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Episode 348 - Inflation - Don't blame wages
In this episode, we discuss the real causes of inflation and why Australia must decouple from America.
Mentioned in this episode:
Transcript
Welcome back to your listener, the iron fist and the Velva glove podcast is just
Speaker:a small intimate affair on this occasion.
Speaker:Just myself and Joe, Joe, how are you?
Speaker:I'm good.
Speaker:And you I'm.
Speaker:Well, Thanks.
Speaker:So dear listener we're recording this on a Monday night because I've
Speaker:got family commitments over the next couple of nights, and then
Speaker:I'm away up in CAIRs for 10 days.
Speaker:So.
Speaker:Joe, and I are recording a podcast which will probably be split into two segments.
Speaker:And so the half that you hear next week, if something astounding
Speaker:happens in the world and we don't mention it, it's because we
Speaker:prerecorded it about a week earlier.
Speaker:So yeah, so bear with us as Joe and I settle into our
Speaker:chairs and attempt a podcast.
Speaker:For up to three hours.
Speaker:I'm missing we a chat already.
Speaker:Yes, it is.
Speaker:Yeah, it would be good to have the chat.
Speaker:We'll old school podcasting without without a chat.
Speaker:See how we go.
Speaker:So I'm a little bit worried dear listener, because I fear this episode
Speaker:could turn into a rant where I just bemoan everything going on in the world.
Speaker:Could be a little bit negative, but we'll try and intersperse it with some
Speaker:positive things if we can, but it's just, it can't always be happy times.
Speaker:Can it, there we go.
Speaker:I've got some notes here.
Speaker:What's going on.
Speaker:I wrote as a headline in my notes and the answer is not
Speaker:much yet a lot or everything.
Speaker:The Morrison government was such a shit show.
Speaker:We became obsessed about his government, which I think was a cross between
Speaker:a train wreck and a clown car.
Speaker:It seems to me just had tragedy and comedy and patheticness all rolled into one.
Speaker:And he's only gotten better since he's got out of office.
Speaker:That's right.
Speaker:Yeah.
Speaker:Hasn't he's been, he was at Margaret courts.
Speaker:He was
Speaker:church.
Speaker:Yes.
Speaker:Telling everyone not to trust the government.
Speaker:Yes.
Speaker:That he was prime minister of and is still.
Speaker:A member of parliament
Speaker:of, yeah,
Speaker:absolutely.
Speaker:Yeah.
Speaker:We'll get onto that.
Speaker:People were, I've been saying for ages that when he stands in lectern, he is
Speaker:channeling the preachers that he's admired in his song and evangelical churches.
Speaker:Like he, to me was always channeling a preacher and He's
Speaker:gonna wanna employ this guy.
Speaker:There's no self-respecting top Australian company.
Speaker:That's gonna want it's more Australia.
Speaker:Apparently they put him on.
Speaker:No, no, No.
Speaker:He wanted to get in the NL and other stuff like surely they
Speaker:won't touch him with a barge pole.
Speaker:He'd hope it's wrong.
Speaker:His post politics career.
Speaker:We'll be trying to be some sort of evangelical preacher.
Speaker:I reckon that's what he said.
Speaker:Either that or on the voice on the voice.
Speaker:Yeah.
Speaker:One of the, one of the ship posting Facebook, things I follow has said
Speaker:basically that every winner of the voice of the last, however many
Speaker:years has been a member Hillsong.
Speaker:Of course, yeah.
Speaker:He'll get lots of votes from.
Speaker:Goes on.
Speaker:Yeah.
Speaker:They'll rally the troops and yeah, dodgy up the voting system.
Speaker:That's a chance.
Speaker:But yeah, we've been obsessed with the Morrison government over the last
Speaker:12 months that I have been anyway.
Speaker:And rightly so, it was terrible.
Speaker:It's time now, dear listener, to look at the bigger picture.
Speaker:How is the world going?
Speaker:How is our society?
Speaker:Where is our civilization in its lifecycle?
Speaker:That's why this episode's gonna be depressing.
Speaker:The answer is not good.
Speaker:Climate change.
Speaker:We've got overheated share and property markets propped up by dysfunctional
Speaker:debt, rising interest rates on that debt falling wages in real terms
Speaker:are failing capitalist system with no alternative being discussed.
Speaker:Rampant misinformation, Christian nationalists.
Speaker:Historic inequality, creating a futile billionaire class, a system that bailed
Speaker:out wall street in 2008 and 2019.
Speaker:And one year after record profits now wants to crush workers with
Speaker:rising interest rates, rising inflation and frozen wages.
Speaker:We've got an unnecessary and avoidable cold war with Russia and
Speaker:China brewing into a hot war and.
Speaker:We've got left wing leadership that is unable to inspire and
Speaker:activate a working class revolt.
Speaker:Your friends who are podcast recently were all about the
Speaker:working class revolt weren't they
Speaker:. Yeah, but they were unable to inspire
Speaker:Ideas were crazy.
