Much trumpeting this week from the usual combovers regarding the southward movement of the official cash rate, as if it means something. Maybe it does and maybe it doesn’t? What is certain is that such movements are swimming against the tide.
Australians hold $51 billion in credit card debt. This seems mighty small when compared with the $1.257 trillion we owe on mortgages - about two thirds of which is for homes to live in, the rest for investment properties - but to put it in context it is something akin to the size of the state budget of Australia’s largest state, New South Wales, is larger than last year’s federal budget deficit and the same as the profits from the mining sector in 2009/10.
So imagine my surprise when I noted on the fine print in my credit card statement last month that the interest charged on purchases had jumped from 12.99 percent to 13.24 percent.
So while the cash rate heads down – the sledgehammer that the Reserve bank uses to open the economic walnut – the interest that Australians are paying on credit cards is heading the other way.
Credit – easy money – is what has atomised community life in Australia. The need to service debt has rendered what were once citizens into little more than villiens and serfs to the coyly named financial services industry. In a more enlightened age they were referred to as usurers.
So what? I hear you cry. Nobody forced people into taking on such toxic levels of debt that a household needs two or even three incomes to stay afloat?
Well, even putting aside the dubious marketing practices of credit providers over the recent deregulated decades, we can look to debt as being the rearguard solution by the working class in Australia to the shrinking proportion of the economy that is the household sector. People have maintained and modestly improved their standard of living by going into hock to the eyeballs to do so; that’s where all these new cars, plasma screen TV’s and too-big-to-have-a-backyard houses have come from.
Debt has ripped out the kneecaps of working people’s ability to take industrial action. No one can afford to. This has led to a collapse in working conditions. So while incomes may nominally keep ahead of inflation (and that is not the case for all industries) it has come at the expense of workplace standards and conditions that were a two hundred year historical project, pissed up against the wall in a generation.
My underlying point in all this is the disconnect between the economics industry – the commentators, spruikers, carpetbaggers and generally useless riff raff that make a living from casting goat entrails like modern day Greek oracles, but with none of the science or accuracy (as the Failed estate pointed out)are there to serve the interests of an ascendant corporatism – and the reality of life for most Australians who are time poor because they are working and commuting to keep the bailiff from the door and never seem to have the time that we knew previous generations enjoyed, simultaneously watching work get harder and longer in complete contradiction to what the technological prophets told us was going to happen – all in the name of the pursuit of “stuff”, primarily provided by, you guessed it, corprations.
It is a bloodless, sociopathic corporatism where you will obey.
The state is merely a facilitator in this process. Governments have simply made it happen in exchange for party political donations used to achieve a hollow power that is beholden not to an electorate, but to those who pay the bills. Hand wringing feeble attempts to withstrain global corporations from completely pillaging the nation have largely failed. When the agenda of communities meets the agenda of corporations, corporations largely win. Coal Seam gas exploration is a case in point. The proposed strata laws in NSW another. Colesworths another still. Open your eyes and you see it every day.
Corporations have friends across the political spectrum – from Eric Abetz to Mar’n Ferguson. They are ubiquitous and exist solely for their own interests. They are not your friend, not even on facebook.
Their wealth is growing faster than the household sector – ordinary people like you and I. They are squeezing the household sector off the economic page. That is the real economic story of our age, and I am yet to find an Australian economic commentator who thinks it is an issue, especially now Quiggin has jumped the shark. Any suggestions would be welcome.
In the meantime, ignore the guff about interest rates going down. Your pound of flesh will be extracted one way or another. Your quality of life compared to even a decade ago is testament to that.