In the past five years the population has grown by just 8%, but government spending has risen by an incredible 21%. By sheer luck the mining boom has increased revenues by 27% but windfall gains like these are not sustainable.
The Daggy Dad “please like me” tour, backed up by his affable side-kick doing slide shows of endless cherry-picked graphs, is nothing more than an advertising campaign. Their claims of strong economic management are based on unrealistic assumptions about future wage growth and consumer spending and completely ignore Australia’s spiralling household debt.
They are reliant on precarious revenue from resources and seem clueless about the importance of diversifying our economy and building new industries to take up the slack caused by technological disruption and the inevitable demise of the fossil fuel industry.
It laughs at Treasurer Josh Frydenberg’s claim in the April budget – and Scott Morrison’s claim in the election campaign – to have returned the economy to “strong growth”, which will roll on for a decade without missing a beat.
Why is the immediate outlook for the economy so weak and uncertain? Not primarily because of any great threat from abroad – though a flare-up in Donald Trump’s trade war with China could certainly make things worse – but primarily because of one big and well-known problem inside our economy: five years of weak growth in wages.
Only one-eyed Coalition supporters could construe the deteriorating state of our economy as somehow acceptable, as having nothing to do with the stewardship of the government. Instead, they will likely insist that the Coalition knows what it’s doing, has everything under control, and that we’re all doing fine. They will extract any morsel of ‘good news’ from the economic data to bolster their conclusions.
They will go on insisting that ‘The Coalition is the superior economic manager’, although the evidence inexorably leads to the conclusion: The Coalition can’t manage money.
What seems to be missing is blaggart Trump not only said he’d raise the 10% tariffs already in place but he’d add 25% on $ 200 bill goods more. This seems as much a backdown than anything else. But it is an action nevertheless he says is good for the economy. He also says it’s not a cost to Americans because the Chinese have to pay it?? The man certainly said the same about the wall didn’t he??. Americans don’t have to pay?? (ODT)
Donald Trump’s top trade advisors have accused China of reneging on promises made during recent negotiations and confirmed that the US will increase tariffs on US$200 billion ($286 billion) worth of goods this week.
When the US President tweeted about the tariff hike on Sunday, local time, many investors and analysts hoped it was a short-term negotiating tactic designed to extract a better deal from China.
Housing Crashes Stocks Boom, Stocks Crash Housing Booms, Swings and Merry-go-Rounds how to stop them taking your money (ODT)
Despite a backdrop of troubling economic signals, the nation’s benchmark S&P/ASX 200 Index rallied almost 10 per cent in the first quarter — its best-ever performance to begin a year in data going back almost three decades. Strong commodity prices and promises of easy monetary policy from central banks are working in the gauge’s favour even as Australia’s property slump deepens and its economy continues to wane.
Victorian Planning Minister Richard Wynne said people were drawn to Melbourne due to its “booming economy and lots of jobs”.
“We’re building for growth with game-changing projects like the Metro Tunnel and the Melbourne Airport Rail Link, and we’re planning for the future with the Suburban Rail Loop, as well as pouring billions into hospital upgrades and new schools,” he said.
“The Liberals did nothing but cut crucial services for four years and Matthew Guy has promised to send a million extra people into the outer suburbs.”
This is not what Malcolm Turnbull is saying in Australia. To complain according to Finance Minister Corman is just “Envy Politics” that Corporations and the rich are getting richer. (OD)
While corporations are enjoying a permanent tax cut which has mainly benefited their shareholders, small businesses also say the law has done little to even the playing field
Just a few months after President Donald Trump’s tax reform passed, small businesses are pushing back against Republican claims that the law will bolster their ability to hire new employees and give out raises to workers—as corporations reap the vast majority of the benefits of the legislation.
Large corporations made clear even before the plan was passed in December that they would use the $1.3 trillion they expect to save as a result of the law to line the pockets of their shareholders—not invest in their employees and new hires as Republicans claimed. Now, small businesses are saying that their workers aren’t benefiting much from the tax law either.
The advocacy group Businesses for Responsible Tax Reform polled entrepreneurs in Maine, Arizona, Tennessee, and Nevada and found that seven in 10 had no plans to hire new employees as a result of the tax plan, while 60 percent said their workers would not be given raises.
