Australia – inflation still falling while the RBA governor keeps inventing ruses to keep hiking rates
It's Wednesday and there is a lot going on in the data release sense -…
I wrote about what I am terming a ‘poly crisis’ in this recent blog post – The global poly crisis is the culmination of the absurdity of neoliberalism (July 18, 2022). I am working on material for my next book to follow up – Reclaiming the State: A Progressive Vision of Sovereignty for a Post-Neoliberal World (Pluto Books, September 2017). The German word ‘Zeitenwende’ means turning point. A fork in the road. It carries with it, from one interpretation, a recognition that the path that has been traversed to date is not the path that should be followed in the future. Something has to give. Whether Albert Einstein actually said “Insanity is doing the same thing over and over and expecting different results” is an interesting literary issue but the essence of the quote (correctly attributed to him or not) is sound. The idea of a ‘poly crisis’ is that big shifts in thinking and behaviour are required. We simply cannot continue to act in the same way as before whether it be on an individual level (us making our own choices) or at a societal level. The organisation of economic activity, our patterns of consumption and conduct of economic policy must all change – radically – for the planet to survive. Tinkering around the edges will be insufficient. Identifying a ‘poly crisis’ is tantamount to declaring the neoliberal experiment has failed dramatically and taken us all to the brink. It cannot form a basis for the future. But there is massive resistance to change and in Australia in the last week we have seen that in spades.
The newly elected (May 21, 2022) federal Labor government in Australia has announced a – Jobs and Skills Summit – to be held in the national capital over September 1-2, 2022.
The aim is to bring “unions, employers, civil society and governments” to produce a White Paper to “address our shared economic challenges.”
It will probably not come to much given the vested interests and the views of the main players to date.
But the Australian Council of Trade Unions released a discussion paper yesterday as input into the Summit which is at least attempting to push the debate towards the ‘radical’, which I applaud (in part).
Their media release (August 10, 2022) – Full and secure employment must be top economic goal – announced the paper – An Economy that Works for People.
The Discussion Paper announces:
… business as usual won’t work … We now face conservative economic voices that would rather crash the economy and put people out of work to lower inflation, than put people first. That’s a cure worse than the disease …
The Paper lists the dimensions of what they consider to be the failure of the current paradigm:
1. Stagnant economic growth – more later on this – given we have to reduce the growth obsession and quickly.
2. “badly underutilised” labour – “high levels of underemployment (driven mostly by the expansion of insecure part-time, casual, contracted-out, and ‘gig’ work) became endemic during the years preceding the pandemic.”
3. “Apprenticeships and other vocational training fell to postwar lows relative to the labour force, held back by funding cuts to TAFE, failed private training schemes, and underinvestment by employers.”
4. “Business investment in innovation” falling.
5. “a dramatic decline in business capital investment”.
6. “the growing climate emergency, and the need to transition quickly to renewable energy and production.”
7. “growing income inequality”.
8. “many business-friendly fiscal, regulatory, and labour policies implemented by the Coalition had nothing to do with ‘growing the pie'”.
9. “the weakest growth in their wages in postwar history” driven, in part, by “deliberate attacks” on unions etc by government.
10. “ongoing redistribution of income from workers to businesses … The deliberate redistribution of income from labour to capital is not just unfair: it also creates major economic problems and risks.”
It goes on to document that “profits have grown three times faster than wages since 2016” and that workers are not sharing in the productivity growth.
These are all things I have written about extensively over the course of my academic life and summarised since 2004 with this blog.
The solutions proposed by the ACTU Discussion Paper are:
1. “Establish full employment in decent jobs as the top national macroeconomic priority” – obviously as Director of an academic research centre named the ‘Centre of Full Employment and Equity’ (CofFEE) I support this priority.
Work is intrinsic to human society.
Those without work are dislocated and alienated, in addition to facing poverty and other pathologies.
Those with oppressive and insecure work are not much better off.
Solutions that do not include providing sufficient jobs for all – like Basic Income – fail to recognise the centrality of work in our lives.
