As Australia braces for runaway inflation, we cannot simply say that all of this will eventually pass, and meanwhile lay the poor on the sacrificial altar.
Inflation is the monster we forgot was real. We are now at the point where an entire generation of Australians never experienced the economic horrors of the 1970s and 1980s.
The Reserve Bank was rightly exasperated that it had not acted more quickly to deal with the price spike, but in a sense it was also a victim of its own success. The RBA has been so successful for so long in keeping inflation within its target range of 2-3% that it has almost forgotten how to fail.
He has certainly remembered that now and his only real lever left to raise interest rates will put middle and working class Australia in the hot seat.
As a lowly arts student – education, by the way, is one of the biggest costs that raises the CPI – I’ll leave the arguments about what to do about that to the economists. Although I’ll also leave you with the old joke that if you put all the economists in the world together, they still wouldn’t come to a conclusion.
But one thing I am sure of is that we cannot simply say that all of this will eventually pass and, in the meantime, throw the poor on the sacrificial altar of macroeconomic theory.
One thing is very clear, and that is that theory hasn’t served us very well so far. Particularly the idea of lockdown-loving Covid eliminators that we could just pause the economy, then restart it and everything would be back to normal.
Instead, the economy has sprung back to life with such voracity that it is eating us alive, fueled in large part by skyrocketing housing costs caused by people quitting or addicted to work from home and labor issues. material supply chain.
Meanwhile, Vladimir Putin’s mad Don Quixote War against the Ukrainian people has caused fossil fuel prices to skyrocket, exposing the failures of states and the federal government to do, frankly, anything on energy policy.
Despite our abundant resources of coal, gas, wind and solar power, Australia has clearly not done enough to shore up a dirty but reliable basic power supply, nor installed enough clean energy infrastructure to replace. We are the very definition of half pregnant and have now been caught with our pants down.
Our new Labor government is acting quickly and smartly on this, including the emergency meeting of energy ministers this week – about 10 years too late, but still… – and an immediate waiver of long-term climate concerns in favor much more pressing problem. to bring affordable energy to people here and now.
Rest assured I’m still all for getting to net zero by 2050 – that’s a pretty indelible public record – but I’m sure I won’t condone the sacrifice of retirees and the working poor to get there to arrive. Lettuce for all, I say.
And so the only question, the eternal question, is what do we really do?
For people on minimum wage, I don’t see how we could refuse a 5% wage increase. While it is true that this may add some inflationary pressure, the alternative is that they pull back and most likely fall. And by all current projections, even 5% won’t be enough to keep up.
But for welfare recipients, the situation is even worse. The $250 sugar hit they got in the last federal budget will be long gone. As welcome as it was, it would have evaporated the day it landed.
Labor could just give more money in their next mini budget, but that would give rise to the same – arguably credible – allegations of inflationary pressure.
A better measure would surely be to reduce the electricity bill and to increase and widen the concessions already granted to some. It could cut costs without fueling a consumer downfall, which is surely the whole point of the game.
Speaking of which, banks need to raise theirs. If interest rates are going to be drastically increased for borrowers, surely they must also increase rates for savers.
If we’re trying to keep inflation low, isn’t that a big part of what makes people save money instead of spending it?
Again, what do I know – I’m just a lowly arts student. But it seems to me that the same banks that used the last global financial crisis to claim that they were good corporate citizens and not a bunch of assholes could use the current crisis to prove it.
We all understand that there are great global forces at play here, many of which cannot be controlled by Australia. But we can control their impact on our most vulnerable and we can ensure no one is left behind.
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