More than half of the owners said the law favored large businesses over small ones and did nothing to put smaller companies on a level playing field with big corporations.
When you force the ABC to take down an article that questions your logic you know something is wrong. Since when has Turnbull taken on the role of ABC editor?
On Friday, the ABC took down Alberici’s analysis, citing that it did not conform to the broadcaster’s editorial standards. Frankly, the article – which has been republished on John Menadue’s blog, is not all that different in focus from analyses by Ian Verrender published by the ABC last year, The Age’s Peter Martin and various others, including myself.
Arguing that company tax cuts may not have the impact that the beneficiaries say will result is hardly controversial.
As I noted in January, Moody’s credit rating agency said of the US company tax rate cut from 35% to 21% (compared with a reduction from 30% to 25% proposed here) that “we do not expect corporate tax cuts to lead to a meaningful boost in business investment”.
But given most people don’t get excited by business investment (or increased business profits), companies here have followed the lead of their US counterparts, and are saying a tax cut is needed to increase wages.
It’s all a bit of smoke and mirrors.
The Nobel Prize winner argues that an economy dominated by large corporations has failed the many and enriched the few.
Energy giant failed to declare donations it made to NSW major parties at a time when it was seeking development approvals for projects on state’s mid-north coast
Britain just got its first concrete sign that the British exit from the European Union, or Brexit, will crush the nation’s economy after a grim set of PMI data released by Markit on Friday morning showed a “dramatic deterioration” in the economy since the UK voted to leave the EU. Markit’s flash PMI readings for the UK’s economy showed that composite output fell to its lowest level since March 2009, during the tail end of the global financial crisis. Here is the scoreboard:
Was the previous Labor government responsible for a record deficit as Mathias Cormann suggests? ABC Fact Check runs the numbers.
They cost us a lot but have received little attention this election campaign.
ABS data show private sector business investment and company profits boomed under Labor but have collapsed under the Coalition
India recently launched a “mini space shuttle” for just $14 million. Many people commented, expressing their unhappiness at India investing in space travel while so many of their people live in poverty. The space industry is worth more than a hundred billion dollars worldwide. Most of this is dominated by just a few countries. If India can break into this industry at a lower cost, it could provide a massive stimulus to their economy.
And let’s take a look at a few of the things that were more expensive than their latest launch, shall we?
John Menadue concludes his unmasking of the claim by Malcolm Turnbull, the media and others, that conservatives are better economic managers.
Journalists sifting through thousands of documents from the leaked Panama Papers have uncovered a list of dumb idiots still paying income tax.
The list – which includes Australians – is said to be several pages long. It could be the most explosive find yet in what is believed to be the biggest data leak in history.
“We’ve learnt some pretty amazing stuff this past week, but even we were taken aback by the idea that some dumbasses were filling in tax returns and paying tax at the proper rate,” Investigative journalists Jenny McGuire said.
The tax – which is funnelled directly to central tax offices in countries across the globe – is believed to be used to fund hospitals, schools and roads.
“Some chumps are paying literally thousands of dollars in tax, every single year. That’s money that could be used to fund extra houses and yachts,” McGuire said.
More to come.
While the Chinese government’s response to Australia’s defence white paper was forcefully delivered, state media coverage was low-key.
Scott Morrison is a formidable politician, a leading contender to replace Tony Abbott, and perhaps the anointed successor to Malcolm Turnbull. But Treasury is hardly an easy stepping-stone to the Lodge. Of the 38 treasurers before Morrison, only six went on to be prime minister.
vdnP_Tw[/embed]Source: Robert Reich: VIDEO: Why We Must End Upward Pre-Distributions to the Rich – Truthdig
Any unwanted economic indicators trying to reach Australian shores will be locked up on a small island and never spoken about again, the new Treasurer has revealed.
Making clear he would not comment on operational matters, new Treasurer Scott Morrison said, “If there’s a problem with our economy you certainly won’t be hearing about it from me”.
When asked where the debt levels were currently at, Mr Morrison said, “on a boat to Manus Island”.
Mr Morrison was then asked what the unemployment rate was, to which he replied “it’s the number of people over 15 who are actively looking for work, as a percentage of the total workforce”.
ABC $7.30 presenter Leigh Halfprice interviews Australian Prime Minister Tony Idiott on the subject of the Australian economy.