A society that provides sufficient work provides hope and discretion for its people.
When I was a teenager (right at the end of the full employment era) we never really thought about ‘getting a job’. We thought about learning opportunities and taking time to think about our emerging adult lives.
It was a time of creativity, mistakes, lessons, and personal development.
When jobs are scarce and the education and training session starts to emphasise ‘getting a job’ over the pure joy of learning, then desperation sets in and poor choices are made, and life experiences diminished.
2. “The Reserve Bank, with a reformed mandate and operational strategy, to work with other government agencies to achieved balanced objectives of full employment and moderate inflation using a wider range of policy levers.”
The – Reserve Bank Act 1959 – already requires the Bank to pursue full employment.
It is the duty of the Reserve Bank Board, within the limits of its powers, to ensure that the monetary and banking policy of the Bank is directed to the greatest advantage of the people of Australia and that the powers of the Bank under this Act … will best contribute to:
(a) the stability of the currency of Australia;
(b) the maintenance of full employment in Australia; and
(c) the economic prosperity and welfare of the people of Australia.
Obviously, the RBA has failed in its charter, given the list of problems identified above.
Their trick was to redefine ‘full employment’ in unemployment terms and rely on the horrendous ‘NAIRU’ literature to save them from litigation that they were in breach of their charter.
I once tried to organise a class action from the unemployed workers union in Australia to test the RBA’s commitment to full employment in the courts but they would not agree to pursue the claim.
I saw some smart mainstream economist yesterday tweet that requiring the RBA to prioritise full employment is impossible because we cannot measure full employment accurately enough.
He is a former board member of the RBA.
Well, here’s a plan – announce that the federal government is scrapping the unemployment benefit and providing a job for anyone who wants to work at a socially inclusive minimum wage – as an unconditional pledge.
What do you think would happen?
Many underemployed would quit their gig jobs and take up the government offer.
The current unemployed would take the government offer.
Some people who are currently outside the labour force would re-enter given the pledge of a guaranteed job at a liveable wage and other conditions (sick leave, holiday leave, superannuation entitlements etc).
Sure enough that would only be a ‘loose’ fully employed state – but it would provide the minimum employment necessary.
Anyway, the ACTU’s point is valid that we need a policy reset and “fiscal policy, public investment, industry policy, regulation, and labour market policy” must all play a role in controlling inflation while ensuring full employment is achieved and maintained.
3. “Implement a fairer inflation-reducing policy that protects workers’ incomes, prevents price gouging, and tackles the underlying sources
of inflation, especially in energy and housing, and reduces the cost of key public services such as early childhood education and care.”
This part of their proposal requires wages to keep up with inflation as well as price controls:
Some key prices (such as prices for energy) should be directly regulated to prevent price- gouging and limit inflationary pressures.
Making public services more accessible and affordable
I don’t think the ACTU is being very radical at all here.
The future requires that we take back control of the essential services and eliminate the profit motive in their provision.
We should nationalise all utilities (electricity, water, transport, communications) and supply them as a public service. That doesn’t mean ‘inefficient’ bureaucracies.
It means we make the goal – public service and sustainability rather than providing massive profits to a small class of mostly foreign shareholders.
We should also make child care free and public transport free for all, rather than just making them, “more affordable”.
4. “Use active fiscal policy to help achieve and maintain full employment, decent jobs, and stable prices.”
The New Keynesian approach is to leave “most macroeconomic management to the central bank” and discredit the use of discretionary fiscal policy.
That ‘policy assignment’ bias has to change.
Modern Monetary Theory (MMT) recommends a permanent zero rate interest rate and all adjustments in spending to be regulated via fiscal shifts.
At least the ACTU is now arguing in favour of some of that shift.
But I know they are still operating within the mainstream fiscal paradigm where they worry about public debt etc. That has to change.
5. “Regulate labour markets so that real wages rise in tandem with labour productivity and support the maintenance of full employment”
The ACTU want to reinvigorate “collective bargaining” but seem to forget that the union coverage is only around 15 per cent or less.