Speaker:I'm talking of a revolt.
Speaker:I'm talking about a revol.
Speaker:At the voting box, Joe, right?
Speaker:Not in the streets.
Speaker:Yeah.
Speaker:I Labor seemed to have this idea that they won the last election and I have
Speaker:to say, I don't know that they did.
Speaker:I think that the liberals lost the last election.
Speaker:And I saw a big swing towards the green, so I think the
Speaker:greens won the last election.
Speaker:They did.
Speaker:Yeah.
Speaker:Yeah.
Speaker:I think people are going.
Speaker:You de facto you're better than the liberals, but given a choice,
Speaker:we wanted a bit more movement
Speaker:yep.
Speaker:Yeah, I think that's right.
Speaker:And it's hard to criticize the labor government at this stage because
Speaker:they're really just getting there the feet under the table, although
Speaker:there will be some criticism coming up, but they've gotta have.
Speaker:Time to work a few things out time to make a few mistakes . But
Speaker:for all those problems, they're all genuinely where we are at.
Speaker:We're like, this is a difficult time in, in, in our, in the life cycle
Speaker:of this particular civilization.
Speaker:I think I blame Ronald Reagan and Margaret Satcher and Ruper Murdoch
Speaker:probably should have put Rupert Murdoch first, but I blame all three of them.
Speaker:So John Howard.
Speaker:He's a little bit player in the skin.
Speaker:He followed what they did.
Speaker:Yeah.
Speaker:Yeah.
Speaker:But I think in terms of the Australian yes.
Speaker:Following suit, it was John Howard who put Reaganomics into
Speaker:practice.
Speaker:Yes.
Speaker:Although I'm starting to wonder how much to blind the whole
Speaker:and Keating years as well.
Speaker:I'm just, I have to examine a bit more closely but.
Speaker:They struck the accord and they opened up the Australian economy.
Speaker:But, there was a lot of industry that was just abandoned that in
Speaker:hindsight, maybe we should have been subsidizing and keeping if possible.
Speaker:And so I'm just not entirely sure now how I feel about the Keating hockey
Speaker:and the, and I'm just not sure how much selling offer stuff they did,
Speaker:then I have to look at it more closely.
Speaker:Yeah.
Speaker:But yeah, I would Howard in there with.
Speaker:Interesting
Speaker:thing to me about Maggie is I actually heard a minor saying to
Speaker:me that Margaret Thatcher invented climate change because she wanted to
Speaker:shut down the minds during the mind worker strike back in the eighties.
Speaker:Oh,
Speaker:because she's famously pro sort of climate change action.
Speaker:Yeah.
Speaker:She was a chemist.
Speaker:She actually understood this own
Speaker:and the minor was saying she was doing that to put pressure on the.
Speaker:That's interesting
Speaker:during the mind worker strike back in the eighties.
Speaker:Yeah.
Speaker:Yeah.
Speaker:What do you think of that?
Speaker:Do you agree with it?
Speaker:I think it's a conspiracy theory personally,
Speaker:but yeah.
Speaker:Could be something in it.
Speaker:That's interesting.
Speaker:Yeah.
Speaker:You wouldn't.
Speaker:No, I think
Speaker:there's, I think there's enough evidence out there to prove that humans are causing
Speaker:climate change by burning fossil fuel.
Speaker:Yeah.
Speaker:Whether she latched onto that as a useful thing, that's possible.
Speaker:I don't know.
Speaker:Hadn't thought of that.
Speaker:I
Speaker:just thought it was interesting to hear it as a conspiracy
Speaker:theory.
Speaker:Yeah.
Speaker:It's one of the better conspiracy theories or better theories going around there.
Speaker:I don't know that either.
Speaker:That's that kind of, even if she was, genuinely in favor of taking action
Speaker:on climate change, she would've loved the fact that it made things
Speaker:difficult for the minors yeah.
Speaker:Yeah.
Speaker:That's true.
Speaker:Okay.
Speaker:So I think we're gonna kick off talking about inflation and interest rates, and
Speaker:then we're gonna talk about some foreign policy issues, China Ukraine, and indis
Speaker:disperse it with a bunch of other stuff.
Speaker:But before we do that, just briefly Couple of episodes ago.
Speaker:I mentioned, I really want people to put their hand up, to meet with their
Speaker:local member, to talk about religious instruction lessons, and particularly
Speaker:in inner city, Brisbane, electorates, where there's a strong non-religious
Speaker:vote revealed by the last census.
Speaker:And we'll help you.
Speaker:Nobody's put their hand up yet.
Speaker:So if you're out there and.
Speaker:You've got nothing to do, or you have lots to do, but you feel
Speaker:the issue's important reach out.
Speaker:And particularly if somebody in Anastasia CHES electorate, it would
Speaker:be really good to have somebody go there and talk to her and find out
Speaker:where she stands on this issue.
Speaker:It's hard to gauge what her personal view is.