The latest figures on the health of the Australian economy as shown in the June 2015 quarter National Accounts continues to paint a gloomy picture. Meanwhile, the spin that Treasurer Joe Hockey and Finance Minister Mathias Cormann offer, is priceless. It seems the thrust of their argument is that it doesn’t matter how bad the…
If most Americans have always been poor in the sense that counts, how shall we describe the condition of working people in the age of “secular stagnation”? Repressed for sure: persistent and hopeless austerity will generate social dislocation on a disturbing scale – rising crime and suicide rates, domestic violence and psychological depression. I think of these as expressions of unorganized resistance. Oppressive conditions are naturally resisted in one form or another. The form taken depends on the existence and scope of savvy agents of political resistance. In any case, the State is preparing for what it fears will be significant outbursts of mass recalcitrance. The infrastructure of a police state is in place. State repression apparently must be practiced, rehearsed in preparation for full fledged assault. The experimental “subjects” have thus far been largely black people. But that’s just the dress rehearsal. Only an organized, active Left with a mass base can avert what’s in the wings. So far, it doesn’t look good. So far.
The last thing the prime minister wanted to talk about on the first day of the new financial year was the economy. Firmly on his agenda is the existential threat to Australia posed by a “death cult”, and boat people. Both politically more fertile ground than the ballooning debt and deficit he promised to fix but now doesn’t talk about much, if at all.
There in the Great Hall of the parliament, Tony Abbott called on a higher being to safeguard the nation. Sounding more like an American president, or even a preacher man, this was his parting salutation to the members of the shiny new Australian Border Force (ABF): “May God bless you. May God bless your work. May God bless the country you are helping to protect and prosper.” Believers may have been impressed. Australians, however, are sceptical of anything that smacks of Bible bashing. Especially if it has a whiff of opportunism about it.
One of the country’s respected economic commentators, Ross Gittins, is not impressed. Security scare intended to hide economic failure Writing in the Fairfax papers, he sees the national security scare campaign as an attempt to hide an inconvenient truth: Abbott and his treasurer are making a hash of the economy. The evidence is compelling. Sure there are people in our midst who would do us harm, who despise who and what we are, but the threat they pose, statistically, is far less than any of us being involved in a road accident.
Asylum seekers must always be seen as threats, queue jumpers and illegals, and never as desperate human beings, men, women and children.
Abbott’s hyperbole reached a low point – or high point, depending on the view – in his response to last weekend’s three terror attacks overseas. Po-faced, he warned, “As far as the Daesh death cult is concerned, it is coming after us.” “Daesh” is the derogatory Arabic acronym given to Islamic State’s various iterations, IS, ISIL, ISIS. Instead of urging us to be alert but not alarmed, he was giving credibility to the outfit’s delusional claim it was winning everywhere. According to the author of the best-selling book, ISIS: Inside the Army of Terror, Michael Weiss, this rhetoric is counterproductive. Counterproductive if you actually want to defeat the extremists – but not if you want to appeal to that rawest of voters’ emotions, prejudice and fear.
The newly appointed border force supremo, Roman Quaedvlieg, stuck to the script. Resplendent in his new uniform, he gave resonance to the prime minister’s spiel: “Our utopia, our country, is under constant threat.” A more hysterical warning would not have been out of place as German bombs rained down on London during the Blitz. Nor would the draconian new powers vested in the ABF. Like our spy agencies, its operations will be shrouded in secrecy. Transparency and accountability are always casualties in war, sometimes justifiably. But this federal government is taking it to extremes, and we’re not even at war.
The Border Force Act is targeting doctors, nurses, teachers and aid workers employed in our detention centres. They face a two-year jail term if they disclose what is happening in these places. That prompted a passionate letter of defiance from more than 40 current and former workers on Manus Island and Nauru. One government adviser explained the need for the information blackout on “context”. The suggestion was that no matter how bad these Pacific gulags are, they are still much better than the conditions suffered by the Rohingyas in people smugglers’ camps.
Such speciousness only gives weight to suspicions that the secrecy is really to hide cruelty lest it swings public opinion. Asylum seekers must always be seen as threats, queue jumpers and illegals, and never as desperate human beings, men, women and children.