Australia used to have a national productivity case within our wage setting tribunals, which ensured that all workers enjoyed a share of the annual productivity growth.
The problem with relying on collective bargaining is that the workers in vulnerable service sectors cannot achieve wages growth through industrial action – the unions are weak in these sectors.
6. “Use targeted tax measures to cool off aggregate demand pressures in fairer ways.”
The ACTU are critical, as I am, of relying on the RBA interest rate hikes to deal with inflation, when excessive spending is not the cause of the price pressures.
They rightly conclude that:
Lower income and indebted families will bear the brunt of that contractionary strategy – whereas high-income households, which do not need to borrow to finance their luxury spending, will hardly notice.
Which will worsen the inequality crisis.
(a) taxing the rich – Yes, but only if we want them to spend less and have less power.
(b) taking excess profits of energy companies – I would just nationalise energy resources.
(c) require companies to invest in sustainable capital rather than distribute profits to shareholders.
(d) cancel upcoming tax cuts that favour the higher-income households.
The problem here is that the ACTU Paper is inconsistent – on the one hand they argue that the “Domestic purchasing power is clearly not the main cause of current inflation” but then want to a “fairer strategy for reducing spending pressure”.
This sends out the wrong message.
We definitely want to use fiscal policy as the main lever for regulating aggregate spending.
And the fairness (progressivity) of the fiscal system can only be evaluated in total, which means that some components (such as a goods and services tax) can be regressive as long as other components on the spending side, for example, are progressive and offsetting.
But at present we don’t need to cut spending per se.
A windfall tax on energy companies (while the lawyers work on the full nationalisation) should not be to cut spending but force the companies currently gouging profits in that sector to reduce prices and divert supply into our domestic market at lower prices.
Further, the ACTU is relatively silent on the climate and health challenges that have to be integrated into the full employment narrative and solution.
The ACTU plan is being characterised as ‘radical’.
I don’t think it is ‘radical’ enough.
A day after its release – the mainstream press has given a platform to a New Keynesian economist to reiterate how we cannot change very much.
The Op Ed (August 13, 2022) – Unions in time warp with a jobs plan that ignores hard economic lessons – is dismissive in the usual way mainstream economists, stifled in their Groupthink, try to suppress ideas they don’t like.
Apparently, the Australian unions are “like a cornered dog … in a desperate frenzy” because their representation of workers has fallen to around 14 or so per cent.
This is the sort of language the mainstream economists use – put-down, insult, etc.
I have experienced this for decades.
The thoughtful ACTU Discussion Paper is dismissed as a worse than a “screed” (Oxford dictionary: a long speech or piece of writing, typically one regarded as tedious).
According to this economist, the Paper doesn’t even attain ‘screed’ status because it is “so perfunctory.”
Which in put-down language means flimsy, lacking in authority.
Which is reality means threatening to the absurd mainstream theoretical framework that has failed to predict anything meaningful in decades.
And then if that hasn’t convinced the readers of how unworthy the ACTU Paper is, the economist invokes the dinosaur defence, you know, the voodoo economics-type claims – out of touch, from another planet, etc:
According to this character the ACTU paper represents:
… a time warp to the pre-accord 1970s, completely oblivious to the hard economic lessons of the past half-century.
You see the strategy – the ‘hard economic lessons’ have established verities.
They represent what we must retain.
Mainstream economics maintains its hegemony.
More of the same with tinkering around the edges.
The ‘hard economic lessons’ of the last 50 years have demonstrated how little economists know about the dynamics of monetary capitalism and how poor the outcomes have been as a consequence of governments following their advice.
1. The “decline in real wages has been caused entirely by rising prices” – not to mention the fact that nominal wages have not growth much at all for some years and capital has increasingly taken the productivity growth in the form of profits rather than the nation sharing those gains across all income claimants.
