The Reserve Bank of Australia must engineer the mass sacking of workers to protect corporate profit margins. That’s the misanthropic austerity ideology that currently passes for economic wisdom in the Australian Financial Review.
A recent example is an article by Christian Baylis, a fund manager, who blames the “profligate youth” for “matcha inflation” and chastises Gen Z for lining up to buy a frozen yoghurt. This consumer spending is causing economy-wide inflation to get out of control!
The triviality of his anecdote masks the explicit and extremist neoliberal ideology.
The economic orthodoxy amongst Australia’s financial elite argues that the RBA’s dual goal of achieving full employment and moderating inflation is unattainable because providing full employment is a “competing objective” that stands in the way of price stability.
The market fundamentalists and corporate bosses hate the current low unemployment rate because it reduces their reserve army of labour and means it is harder for them to keep wages low.
Instead, the Australian public accept should be annoyed at the idea of “making around 28 million people accept a higher price level for the sake of generating a highly prospective 50,000 jobs”.
Read that again.
He is framing the jobs and livelihood of 50,000 fellow Australians as an inefficiency that must be eliminated. In the eyes of this market fundamentalist, full employment is a “misguided priority” that we must now “pay our dues” for.
The Reserve Bank is even more extreme! They claim that 80,000 people need to be sacked.
The reserve army of labour is capitalism’s need for a desperate, unemployed underclass to discipline the workforce. If you ask for too much, demand fair wages or decent working conditions, there’s literally tens of thousands of people ready to take your job.
When Gen Z has jobs (currently at 9.5 percent unemployment, which Baylis says is too low), they have the power to refuse poor conditions. Baylis admits this openly: “pushing up interest rates softens the labour market, go figure”. He wants the RBA to put its “hiking boots on” to crush this bargaining power, cut wages and increase unemployment.
But the entire neoliberal economic premise of the Australian Financial Review, Reserve Bank and fund managers like Baylis is a lie.
As Matt Grudnoff from the Australia Institute points out, the RBA has consistently misjudged how unemployment impacts inflation. Recent data shows inflation is being driven by supply-side shocks, accommodation costs, and international travel. Sectors dominated by corporate pricing power, not teenagers buying yoghurt.
What’s more, sacking 80,000 people does absolutely nothing about the causes of inflation in the real economy.
The Australian Bureau of Statistics has conclusively demonstrated that the cost of housing is driven by the cost of building supplies increasing, and by labour shortages! Too few people available for work, and materials cost too much!
The cost of building supplies is high because Australia imports around 60 percent of our building supplies from overseas. We are subject to the pricing power of international, monopolised freight transport costs and monopolised supply chains for things as diverse as windows, tiles, timber, door handles and even structural steel. All shipped to Australia by just a handful of global logistics firms, and funnelled through monopolised, privatised (formerly publicly owned) ports and then distributed by monopolised trucking companies owned by billionaires.
The top ten largest global logistics companies made $340 billion in profits between 2019-2023 and not only do the major logistics companies have fat profit margins, they also are very “tax efficient” which means they use accounting loopholes to shift profits off shore to pay effective tax rate of only 9.7 percent.
How does sacking 80,000 people assist with reducing building materials costs? It doesn’t of course, but sacking those people and wrecking their lives would make them more desperate to take their next job at a lower wage.
Of course, the Reserve Bank and AFR aren’t arguing that 80,000 people need to be sacked because they just don’t have the correct information. They make these arguments because they have a specific class agenda to defend: they must preserve the existing, collapsing neoliberal order.
The fund managers and neoliberal economists like to hyperventilate about “excessive money printing” that occurred during the pandemic. There is no doubt that the stimulus by governments around the world pumped vast amounts of liquidity into the economy, but in real terms literally all of that liquidity was captured by the global ultra-rich and used to push up asset prices (shares, property, etc).
Real inflation is eating everyday people alive.
Rents are skyrocketing. We have reached a point where finding a rental for less than 30 percent of a minimum wage income is statistically impossible in most Australian cities.
Yet the AFR views Gen Z’s hatred of the housing market as merely a grievance, ignoring that shelter is a fundamental material need.
This is the brutal reality of the neoliberal rentier economy, where capital has excessive power over labour. The plutonomy demands that the working class suffer higher interest rates, which drive up rents and mortgages while destroying jobs, to solve an inflation crisis caused by corporate profiteering. Higher interests rates just siphons wealth from working people to the ultra-rich bankers and bond holders. No wonder people are angry!
The neoliberal economists and fund managers like to assert that we are in a “world of trade-offs”, but the trade-off they proposes are always one-sided.
They demand 80,000 workers lose their livelihoods and incomes so that asset managers can enjoy “real” interest rates. We must reject this misanthropic neoliberal ideology.
The solution to inflation is not to destroy the lives of the young. It is to break the pricing power of the corporate monopolies and de-commodify the housing market. It is to create a job-guarantee to remove involuntary joblessness and institute wealth taxes.