The protesting signatories see it very differently:
“We have advocated, and will continue to advocate, for the health of those for whom we have a duty of care, despite the threats of imprisonment, because standing by and watching substandard and harmful care, child abuse and gross violations of human rights is not ethically justifiable.”
Far from being dissuaded by these concerns, the government is looking forward to the Labor Party tearing itself apart over them at its national conference later this month. It keeps the headlines where Abbott wants them, and well away from his abandonment of real and promised economic reform. “It’s politics, stupid,” seems to be the new ruling principle.
Nowhere was this more obvious than the revelation that the Expenditure Review Committee (ERC) of cabinet, chaired by the prime minister, actively considered changes to superannuation tax arrangements before this year’s budget. Labor’s Chris Bowen, a former treasurer, says the department would not have sent four briefings to the ERC unless this was the case. At the time, Joe Hockey was signalling a disposition for changes. He was being urged to it by his own Commission of Audit, his own Financial System Inquiry, and the superannuation industry itself.
Abbott killed it stone dead after Labor announced it would concessionally tax interest earnings above $75,000. Hardly a sock-the-rich move, it would begin to address the huge cost to the budget of these concessions. Never mind the advice, for Abbott it was politics. The prime minister has now gone one step further. His promise not to look for equitable savings in this area is a “never ever”. Repeating the precedent of his election eve undertakings not to do something, he told reporters, “We have made a very clear decision that we aren’t ever going to increase the taxes on super.”
A government serious about repairing the budget would be looking for more than bracket creep to do the job – that is, inflation pushing wage and salary earners into higher tax brackets. In the meantime the budget deficit has doubled, unemployment is rising, productivity is falling and investment is patchy. Gittins has called out Abbott’s bluster in opposition, his claim the Liberals had good management in their DNA. “I thought he had a point,” Gittins writes, “but what we didn’t discover until too late was that he and his chosen treasurer just didn’t have that gene in their bodies.”
Abbott’s reform shyness is born of political weakness, a legacy of last year’s budget disaster and February’s leadership scare. He has been clawing his way back but his government is still languishing in the polls. Wrapping himself in a flag or 10, depending on the occasion, is only working to a point. This week’s consolidation of the past quarter’s Newspolls dramatically shows it would lose government in an election held now. A lot of the media focus is on Bill Shorten’s looming challenges in the unions royal commission and the ALP national conference. But the warrior prime minister is facing two big moments of truth in coming months.
The United States Supreme Court’s recognition of same-sex marriage as a human right has given new impetus to the push for recognition here. A Liberal backbench bill, seconded by Labor and supported by independents, will go into the parliament in August. That will trigger a debate in the Liberal and Nationals party rooms on a conscience vote. Abbott hasn’t changed his views, he says, although this week he refused three times to restate them. He is under pressure from his conservative allies not to allow a free vote, a position that is looking increasingly out of step with the broader community and as such could be politically damaging.
Not making our climate-change sceptic PM’s life any easier is a new alliance calling itself the Australian Climate Roundtable. What must have surprised, if not shocked, the naysayers in the Coalition was the membership of the group. Besides the usual environmentalist suspects, business is throwing its weight behind the need for real action to achieve the stated goal of avoiding a two-degrees Celsius rise in the earth’s atmosphere. The aluminium industry, one of the biggest users of electricity, says it’s time to set climate policy on a path that will efficiently reduce emissions while also enhancing economic prosperity and maintaining industry competitiveness.
The roundtable includes as a policy tool trade in emissions entitlements and the removal of carbon from the atmosphere – something Abbott has categorically ruled out. Anything that smacks of a carbon tax is anathema to him. It would show his “scrap the tax” as a pyrrhic victory. But when you have the Business Council of Australia, electricity generators, manufacturers and unions all signing up to policies that look beyond the next khaki election, it’s serious.
Adding to the pressure is the announcement from China, one of the world’s biggest emitters, that it is intent on cleaning up its act. Beijing has announced ambitious initial emission reduction targets for after 2020. Apart from praising coal as “good for humanity”, Abbott has had precious little to say on the subject. He’s been too busy scaring the nation with an overblown terror threat to spend any time addressing one the world’s scientists warn is real and increasingly urgent. Urgent, in the sense that a transition to a less carbon-intensive economy takes decades and has to begin now. In case Abbott hadn’t noticed, our future depends on it.