2. “The fastest way to grow real wages is to bring down inflation” – reducing inflation will help. But redistributing national income will also help and in the long-term it is unsustainable to have a wage share fall from around 60 per cent to below 50 per cent (as it is now) while capital takes the real income produced and lost to workers as profits
That cannot be a recipe for the long-term.
And attacking inflation now by creating unemployment and keeping wages growth flat will only worsen that situation.
3. “The report claims an easy solution to that, too. Prices too high? Simply legislate lower prices. Among the first things you learn in ECON101 is just how damaging price controls can be for the very people they’re intended to protect. ”
You learn very little that is useful in ECON101.
The context of the ACTU proposal to regulate prices in the energy sector is the current gas situation. Australia has abundant gas resources yet our domestic market is now in massive short supply with huge price increases because the mostly foreign owned companies are diverting gas production to foreign markets where the Russian invasion of the Ukraine has created a short supply.
They are making massive ‘rents’ (excess profits) at the expense of Australian households.
One thing ECON101 teaches students is that when there are economic rents (excess profits) taxing them away (via price controls in this case) will not divert resources away from that use.
The professor seems to misunderstand that.
The energy companies will still make what he would call ‘normal profits’ which are a reflection of the opportunity cost of using their capital in that use rather than a competing alternative.
But further, the gas resources are not owned by these capitalists – they are part of our national wealth and if the government fixes the price the gas is not going anywhere even if the companies were to decamp.
That is why I support nationalisation rather than regulation.
4. “This inflation is caused by too much money chasing too few goods and services” – in part it is.
But that is because there are temporary and extraordinary disruptions to supply which will dissipate soon enough.
Creating unemployment to reduce demand will only exacerbate the misery and the ‘hard economic lessons of the past half-century’ tell us that once unemployment rises, it falls very slowly over an extended period, which imposes massive costs on society, in excess of the massive daily national income losses that it creates.
When inflation is being driven by these transitory and extraordinary events and there is evidence that inflationary expectations are not rising much (see yesterday’s blog post) then the best option is to see it out and help the most disadvantaged get through the cost of living crisis with fiscal transfers.
Rendering those households unemployed is not a solution although it is the only solution mainstream economists think about.
5. “perhaps the rich are hoarding the lettuces? And if we give everyone some more money to buy lettuces, there’ll suddenly be enough lettuces to go around. These claims are so facile it’s hard to know whether stupidity or disingenuousness is to blame.”
Making fun of people. The mainstream way when they haven’t an argument.
Everyone knows that there is a food supply shortage in Australia at present as a result of bushfires and more recently major flooding.
Everytime these natural disasters strike (and they are more frequent now – part of the ‘poly crisis’) food prices rise sharply.
And then they fall once the market gardens resume production.
To dismiss the ACTU’s position as being one of giving people more money to buy lettuce is just insulting – the typical mainstream tactic.
The economist then goes through the usual arguments:
(a) We need more immigration because they spend more and keep downward pressure on wages and working conditions.
(b) We need to make it easier for foreign capital to take over our resources – and gouge profits.
(c) Free movement of capital, goods and people – to ensure the living standards of workers here are suppressed.
The mainstream voice reflects the past which has now after 4-5 decades of prominence delivered us a ‘poly crisis’.
The solutions are not to keep doing what we have but heeding the ‘hard economic lessons of the past half-century’.
Only through a return to collective goals of full employment and more equitable national income distribution, buttressed with first-class public services will we start to envision a future.
The one thing the economist got right was that thinking that “there are no trade-offs” will not cut it.
All of us have to radically change our consumption patterns, our material expectations, our housing designs and fitouts, our transports, etc
That alone will be painful for most.
At least reduce the pain by ensuring we can all work in sustainable ways and enjoy the dignity that that status brings.
That is enough for today!
(c) Copyright 2022 William Mitchell. All Rights Reserved.
This Post Has 20 Comments
Bill, you wrote”
“Those without oppressive and insecure work are not much better off.”
“Those with only oppressive and insecure work are not much better off.”