Speaker:Myself and others are starting to work out different.
Speaker:Politicians and where they sit on this issue, but it's
Speaker:hard to read Anastasia palace.
Speaker:Show's personal position on this.
Speaker:So it'd be good if somebody could talk to her and just before we get into
Speaker:it as well, I enjoyed my discussion with Carl Fitzgerald last week.
Speaker:He was talking about land banks and developers, drip feeding, or
Speaker:drip releasing rezoned property.
Speaker:Keep the market price up.
Speaker:You mentioned a book.
Speaker:Yeah.
Speaker:You haven't read the, you haven't seen the episode yet, but you mentioned
Speaker:a book we were talking about.
Speaker:Yeah.
Speaker:Yeah.
Speaker:Game of mates written by a UQ and a university of Sydney professor.
Speaker:And it's about corruption in Australian politics, but a very strong
Speaker:section around land use and local councils and the coziness between
Speaker:developers and council planners.
Speaker:Talking about the revolving door of people, leaving council, going into work
Speaker:for a developer, and then coming back after five or 10 years and working back
Speaker:in council and just a level of, without.
Speaker:Without avert bribes, just a level of friendliness.
Speaker:And the whole game of mates was not about cash in paper bags as yeah.
Speaker:Has happened in the past, but more just these people being friends
Speaker:and doing favors for mates.
Speaker:Yep.
Speaker:And those favors are at the cost of the average Australian.
Speaker:Yeah.
Speaker:So there's a similar story about a revolving door with coal mining industry.
Speaker:Operatives working in Canberra.
Speaker:I think it was Michael West report did something on that showing just
Speaker:how these people for a few years would be in industry for a few years would
Speaker:be a ministerial advisor back into an industry back as advising and just.
Speaker:There was this group of people in and out of government and the mining industry.
Speaker:So yeah, I can easily imagine a similar thing at council level with developers.
Speaker:So is that an old book game of mates?
Speaker:Is it how old is it?
Speaker:It's gotta be five years old now.
Speaker:Okay.
Speaker:Yep.
Speaker:Anyway.
Speaker:Story wouldn't have changed.
Speaker:Yeah,
Speaker:no I think, look, it's as relevant now.
Speaker:And there were some interesting suggestions.
Speaker:The biggest one was a lot of overseas experts, cuz they're talking about, you
Speaker:need time in industry to understand the industry and you need to become an expert.
Speaker:But what effectively they were saying was council should be hiring from overseas.
Speaker:So there aren't
Speaker:these vested interests.
Speaker:Yeah.
Speaker:Yep.
Speaker:All right.
Speaker:Inflation and what's happening with the economy and the responses from different
Speaker:groups and I'm not sure how much we've mentioned about this in the past.
Speaker:So maybe a little bit of repetition, not sure, but you.
Speaker:What we've got.
Speaker:Dear listener is inflation is which has been dormant for
Speaker:years, suddenly raised its head.
Speaker:And in response, the reserve bank has said, gotta raise interest rates,
Speaker:gotta fix that and gotta deal with this inflation by rising interest rates.
Speaker:And sure enough, they're all starting to rise.
Speaker:And is this the appropriate response?
Speaker:What has caused inflation?
Speaker:What's really going on.
Speaker:Do we just to have to accept what these people are telling us or can
Speaker:we work it out for ourselves in the same way that we became experts on
Speaker:lockdowns and the effect on the economy?
Speaker:And we became experts on Ukraine and NATO.
Speaker:Well, Now experts, I am at least on inflation and interest rates.
Speaker:I'll
Speaker:do the best.
Speaker:Did you see the Chase's comment chases have.
Speaker:No it was employees tell CEOs that they can't afford a pay rise this
Speaker:year because of inflation and its CEOs wages causing the inflation.
Speaker:Yes.
Speaker:Yes.
Speaker:They should be.
Speaker:That's where we're at.
Speaker:So let's look at some charts and statistics.
Speaker:If you are watching this on the video, you'll see a chart on your screen,
Speaker:which this came from Sally McManus, who.
Speaker:Head of the labor movement in Australia.
Speaker:And it's a chart showing the labor's share of labor as opposed
Speaker:to capital L a B O U R share of GDP.
Speaker:And you will see that it peaked in about 1975 or so, and then has been
Speaker:on a decline since, that's the share of gross domestic product and more
Speaker:importantly, or as important is the next slide that'll come up, which basically
Speaker:shows profits index and a wages index.
Speaker:Assuming they started at the same point in 2002, and a very slow,
Speaker:incremental rise for wages and.
Speaker:And a real strong rise for profits, particularly since 2016.
Speaker:So this is wasn't that when
Speaker:Scotty got into
Speaker:yeah, would've been around, he was with us for a bit over three or four years,
Speaker:maybe a bit before Scotty, wasn't it.
Speaker:Just a little bit before Scotty, perhaps.
Speaker:ES essentially.
Speaker:What we've got is profits far out stripping wages.
