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- Is it just me or is this obvious?
Show of hands, who else was incredibly frustrated by Federal Budget coverage this week? This is the first time in a while that I felt huge questions were being left unanswered. It’s clear the economic problems we’re facing right now are bigger than one or two or even three budgets can solve.
There is a lot swirling around in my head on all of this, but there is one problem that I just cannot shake. Work through this brain dump with me:
Who Is Really Doing The Inflation?
I cannot shake the feeling that people on low and low-middle incomes are being targeted as the source of inflation, and it’s not working because they’re not actually the folks driving prices up. Inflation occurs when supply > demand (yes, we knowww!). It’s been repeated over and over and over that to stop prices going up, we have to ‘slow down spending’ which really means ‘we need people to have less money to spend’. Sounds mean, but in theory it makes sense?
That is why so many commentators and many economists say the modest increases to Jobseeker and other welfare payments would be inflationary. If you give people more money to spend, businesses will increase their prices. IMO Greg Jericho made the only transparent explanation – raising Jobseeker does increase the amount of money people have to spend, but by a percentage so small it’s barely noticeable.
Not really. Quarterly Gross Household Disposable Income in Australia in December was $376.8bn
Normally it increases by around 1.08% or $3.9bn.
So it would look like this in total. 4/11
— Greg Jericho (@GrogsGamut)
Apr 21, 2023
When you look at the four biggest areas of inflation, three of these are essential items that people can’t opt out of: medical/health, tertiary education, gas/household fuels. The last item is totally optional though: domestic holiday travel. Do you reckon holiday spending going up because of the poor or the wealthy?
And even though the RBA has continued to increase the cash rate, house prices are still going up. In theory, with higher interest rates making loans more expensive, house prices should drop… but they aren’t because wealthy investors and homebuyers are unbothered by the changes. They can still afford to compete with each other, keeping prices high. In the meantime, the mortgage costs get passed directly onto renters… which is inflationary! It increases housing costs!
Another example – compare taxes affecting two different groups: smokers (typically lower income) vs the shareholders of mining & resource companies (typically higher income). The tax increase on cigarettes and tobacco will raise around $660million per year, which is more than the $600m per year from the petroleum resource rent tax (PRRT). Surely, we’d expect much higher taxes on billion dollar resource companies and the trickle-down effect on high income spending? Less profit = small or no dividends to shareholders. Right?
When the wealthy get extra cash or tax breaks, do we adequately question where that money goes? Do we ask them to sacrifice for the sake of a healthy economy to (supposedly) the benefit of Australia?
Economics is complex so it’s difficult sometimes to tell whether spending is inflationary or not — unless you know this simple trick:
if I don’t like what you’re spending it on: it’s inflationary 🚫
if I like what you’re spending it on: it’s not inflationary ✅— cameron wilson (@cameronwilson)
May 10, 2023
I’d love to see the data on total expenditure, broken down by household income level, but can’t find it anywhere. (Point me in the right direction if you can!) It seems to me that if we have to slow discretionary spending down to get inflation under control… it’s wealthy and high income Aussies who need to be targeted? Not those on low incomes whose spending is predominantly on survival?
Even equity-focused economists have insisted it’s a good thing that this budget’s welfare increases were so small, because any bigger would (allegedly) be inflationary. Maybe that’s true, but I don’t see other solutions being discussed? When the middle income folks run out of fat to trim… where do we go from there?
I never studied economics so if you are an ECON guru and you’ve got something to say about this pleasepleaseplease shoot me an email: [email protected] Give me answers, I beg! I’d love to work this into a bigger article for the website if I can find some clarity.
Good stuff on Zee Feed rn:
Looking at the actual impact on these areas: Surplus; Welfare & Cost of Living; Housing & Rent; Climate & Environment; Health & Mental Health; Education; Wages & Tax; Indigenous Affairs. CLICK HERE TO READ.
Smart stuff on the Internet 💭
All the stuff I found on the web that made me think, smile, or have an ‘aha!’ moment. Spend your Sunday reading them – you'll be better off for it:
The Internet Isn’t Meant To Be So Small on Defector
“The internet wasn't supposed to be six boring men with too much money creating spaces that no one likes but everyone is forced to use because those men have driven every other form of online existence into the ground. The internet was supposed to have pockets, to have enchanting forests you could stumble into and dark ravines you knew better than to enter.
This mini video series on Envy by Ayanda on TikTok
Ayanda is one of my favourite accounts on TikTok – she articulates modern philosophy and life so clearly and powerfully. Her three-part series on how our society creates envy within us has been so helpful for me in sorting out my own feelings of jealousy and inadequacy, and realigning the goals of this business. Highly recommend you watch and/or follow!
WA police raid journalists on The Saturday Paper
“As police went through my office and my notebooks, which contain confidential material relating to a range of sensitive sources and stories on which I have recently worked, a piece I had written for this newspaper about a crackdown on Woodside protesters and ‘pre-emptive policing’ was going to print. At almost the same time, police to the north of Perth were harassing a young reporter, Eliza Kloser, who works for the Indigenous community outlet Ngaarda Media.”
Pop Culture Is Tefi Pessoa’s Calling on Centennial World
“I feel like pop culture is humanity from maybe a more feminine lens and I think that is important too and it influences the way we talk to each other, how we get to know each other, how we smoke each other out.”
What I’ve Learned Since Getting a Glory Hole in My Home on Vice
One of the most interesting interviews I’ve read in a long time, with artist Emil from Melbourne who has a glory hole in his home that (straight) men pay to use. “When I ask these men, what is it about me that they're attracted to… they're like, as masculine men, we're attracted to the opposite energy, which is femininity. That makes a lot of sense. It's not really about just your gender, how you present, but a lot of it is actually this energy that a lot of us emit, which is going beyond face value.”