Bill wrote: “We should also make child care free and public transport free for all, rather than just making them, “more affordable”.
To break through the resistance to free public transport, we need to point out that the more people who use it, the fewer people are driving on the same roads the rich are, and so getting in the way of the rich getting there faster. Do not build more roads, build more busses, etc.
IMHO, nationalization is off the table in almost every advanced nation. It is taken to mean stealing the businesses.
I suggest that Aust. buy the foreign owned businesses it wants to nationalize with gold. What else is the gold good for? It can pay the Australian owners with Aust$.
The Manchin-Shumer sketch in the US is all about taking the fight against climate change away from progressive people and into the lap of the extremist center.
The capitalism of exploitation, colonialism and environment devastation is saying: it’s up to the markets to decide what to do.
Except there are no markets.
In 2022, we have an economy even more monopolized than we had 10 years ago.
If markets will do anything for a profit, monopolies will kill “whatever it takes” to secure the profits they deem as imperative.
I might be wrong, but I believe that “whatever it takes” is just what is happening in Ukraine – from both sides.
“Whatever it takes” wants to go to Taiwan too, if the Taiwanese people are willing to follow the bait (which looks like they are not).
Anyway, tackling climate change with the wrong solutions might be worst than keeping selling petrol and diesel cars as usual, drilling more oil and gas, and keep pumping CO2 into the atmosphere, until we destroy it.
And it’s all about the wrong solutions we are dealing here.
Mining and handling ore to extract lithium, cobalt, copper, manganese, nickel, steel, and other minerals needed to build batteries, will have a crushing impact on the environment.
Batteries only store electric energy, that has to be produced with fossil fuels.
So replacing petrol cars with electric ones won’t solve anything.
What we need is public transportation, backed by a system of shared cars, that might be self-driven (speed control will save billions of gallons of fuel) or not (for now).
If we give the option to the car-sharing industry, will never get anything. It will keep beeing cheaper driving your own car.
Car manufacturers don’t have a future, if we want a future for the planet.
Is Germany, France, Japan, the US and China willing to kill almost all of the their car industries?
Only public investment will do the trick.
But, there we have the extremist centrists in the way again.
@Steve_American re: ‘nationalization is off the table in almost every advanced nation’. Almost may be a key word there. The French government is in the process of renationalising EDF (Electricity de France), of which it already holds an 84% stake. EDF is, as I understand, one of the if not the largest electricity producers in the world, operator of France’s 56 nuclear reactors and international electricity supplier, including being a major supplier to the UK. It apparently needs to submit an application to a Financial Markets Authority in September. It also has to deal with a lawsuit from an employee shareholder group (socialism faces challenges from all quarters). EDF was previously a state company (formed in 1946) before being partly sold off/privatised in 2004 as France was possessed by EU neo-liberalism. I’m aware that Americans have a stranger view of the French than even us Brits, even though they facilitated American independence, but I think we can agree that France is a major advanced nation.
Imo ,they are full of fear because they are well aware of how pxxxised people are.what happens if more people realy do ,twig, that technically the last 60 yrs hav3 been @ gigantic sham ?..
@Paulo Rodrigues re: ‘I might be wrong, but I believe that “whatever it takes” is just what is happening in Ukraine – from both sides.
“Whatever it takes” wants to go to Taiwan too, if the Taiwanese people are willing to follow the bait.’ I can’t say I fully understand this, and my apologies if I’ve got this wrong, but it seems that while correctly recognising the evils of ‘western’ imperialism, you are joining the 21st century version of those westerners who went around with Mao’s Little Red Book, while being ignorant or ambivalent to his policy of mass starvation while exporting food for weapons technology, and continuation of Qing Dynasty imperialism. Now (from the annexation of Tibet 1950/51) we have CCP dynasty imperialism, and Putin imperialism which follows in the footprint of Russian Tsarist expansion. In a rather late 20th, 21st century way, under fire, people in Taiwan and Ukraine indicate pretty clearly that they don’t want to be subsumed by their bigger bullying neighbour, irrespective of whether they are following the bait of EU expansion or simply being a very successful supplier to the car and bike industry.
