months to hire tradies, the tradies would show up on site, the parts they needed still hadn't shown up because of the supply shortage, so they'd go home. A few weeks later, the parts would show up, but the developer would then need to book the tradies again...
Russia is also a big oil and gas supplier, so as it was shut off from the world market, energy prices surged.
So building projects were being delayed, costs were increasing, new housing supply was delayed.
But wait — what about our higher education system? Why are there skills shortages to begin with? Why aren't our TAFEs and unis producing enough skilled workers?
Well, starting with the Keating government and accelerating under John Howard, the federal government discovered that full fee paying international students are a great way to fund higher education without raising taxes.
So higher education went from primarily training students to fill local skills gaps to exporting education.
Student migration dried up during the pandemic, but it kicked off again just as border restrictions were lifted.
Those students need housing.
At the same time, delays in processing skilled migration visas meant there were massive skills shortages in construction. And supply shortages.
It still gets worse. (1/2)
@exocrinous @Longmactoppedup In a number of key industries — supermarkets, telcos, banks, airlines, electricity — Australia doesn't have genuine competition.
Instead, we have two to four big companies that own the industry and basically act as a cartel.
They saw the supply shortages and skills shortages, and jacked up their prices.
Then when those shortages cleared, instead of lowering prices, they kept raising them and raked in record profits.
All this led to skyrocketing inflation.
Here's where the Reserve Bank comes into play.
Back in the late 1970s and 1980s, there was a number of years where there was a wages spiral.
Basically, this was where prices were rising, so unions demanded and received higher wages, which led to companies putting up prices, which led to higher wage demands...
The thing that eventually ended that cycle was the Reserve Bank lifting interest rates to 17% and causing a recession.
At its simplest, this caused people to lose jobs and stop demanding wage increases and businesses to stop raising prices.
The Reserve Bank acted like a wage spiral was happening again, and put up interest rates.
But this time, it didn't work particularly well, because in most industries, wages weren't rising.
And because housing prices were one of the root causes of the inflation, and higher interest rates made it more expensive to borrow to build houses, it actually made the problem worse.
Instead, people just cut their spending right back.
Which brings us to the almighty catastrofuck of an economic mess Australia's in right now.
At the same time, the same sorts of issues are happening across the world.
There's global skills shortages. Housing prices are skyrocketing across the world. Inflation is surging, even as supply shortages clear. Wage growth is stagnant and isn't keeping pace with the economy.
So in the US Federal Reserve is raising interest rates, and house prices in — say — New York are hitting record highs. Inflation there is surging, but wages are stagnant.
And that's the simple version — there's even more to it, but I'm already on the second post.
It's basically the end product of 30 or 40 years of short-sighted economic policy.
We simultaneously need more skilled migration to fix this mess, but it will also make the problem worse.
The Reserve Bank is lifting interest rates to slow inflation but it's also making the problem worse.
Consumer spending has fallen off a cliff and simultaneously inflation is running rampant.
Households are in a recession while the overall economy is overheating.
And the same things are happening in China, in Europe, in the US, in Canada.
So even if we can solve some of these issues domestically, some of these issues have a global dimension.
In short, it's a mess. (2/2)
And it would all be solved very quickly if we just converted the economy to communism.
Americans be like "WOOLWORTHS?!?!" 😂
This is the best summary I could come up with:
But whatever Wednesday's data shows, the truth is we are already experiencing the biggest dive in living standards in half a century — and have been for two years.
Previous dips in household disposable income per capita have been accompanied by high unemployment, concentrating the pain in the unlucky group looking for work at the time.
Looked at through a longer-term lens (the longest the bureau's spreadsheets allow) the latest dive in real household disposable income per capita is the biggest in half a century.
This appears to date back to a 1974 New York Times article, written by a US business cycle expert Julius Shiskin.
Three decades ago, after the release of the September 1990 national accounts on November 29, Treasurer Paul Keating declared they showed Australia in recession.
A "recession" even briefly appeared after revisions to the 2000 national accounts, under Prime Minister John Howard and Treasurer Peter Costello.
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