Speaker:So companies and profits have been doing very well overall compared to wages.
Speaker:So that's a key sort of,
Speaker:I was quite shocked.
Speaker:I saw news.com had reposted or had written an article based on
Speaker:an Australian Institute report.
Speaker:As opposed to the IPA.
Speaker:Yes, which was saying the real cost.
Speaker:Sorry.
Speaker:The real effect of inflation, only 5% of inflation was due to labor costs.
Speaker:Yes.
Speaker:I've got it in the list here, somewhere.
Speaker:The Austral Institute.
Speaker:I'll get to that one.
Speaker:Okay.
Speaker:I think it's somewhere list here, but I was just shocked to see it in
Speaker:news.com.
Speaker:Yeah.
Speaker:Yeah.
Speaker:Slipped in somehow.
Speaker:So I got a bunch of commentators talking about different things.
Speaker:First off is Michael Hudson who is talking about America, which is doing
Speaker:the same thing, inflation fair, raising interest rates, and it exactly the
Speaker:same scenario happening in the states.
Speaker:And so Michael Hudson says to wall street and its back as the solution
Speaker:to any price inflation is to reduce wages and public social spending.
Speaker:Rising unemployment will oblige labor to compete for jobs that pay
Speaker:less and less as the economy slows.
Speaker:This class war doctrine is the prime directive of neoliberal economics.
Speaker:Public discussion of today's inflation is framed in a way that avoids blaming the
Speaker:8.2% rise in consumer prices on the Biden.
Speaker:Administration's new cold war sanctions on Russian oil, gas, and agricul.
Speaker:Or on oil companies and other sectors using these sanctions as an
Speaker:excuse to charge monopoly prices.
Speaker:So your listener, a large component of the inflation is the rising cost of energy,
Speaker:both directly where people buy energy to heat their homes or drive their vehicles.
Speaker:But it's used, you know, freight costs in shipping stuff from China.
Speaker:It's used to create.
Speaker:Fertilizer it's, there's so many things where you increase the cost of fuel.
Speaker:It has a an add-on effect in something that you may not
Speaker:necessarily associate with fuel.
Speaker:And that's, a big part of that is the sanctions on Russia and fuel companies.
Speaker:Charging huge profits as a result because of monopoly situations,
Speaker:Joe Robert Reich was talking about the fact that all these oil companies in
Speaker:the states have gone, oh we need to open up federal lands for drilling.
Speaker:And it's not a shortage of oil.
Speaker:And these oil Wells that they're talking about prospecting for are gonna
Speaker:take five to 10 years to come online.
Speaker:By which time who knows what the oil pricer will.
Speaker:Indeed, but they basically just want an excuse to to open up more oil Wells.
Speaker:Yes.
Speaker:And peel back previous restrictions.
Speaker:And they're using this as an excuse to do that.
Speaker:Yes.
Speaker:And it's the workers who are going to end up paying the price.
Speaker:They don't turn around to the companies and say, stop this monopoly price gouging.
Speaker:They just say to workers, oh, you have take code.
Speaker:The UK did on C.
Speaker:With their price gouging.
Speaker:Yeah.
Speaker:Yeah.
Speaker:With with the type of resourceful profits tax profits.
Speaker:Yeah.
Speaker:More of that please.
Speaker:So still continuing with Michael Hudson COVID shut down of the us
Speaker:and foreign economies and foreign trade also is not acknowledged as
Speaker:disrupting supply lines and raising shipping costs and hence import prices.
Speaker:The entire blame for inflation is placed on wage earners and
Speaker:the response is to make them the victims of the coming Auster.
Speaker:As if their wages are responsible for bidding up oil prices, food prices, and
Speaker:other prices resulting from the crisis.
Speaker:The reality is that they are too debt strapped to be spend thrifts.
Speaker:The pretense behind the Fed's recent increase is that raising interest
Speaker:rates will cure inflation by deterring borrowing to spend on the basic needs
Speaker:that make up the consumer price.
Speaker:But banks don't finance much consumption.
Speaker:Banks lent almost entirely to buy real estate stocks and
Speaker:bonds, not goods and services.
Speaker:Some 80% of bank loans are real estate mortgages.
Speaker:And most of the remained loans are collateralized by stocks and bonds.
Speaker:So raising interest rates will not lead wage earners to borrow
Speaker:less, to buy consumer goods.
Speaker:So that's true.
Speaker:And he makes a point here, the Democrat party the party's identity politics.
Speaker:Address, almost every identity except that of wage earners and
Speaker:debtors his passing aside there.
Speaker:So that's initial comments on the us situation by Michael Hudson saying
Speaker:that a lot of the inflation is just increased fuel costs, brought it
Speaker:out by sanctions and price gouging.
Speaker:Then we've got crikey had an article and it said that rising profit
Speaker:levels among the Australian corporate sector has been identified as one
Speaker:of the key courses for increasing inflation levels across the country.
Speaker:A new reporter shown so rising profit levels amongst.