Patrick B. I wrote “from both sides”. Ukraine war is an imperial war.
In fact, since the romans built an empire, that wars are driven by the imperialist desire to exploit other people’s resources, including human resources.
Wasn’t WWI all about a clash of empires: the great British empire beeing coveted by the German empire? Both lost and another empire – the US – took charge of the spoils.
Wasn’t WWII another push to build the German empire?
What about the EU blob? Isn’t it again the Germans trying to build the German empire.
It’s remarkable how the thing is neither a state or a federation – it’s an empire (if it will end in tears or not, remain to be seen, but the probability of such outcome keeps rising).
When I say extremist centrists, I’m refering to people with no backbone, many of them who carried Mao’s little redbook in the 1970s, and now are fierce neoliberals.
Do you remember a funny Portuguese bloke, who got to be president of the EU comission?
Well, just before he got the top chair in Brussels, he supported Bush’s claim of “massive destruction weapons” in Iraq?
That was the US empire push to exploit the resources of Iraq.
And it “was worth it”, said Madeleine Albright. Still is.
Well, Mr B was a leader of a Maoist party, in the aftermath of the Portuguese revolution of 1974.
He carried the little red book around, but when Maoism was not hype anymore, he threw it in the trash bin and returned to his family’s scrolls.
He belongs to the elite, and so his “Maoist” past was no impediment to the return of the prodigal son.
They knew it was only his way of surfing the maoist wave.
What the extemist centrists like about Mao and Stalin?
The scrolls are tainted with blood all over.
What about Putin’s brutality?
Hi, Bill. Could you erase my last comment, please.
Well, I’m glad for the Aussies having some semblance of a discussion on their neoliberal dysfunctions. In America the obsession is the ethical & petty criminal debauched ex presidents ongoing soap opera. Europeans at least have a social safety net of some help to their population with medical and educational support. The US is beset with outrageous social, political, economic and obscene crime. We’re like a dangerous cornered animal to the rest of the world.
As a retired person, you lost me at:
“… Those without work are dislocated and alienated, in addition to facing poverty and other pathologies.”
I’m feeling rather involved, and well enough off, Thank you.
Mind you, Twitter can be considered a pathology.
Steve – American . Your comment ” that nationalisation is off the table in almost every advanced nation, ” tells me that neo- liberalism is still alive and well. As we move into the middle of the 21st century, humanity will have to accept that national governments will need to take greater control over the natural resources of their countries and increase efficient public services / infrastructure. The alternative IMHO is the collapse of civilised society
and a tilt to barbarism.
I think this is the or a Key point.
Bill wrote: “The ‘hard economic lessons’ of the last 50 years have demonstrated how little economists know about the dynamics of monetary capitalism and how poor the outcomes have been as a consequence of governments following their advice.”
If I had been writing this I would have started it with a word or words to show that you are reversing to POV.
Something like, “Actually, the ‘hard economic lessons’ …”
I’d also add, “And we can count on one hand the number of significant mainstream econ. consensus predictions that have been right over all those 50 years.”
Or “In fact, ‘hard economic lessons’ …”
Dear Tom Wilson (at 2022/08/12 at 9:38 am)
Your expectations as a retiree with sufficient funding are entirely different to a person of working age who must work for a living.
Would you have been happy to be unemployed on low or no income support when you were of working age? I doubt it.
“I suggest that Aust. buy the foreign owned businesses it wants to nationalize with gold. What else is the gold good for? It can pay the Australian owners with Aust$”
It can pay foreign owners with A$ too. Does it make any real difference, for example, if Rupert Murdoch is an Aussie or an American?
If we look at any possible transaction in resource terms it make sense, from our POV, to put as many real resources into public hands. This means not paying anyone in gold! Nationalisation in the ‘western democracies’ usually comes with fair compensation so it can’t be considered theft. But even if it didn’t it wouldn’t be any different from the principle of govt imposed taxation.