Mining magnate Gina Rinehart says she is heartbroken, but holds out hope of one day mending the broken relationship with her trust fund.
“She knows it will take time; there’s no quick fix,” a friend of Ms Rinehart said. “But the relationship between a mining magnate and her trust fund is special, it’s sacred. So I’m confident that with time, patience and lots and lots of litigation the two can be brought back together”.
Ms Rinehart held back tears as she tried to come to terms with where it all went wrong. “I remember when it was so small – just a billion dollars or so.
“It’s grown so much; so much. And somehow I let it drift away. I only hope we can get back to that intimate, beautiful time we had when it would cuddle up next to me at night and do whatever I said”.
Why did Prime Minister Benjamin Netanyahu of Israel feel the need to wag the dog in Washington? For that was, of course, what he was doing in his anti-Iran speech to Congress. If you’re seriously trying to affect American foreign policy, you don’t insult the president and so obviously align yourself with his political opposition. No, the real purpose of that speech was to distract the Israeli electorate with saber-rattling bombast, to shift its attention away from the economic discontent that, polls suggest, may well boot Mr. Netanyahu from office in Tuesday’s election.
But wait: Why are Israelis discontented? After all, Israel’s economy has performed well by the usual measures. It weathered the financial crisis with minimal damage. Over the longer term, it has grown more rapidly than most other advanced economies, and has developed into a high-technology powerhouse. What is there to complain about?
The answer, which I don’t think is widely appreciated here, is that while Israel’s economy has grown, this growth has been accompanied by a disturbing transformation in the country’s income distribution and society. Once upon a time, Israel was a country of egalitarian ideals — the kibbutz population was always a small minority, but it had a large impact on the nation’s self-perception. And it was a fairly equal society in reality, too, right up to the early 1990s.
Since then, however, Israel has experienced a dramatic widening of income disparities. Key measures of inequality have soared; Israel is now right up there with America as one of the most unequal societies in the advanced world. And Israel’s experience shows that this matters, that extreme inequality has a corrosive effect on social and political life.
Consider what has happened at either end of the spectrum — the growth in poverty, on one side, and extreme wealth, on the other.
According to Luxembourg Income Study data, the share of Israel’s population living on less than half the country’s median income — a widely accepted definition of relative poverty — more than doubled, to 20.5 percent from 10.2 percent, between 1992 and 2010. The share of children in poverty almost quadrupled, to 27.4 percent from 7.8 percent. Both numbers are the worst in the advanced world, by a large margin.
And when it comes to children, in particular, relative poverty is the right concept. Families that live on much lower incomes than those of their fellow citizens will, in important ways, be alienated from the society around them, unable to participate fully in the life of the nation. Children growing up in such families will surely be placed at a permanent disadvantage.
At the other end, while the available data — puzzlingly — don’t show an especially large share of income going to the top 1 percent, there is an extreme concentration of wealth and power among a tiny group of people at the top. And I mean tiny. According to the Bank of Israel, roughly 20 families control companies that account for half the total value of Israel’s stock market. The nature of that control is convoluted and obscure, working through “pyramids” in which a family controls a firm that in turn controls other firms and so on. Although the Bank of Israel is circumspect in its language, it is clearly worried about the potential this concentration of control creates for self-dealing.
Still, why is Israeli inequality a political issue? Because it didn’t have to be this extreme.
You might think that Israeli inequality is a natural outcome of a high-tech economy that generates strong demand for skilled labor — or, perhaps, reflects the importance of minority populations with low incomes, namely Arabs and ultrareligious Jews. It turns out, however, that those high poverty rates largely reflect policy choices: Israel does less to lift people out of poverty than any other advanced country — yes, even less than the United States.
Meanwhile, Israel’s oligarchs owe their position not to innovation and entrepreneurship but to their families’ success in gaining control of businesses that the government privatized in the 1980s — and they arguably retain that position partly by having undue influence over government policy, combined with control of major banks.
In short, the political economy of the promised land is now characterized by harshness at the bottom and at least soft corruption at the top. And many Israelis see Mr. Netanyahu as part of the problem. He’s an advocate of free-market policies; he has a Chris Christie-like penchant for living large at taxpayers’ expense, while clumsily pretending otherwise.