Speaker:The corporate sector research from the Australia Institute has revealed
Speaker:increasing profit levels amongst companies and not increased wages
Speaker:for workers had been contributing to rising inflation rates.
Speaker:The report found wages made no contribution to inflation in
Speaker:Australia during 2019, 2020, or in the following year 2020.
Speaker:The most recent financial year.
Speaker:So wages only make up 0.6 percentage points of the 4.1%.
Speaker:Richard Dennis from the Australian Institute said, despite concerns from
Speaker:employers and business groups, increased wages would contribute to rising costs.
Speaker:The data showed that the increasing profits were a major factor for inflation
Speaker:it's profits, not rising costs that are driving Australia's inflation.
Speaker:He said, it's a shortage of competition, not a shortage of skilled labor.
Speaker:That's driving up the cost of.
Speaker:Interestingly
Speaker:I read, I think it was a article about
Speaker:gas prices.
Speaker:And they were saying that the Queensland government, because of
Speaker:its hands off approach where they refused to build a state owned
Speaker:infrastructure for the L and G pipe.
Speaker:basically, there were three consortiums that ended up each building their own.
Speaker:And because of that, they were overextended and therefore couldn't
Speaker:afford to sell their gas onshore because they had to pay for this infrastructure
Speaker:that they all independently built.
Speaker:Rather than sharing the infrastructure.
Speaker:Yes.
Speaker:And so that's added costs on, which has basically made gas more.
Speaker:Okay.
Speaker:Yeah.
Speaker:Even if they wanted to, they wouldn't sell it locally at a cheap price.
Speaker:Yeah.
Speaker:Basically they were saying that the state should have built the infrastructure
Speaker:with control with stipulation.
Speaker:Yeah.
Speaker:With the stipulation that they could divert gas as needed to the local
Speaker:market.
Speaker:Because I think Russia is showing that if you can control
Speaker:pipelines, it comes in quite handy.
Speaker:Yes you can put a lot of pressure on it.
Speaker:Yeah.
Speaker:Keep control of.
Speaker:Here's a broad worldview by Yiannis Forfar.
Speaker:So as dear, listen, I've got a bit of a man crush on Yiannis.
Speaker:Think he's great.
Speaker:Okay.
Speaker:Yiannis says, so what is really going on half century long power play led by
Speaker:corporations wall street, governments and central banks has gone badly wrong.
Speaker:As a result.
Speaker:The west authorities now face an impossible choice.
Speaker:Push conglomerates and even states into bankruptcies or allow inflation
Speaker:to go unchecked for 50 years, the us economy has sustained the net exports
Speaker:of Europe, Japan, South Korea, then China and other emerging economies.
Speaker:So basically for 50 years, all this stuff's been going into the us
Speaker:economy while lion share of those foreigners profits rushed to wall
Speaker:street in search of high returns.
Speaker:On the back of this tsunami of capital heading for America, the
Speaker:financiers were building pyramids of private money, such as options and
Speaker:derivatives to fund the corporations, building up a global labyrinth of
Speaker:ports, ships, warehouses, et cetera.
Speaker:When the crash of 2008 burned down these pyramids, the whole financialized
Speaker:labyrinth of global just in time.
Speaker:Supply change was imperiled.
Speaker:To save, not just the bankers, but also the labyrinth itself.
Speaker:Central bankers stepped in to replace the finance's pyramids with public money.
Speaker:Might remember quantitative easing.
Speaker:Meanwhile, governments were cutting public expenditure jobs and services.
Speaker:So we had socialism for capital and harsher disparity for li not just
Speaker:constant to be using those bailouts.
Speaker:Yes.
Speaker:Money just appeared.
Speaker:Literally just appeared wages, shrunk and prices and profits are
Speaker:stagnant, but the price of assets purchased by the rich skyrocketed.
Speaker:It was a new power game.
Speaker:The traditional struggle between capital and labor to increase their respective
Speaker:shares of total income through markups and wage increases continued, but was
Speaker:no longer the source of most of new wealth after 2008 wealth triumphed in
Speaker:equity and real estate markets, which had decoupled from the real economy.
Speaker:Then came to pandemic, which changed one big thing.
Speaker:Western governments were forced to channel some of the new rivers of central make
Speaker:central bank money to lock down masses.
Speaker:And as the lockdown multitude spent some of their furlough money on scarce
Speaker:imports prices began to, and corporations with great paper wealth responded by
Speaker:exploiting their immense market power.
Speaker:To push prices higher through the roof.
Speaker:And after two decades of central bank supported Bonanza of soaring, asset prices
Speaker:and rising corporate debt, a little price inflation was all it took to end the
Speaker:power game that shaped the post 2008 world in the image of a revived ruling class.
Speaker:So what happens.
Speaker:Probably nothing good to stabilize the economy.
Speaker:The authorities first need to end the exorbitant power be showed upon
Speaker:the very few biopolitical process of paper, wealth and cheap debt creation.