“It can pay foreign owners with A$ too.”
They can offer such a deal, but it will only work if the counterparty accepts. Otherwise, nothing happens.
A counterparty might accept if they could immediately use the A$ to buy commodities from Australia, whether gold or something else. They might accept if the A$ had a mystical reputation as a Reserve Currency, which they could hold as a Long-Term Asset. Mostly, domestic currencies work to greatest effect in the domestic market.
” They can offer such a deal, but it will only work if the counterparty accepts”
This isn’t how Nationalisation happens. Think of it as a takeover if you like. Once a bidder acquires a certain %, depending on local laws, of any company shares then they entitled to buy them all and in the local currency. There are no exemptions for foreign holders.
Not that it matters. An A$ is currently worth US$0.71 So there no problem for anyone wanting US$ providing they can use a calculator.
Good to see another Oz journalist thinking outside the mainstream box:
“It’s the last taboo in central banking. So will the RBA review look at how money is created?”
There is a reoccurring theme that I come across on Twitter. (UK)
Some that have been non-conformist for a word, especially for the last couple of years struggle with the idea of taxing super-normal profits. And its the same with what we could call traditional conservatives.
Liz Truss says profits are not bad. But this has now been seen to be a dirty word. And the left frustratingly, simply do not come up with taxing these profits. The best they say, is a one off windfall tax.
The non conformists I feel are more grass-roots and have the potential to at least bring about this sort of change.
Like you, I would nationalise water, gas and other utilities. I think this is the most sensible solution for irresponsible water companies, and profit gouging gas companies.
I suppose what I am saying, is. Why is it so difficult when the bleedin obvious is right in front of their eyes.
I absolutely agree with the title of this topic.
Starting with the climate change issue as crucial entry to this topic, the failure to deal with climate change is a gross failure of our entire political economy system, a failure of capitalism. Illusory solutions from CCS (Carbon, capture and storage) to Carbon Markets were promoted to;
(a) delay real action; and
(b) game the system for subsidies with boondoggles.
Vested private and corporate interests ruled. This is how our system, capitalism, works: private interest against public and natural system good.
We have entered the “Age of Consequences”. World systems, natural, social and economic are all de-stabilizing; rapidly falling out of their previous relative equilibria. It will be crucial to meet this period with socioeconomic change: to use the changes to dismantle capitalism. The system that is rapidly destroying the world is not the system which can save and rebuild it. We no longer need any further evidence that capitalism is riven with internal and external contradictions and is ultimately destructive of human and natural potential.
If we continue with capitalism, especially but not only market fundamentalist capitalism, we will essentially destroy the Holocene world, civilization and likely the human race. This is near certain on current trends. If we turn radically to Democratic Socialism we might save the situation. I say “might” because there are no certainties on this side of the equation. We have already committed far too much damage, social, economic and ecological. It will mean changing horses (systems) mid-stream in crisis. But this horse, capitalism, is dying under us and it is taking us under with it.
We can make a start by ceasing our compensation and subsidizing of those industries and boondoggles which are destroying society and planet and misdirecting resources. Decision and allocation power has to be taken away from those who hold capital. That can only be done by taking away their capital. So, we must commence by repossessing their capital and capital assets. It’s as simple (and as difficult) as that. We must commence with the political and people powers that are still at hand, if we have the political will to use them. As follows;
1. Cease subsidies to the rich.
2. Increase their taxes.
3. Remove tax minimization, tax avoidance and tax haven opportunities.
4. Nationalize strategic & monopoly enterprises.
5. Move more to an MMT and even “state money” model.
6. Increase regulations, especially on finance and on the generation of negative externalities.
This radical dream may seem unrealistic even at this late hour. However, crises from climate change and the general Anthropocence to the emergence now of the Pandemicene make these matters of existential import. Near term personal death and human species extinction ought to concentrate a lot of minds and will. If not, it’s the end for most of us. It’s as simple as that.