We're overachievers. Highest house prices. Highest per capita household debt. Highest per capita water consumption on the driest continent. Best AFL players.
Here [mp3] is heterodox economist, Michael Hudson interviewed by journalist, Alan Kohler about Australian house prices.
And, here's Kohler's follow up article, The tragedy of Australian manufacturing.
And, from the article, some excerpts:
"There are two big problems for Australian manufacturing (there used to be three when the Australian dollar was at parity with the US dollar and the car industry collapsed, but it has since fallen to the long-term average of about 70 US cents)."
"The first problem is house prices."
"In the past 15 years, wages have been deliberately suppressed by a policy of elevated immigration, both temporary and permanent, while house prices have been deliberately boosted by government policies that have boosted demand and reduced supply."
Here is a relevant chart.
"Those two policy aims – lower wages and higher house prices – are about to collide: House prices won’t come down much, so wages will have to rise, which will make Australian manufacturers even less competitive than they are now unless the exchange rate falls a lot more."
"The second problem for Australian manufacturers is the refusal of governments, state and federal, to support them with active procurement."
"There has been no consistent attempt in Australia to use infrastructure procurement to build sovereign manufacturing capacity and security, which came through in submission after submission to the inquiry."
Here is my usual chart with wage and house price indexes showing. But, what's clear in the Kohler article is the energy blindness.
Economies run on affordable dense energy, with the most important source being transportable oil. The money system determines who gets what of the fruits, and the damage, of that massive burning. Of course, some environmental and social damage can't be avoided no matter how much money, power and material wealth has been accumulated.
Rising energy prices (and house prices) can't be absorbed by real goods and services incomes, and are lockstep with increases in debt. The evidence is in that, if possible, people are saving hard, cutting back on consumption and trying to pay down debt. This isn't good for the economy in the absence of inadequate government spending. Once again, iron ore is saving our bacon to some extent.
And now let's again finish with a tribute to ScoMo, the man a majority voted for.
Do we have the leadership to deal with private debt that can never be repaid, dense energy that's increasingly unaffordable, and remaining affordable dense energy that will soon be cut off or rationed at best?
ScoMo's claim to the job is that he wants to fulfil his destiny.
Do we want to be lead by a crazy Pentecostal1 Christian?
Do we want housing in the hands of a former national policy and research manager for the Property Council of Australia?
Do we want the economy in the hands of someone with a degree in applied economic geography?
Included in that degree is the study of "the relationship between the environment and the economy (tying into a long history of geographers studying culture-environment interaction), and globalization."2 You've got to laugh.
His government is neoliberal to its bootstraps. He's made China and Russia our enemies. He's working for the rentiers, and he's no friend of yours.
Oxford Dictionary of English "Relating to or denoting any of a number of Christian movements emphasizing baptism in the Holy Spirit, evidenced by ‘speaking in tongues’, prophecy, healing, and exorcism with reference to the baptism in the Holy Spirit at the first Pentecost (Acts 2:9-11)."↩