Speaker:What Yiannis is getting out there is that money flooded into the
Speaker:system that money was used to.
Speaker:It was so cheap that the top end of town could borrow cheaply buy stuff in the.
Speaker:And that cheap money caused a bubble of in, of inflated property and equity
Speaker:prices, because what are you gonna do?
Speaker:Interest rates are at zero.
Speaker:You can borrow stuff at 1%.
Speaker:You may as well be buying equities and property, and that pushed up the price.
Speaker:And that's where we're at now.
Speaker:So that's one of the aspects of where we got to.
Speaker:right then I've got something from the Saturday paper and
Speaker:let's see, what does it say here?
Speaker:I'll try and shorten it a little bit.
Speaker:So profits are now the highest ever share of Australia's GDP while
Speaker:wage shares are at historic lows.
Speaker:A recent analysis of Australia's national accounts by Greg Jericho
Speaker:from the Australia Institute found company profits increased by 25.3%.
Speaker:Over the past year.
Speaker:Over the past two years, profit margins increased by 40.3% while
Speaker:wages increase by just 7.4%.
Speaker:So they have a dear listener in Australia in the past two years.
Speaker:Look, forget about your mom and dad, businesses selling coffee and cakes.
Speaker:Think of big corporations, profit margins increased by 40.3% while
Speaker:wages increased by just 7.4%.
Speaker:And now with some inflation they're gonna around it's wages who are
Speaker:told, oh, I could freeze . Yeah.
Speaker:Yeah.
Speaker:I think of some corporations that did very well under lockdown, particularly
Speaker:those in retail, online retail.
Speaker:And I can't see that they're bearing any of the blame for this
Speaker:inflation and yet it is them that.
Speaker:We don't get enough of this commentary in mainstream media.
Speaker:So as it says in this article yet the notion that wage growth is the
Speaker:major driver of inflation continues to persist in the public consciousness.
Speaker:There was journalist Philip Corey's infamous claim that pecking
Speaker:wages to inflation would be a one way ticket to the via Republic.
Speaker:Likewise, Andrew Mackellar chief executive of the Australian chamber
Speaker:of commerce and industry said small business cannot afford.
Speaker:Minimum wage rise of more than 5% in such increases would
Speaker:cruel jobs not create them.
Speaker:Meanwhile, broadcast a Wallied alley described Waag nation
Speaker:as the bitter medicine that might keep inflation in check.
Speaker:So as you just rating stuff the commentary is just talking about, oh,
Speaker:it's gotta be wages, a bit of inflation sniffing around, crack down on wages.
Speaker:Couldn't possibly allow wages to keep up with inflation.
Speaker:And and really Australians have to say, no, that's not how it should work.
Speaker:Why just have to keep up in real terms, at least with inflation.
Speaker:And that's what the The railway strike in the UK was all about with that.
Speaker:Those clips I played a few weeks ago where they were saying they're
Speaker:just keeping pace with inflation and they're fighting for it.
Speaker:What else have I got here?
Speaker:So yeah, it just says here, fact check on aisle, two wages
Speaker:do not increase inflation.
Speaker:Unless they increase faster than inflation and productivity combined.
Speaker:And in reality, wages have been flat or declining in real terms for more
Speaker:than a decade business commentators and corporate economists pedal the
Speaker:same tired orthodoxy blaming wages for higher inflation and even evoking
Speaker:fantasies of wage price spirals.
Speaker:I'm fairly sure that in fact, I know that at the end of slavery in the us,
Speaker:the slave owners complained that it would force businesses out of out of business.
Speaker:Yes.
Speaker:Because they couldn't afford to run their cotton farms without slaves.
Speaker:Yes.
Speaker:I think they still did.
Speaker:Okay.
Speaker:Afterwards somehow.
Speaker:They got huge amounts of reparation.
Speaker:At the end of the day, if your business is run by stealing from your employees,
Speaker:should it be running?
Speaker:Yes.
Speaker:And the thing is if you are selling coffees and cakes and you're thinking,
Speaker:ah, I've got these staff and I can't afford to pay him an extra dollar
Speaker:an hour or whatever it was, you've gotta think of who are your clientele?
Speaker:If they have an.
Speaker:Money in their pocket, they're able to buy the coffee.
Speaker:So you have to think of your clientele as well as your as your employees and costs.
Speaker:And know, it doesn't matter if inflation goes up five or 10%, if
Speaker:if you can maintain your sales if people have that money to spend.
Speaker:This article goes on to say that part of our problem in Australia
Speaker:as well is that we've got a lot of monopolies and oligopolies.
Speaker:We've got a lot of industry in Australia where there's only a two, three or
Speaker:four players in the game and they can easily basically control the pricing.
Speaker:And really we're talking about inflation.
Speaker:We've talked about profits increasing well above.
Speaker:The rest of the of the economy.
Speaker:One of the answers is you should be doing stuff to break up monopolies
Speaker:and increasing competition to drive down those profit margins.