So Mr. Netanyahu tried to change the subject from internal inequality to external threats, a tactic those who remember the Bush years should find completely familiar. We’ll find out on Tuesday whether he succeeded.
This post originally ran on Robert Reich’s website.
The U.S. economy is picking up steam but most Americans aren’t feeling it. By contrast, most European economies are still in bad shape, but most Europeans are doing relatively well.
What’s behind this? Two big facts.
First, American corporations exert far more political influence in the United States than their counterparts exert in their own countries
In fact, most Americans have no influence at all. That’s the conclusion of Professors Martin Gilens of Princeton and Benjamin Page of Northwestern University, who analyzed 1,799 policy issues — and found that “the preferences of the average American appear to have only a miniscule, near-zero, statistically non-significant impact upon public policy.”
Instead, American lawmakers respond to the demands of wealthy individuals (typically corporate executives and Wall Street moguls) and of big corporations – those with the most lobbying prowess and deepest pockets to bankroll campaigns.
The second fact is most big American corporations have no particular allegiance to America. They don’t want Americans to have better wages. Their only allegiance and responsibility to their shareholders — which often requires lower wages to fuel larger profits and higher share prices.
When GM went public again in 2010, it boasted of making 43 percent of its cars in place where labor is less than $15 an hour, while in North America it could now pay “lower-tiered” wages and benefits for new employees.
American corporations shift their profits around the world wherever they pay the lowest taxes. Some are even morphing into foreign corporations.
As an Apple executive told The New York Times, “We don’t have an obligation to solve America’s problems.”
I’m not blaming American corporations. They’re in business to make profits and maximize their share prices, not to serve America.
But because of these two basic facts – their dominance on American politics, and their interest in share prices instead of the wellbeing of Americans – it’s folly to count on them to create good American jobs or improve American competitiveness, or represent the interests of the United States in global commerce.
By contrast, big corporations headquartered in other rich nations are more responsible for the wellbeing of the people who live in those nations.
That’s because labor unions there are typically stronger than they are here — able to exert pressure both at the company level and nationally.
VW’s labor unions, for example, have a voice in governing the company, as they do in other big German corporations. Not long ago, VW even welcomed the UAW to its auto plant in Chattanooga, Tennessee. (Tennessee’s own politicians nixed it.)
Governments in other rich nations often devise laws through tri-partite bargains involving big corporations and organized labor. This process further binds their corporations to their nations.
Meanwhile, American corporations distribute a smaller share of their earnings to their workers than do European or Canadian-based corporations.
And top U.S. corporate executives make far more money than their counterparts in other wealthy countries.
The typical American worker puts in more hours than Canadians and Europeans, and gets little or no paid vacation or paid family leave. In Europe, the norm is five weeks paid vacation per year and more than three months paid family leave.
And because of the overwhelming clout of American firms on U.S. politics, Americans don’t get nearly as good a deal from their governments as do Canadians and Europeans.
Governments there impose higher taxes on the wealthy and redistribute more of it to middle and lower income households. Most of their citizens receive essentially free health care and more generous unemployment benefits than do Americans.
So it shouldn’t be surprising that even though U.S. economy is doing better, most Americans are not.
The U.S. middle class is no longer the world’s richest. After considering taxes and transfer payments, middle-class incomes in Canada and much of Western Europe are higher than in U.S. The poor in Western Europe earn more than do poor Americans.
Finally, when at global negotiating tables – such as the secretive process devising the “Trans Pacific Partnership” trade deal — American corporations don’t represent the interests of Americans. They represent the interests of their executives and shareholders, who are not only wealthier than most Americans but also reside all over the world.
Which is why the pending Partnership protects the intellectual property of American corporations — but not American workers’ health, safety, or wages, and not the environment.
The Obama administration is casting the Partnership as way to contain Chinese influence in the Pacific region. The agents of America’s interests in the area are assumed to be American corporations.
But that assumption is incorrect. American corporations aren’t set up to represent America’s interests in the Pacific region or anywhere else.
What’s the answer to this basic conundrum? Either we lessen the dominance of big American corporations over American politics. Or we increase their allegiance and responsibility to America.
It has to be one or the other. Americans can’t thrive within a political system run largely by big American corporations — organized to boost their share prices but not boost America.