Speaker:That's an anti inflationary step that the government can take.
Speaker:It was interesting to talking to friends in the UK who are in the supermarket
Speaker:business and they were talking about.
Speaker:The percentage of market share that each supermarket has.
Speaker:And the biggest supermarket in the UK has less than 30
Speaker:something less than 35% anyway,
Speaker:market share.
Speaker:Yep.
Speaker:So there are so many different supermarkets that there
Speaker:is sufficient competition.
Speaker:Yes.
Speaker:Whereas over here, there's the Coles and wooleys an Aldi is a
Speaker:very small part of the market.
Speaker:And IGA is
Speaker:minuscule.
Speaker:There's just a number of industries like that.
Speaker:Alcohol, for example, it's incredibly small number of players in the market
Speaker:selling beer at the end of the day.
Speaker:Be surprised how small the market is.
Speaker:Yep.
Speaker:Okay.
Speaker:And there was a, this article goes on quote uh, Sims, who was.
Speaker:Formally with the uh, a C and he's calling for more work to be done in
Speaker:terms of dealing with monopolies.
Speaker:And there's another article here, which will be in the show
Speaker:notes for people who are patrons talking about the reserve banks.
Speaker:So part of what's happening here, dear listener is it's the reserve
Speaker:bank that is raising the cash rates.
Speaker:In order that this increase will be passed on by the banks in its lending.
Speaker:And I've had a bit of an argument with off the record.
Speaker:I think it was with Paul, who was on the podcast a few weeks ago about the
Speaker:RBA, because I was saying, this is such an important function of our economy.
Speaker:Why are we outsourcing it to the reserve bank?
Speaker:Like the politicians should be in charge of this.
Speaker:I dunno that it actually makes sense to.
Speaker:To have an outside sort of force involved, but there's a really interesting article
Speaker:that talks about the people who are on the reserve bank board really are not
Speaker:qualified in terms of monetary policy.
Speaker:They're just people who have been in business.
Speaker:And if labor's in charge, then there might be some union people on there, but
Speaker:they're not people with actual experience and qualifications as economists.
Speaker:In monetary policy.
Speaker:And in fact, the more you know about this stuff, the probably the
Speaker:least likely you are to actually get on the reserve bank board.
Speaker:The treasurer trying to think of his name on labor's side he's announced
Speaker:this is gonna be some inquiry into the reserve bank and how it operates.
Speaker:And I think that's a good idea because.
Speaker:At the moment, it's just run by guys who have run businesses or
Speaker:guys who have run unions and people with real expertise in monetary.
Speaker:It matters they're not on the reserve bank board.
Speaker:And it, it seems to me a very crazy situation that we've outsourced
Speaker:to a group of people who don't necessarily hold any qualifications.
Speaker:. Yeah.
Speaker:I I understand outsourcing it, but surely you outsource it to
Speaker:the experts rather than leave it in the hands of the politicians.
Speaker:Ultimately like our defense, we say to defense experts, draft up a white paper,
Speaker:tell us what you think we should do, but at the end of the day, we'll then
Speaker:make the decision and live or die by it.
Speaker:At least I, yeah, I still think it should be a role of government rather.
Speaker:I think they could make a recommendation, but then the government
Speaker:should be responsible for it.
Speaker:So anyway, while I have a drink and refresh my throat, they've got a lot
Speaker:of that was to do with capitalism as part of the problem here.
Speaker:I've been digging up some of our land and hard bottoms, old stuff, and I thought
Speaker:I should be replay a bit more of it.
Speaker:So let's intersperse this with a little bit of land and hard.
Speaker:What's that my love, what am I doing?
Speaker:Well, I'm going to write some love poetry.
Speaker:Well, Of course, I'll let you read it when I'm finished.
Speaker:Um, O capitalism.
Speaker:Some say you are a prison, but to them, I do not listen.
Speaker:Some say you have put millions in the ground, but to that I say Hmm,
Speaker:they were mostly brown in you.
Speaker:There is no gloom as people consume and the economy booms profits are maximized
Speaker:and to no, one's surprise those of us on.
Speaker:Get to keep the lot.
Speaker:Well, Landon there's one for the
Speaker:Thank you, Landon.
Speaker:Best part of that.
Speaker:Landon was your little ham as you started off.
Speaker:That was a good comic timing.
Speaker:I like that Landon.
Speaker:That's a little bit about interest rates and inflation and how we're being
Speaker:hoodwinked, but it just can happen anyway.
Speaker:Isn't it?
Speaker:Talk about, we're talking about big picture on this episode, I
Speaker:promised I would depress you and win and rant and complain.
Speaker:So let's talk about foreign affairs, foreign policy what's going on in
Speaker:the world in terms of conflict.
Speaker:What's America doing China, Ukraine, Australia, Chinese affairs.
Speaker:let's try and summarize where we're at at the moment.
Speaker:And Joe, the bits I'm reading in the media is in terms of our
Speaker:relationship with America, labor seems to be still all the way LBJ.
Speaker:Yes.
Speaker:It's just continues the comments and things that you seem to see.
Speaker:Of course, we are just going to be the laptops of America into the
Speaker:foreseeable future, and they just don't want to cut loose unhitch the wagon.
Speaker:We are just tied to them.
Speaker:There's lots of countries in the Asia Pacific region who you just
Speaker:have an independent policy who keep themselves separate, and we
Speaker:just have convinced ourselves.
Speaker:that America is going to save us from the evil Chinese.
Speaker:There is the whole Anglo thing.
Speaker:Isn't there?
Speaker:English speaking friends will support English, speaking
Speaker:friends against those Asian.
Speaker:It's like the five I's.
Speaker:Yeah, there, there seems to be very much a we trust English speaking countries more
Speaker:than we trust those bloody foreigners.
Speaker:Yes.
Speaker:And yeah, because we have a shared heritage of British colonialism.
Speaker:Yes.
Speaker:At some point, please labor grow up and recognize as Keating like you all
Speaker:general fact at the alter of poor Keating.
Speaker:He's been telling.
Speaker:Australians for the last 30 years, we've got to be an independent,
Speaker:strong, an independent voice is actually where we'll get security, not
Speaker:from being this lap dog of America.
Speaker:It's just gonna get us into trouble.
Speaker:But they the comments that are coming out have us still hitch to the wagon.
Speaker:And, I've got such an issue with this because.
Speaker:The Americans are such freaks and oh, they've gotta protect
Speaker:us from the evil Chinese.
Speaker:I was talking to my sister-in-law just before the podcast and little
Speaker:bit on this, just talking about, oh what, if they invite invade Taiwan
Speaker:or whatever, I was like, if China invaded Taiwan full on invasion.
Speaker:it still wouldn't add up to what America's been doing around
Speaker:the world in the last 70 years.
Speaker:Like they're just doing what normal superpowers do and you can't look at
Speaker:the Americans actions over the last 70 years and and applaud it in any way.
Speaker:Like they've been interfering and throwing overthrowing
Speaker:governments left, and center for.
Speaker:Since their inception, it's not just the last seven years.
Speaker:It's since their inception.
Speaker:That is what they are about the American empire.
Speaker:And to just be continually saying, oh, we need America to save us from
Speaker:imperialism from these other groups.
Speaker:What if you think these guys have been doing all this time.
Speaker:So that's part of it.
Speaker:And the other part is they are in the decline.
Speaker:They are not.
Speaker:Going to be the hegemonic force into the future that they have been.
Speaker:And so start thinking about how the power play will work out
Speaker:over the next 20 or 30 years.
Speaker:The American empire is in the decline.
Speaker:Its only strength is military this stage.
Speaker:Actually I'll go into their strengths.
Speaker:No.
Speaker:I was gonna say their theocracy is a great strong
Speaker:point indeed.
Speaker:In terms of exporting Christianity is one of their greatest exports.
Speaker:Yeah.
Speaker:It's particular branch of it.
Speaker:Yeah.
Speaker:So look, I dunno if I've ever said this before.
Speaker:I've found in my notes.
Speaker:Maybe I have, but America won the cold war, relying on three power bases,
Speaker:financial military, and propaganda power.
Speaker:It does seem the
Speaker:Chinese are gonna be there though.
Speaker:It says now there are chinks appearing in these three
Speaker:power bases.
Speaker:did I say that?
Speaker:Yeah.
Speaker:Now there, yeah.
Speaker:Financial military and propaganda power.
Speaker:So let's look at those powers.
Speaker:So militarily it bullied smaller states.
Speaker:Obvious invasions include Vietnam, Korea, Iraq, Afghanistan, but
Speaker:less obvious are the hundreds of interventions where the us supplied
Speaker:covert or overt military assistance to governments or rebels that it favored.
Speaker:And it is propaganda power to convince the world that these were necessary
Speaker:actions to promote freedom and democracy.
Speaker:And they're really about promoting the interests of Theo financially,
Speaker:the USA bullet everywhere.
Speaker:So through us dollar hedge of money and cheap money for us C.
Speaker:It enabled us multinationals to buy industrial companies
Speaker:and developed countries.
Speaker:And through the IMF and the world bank, it forced smaller countries to sell their
Speaker:commons on the cheap to us companies.
Speaker:And if they didn't agree, it resorted backwards.
Speaker:Military power to engineer, regime, change and installed,
Speaker:friendly us friendly regimes.
Speaker:And then it used more propaganda power to convince the rest of the world
Speaker:that its actions were legitimate.
Speaker:It propagandized everybody.
Speaker:So through cultural Hege money in the English speaking world, it has
Speaker:controlled the flow of information through mainstream, Western media, powerful
Speaker:American multinational companies benefit from aggressive us foreign policy and
Speaker:the mainstream media could not afford to criticize the program, even if it wanted
Speaker:to the fear of losing advertising revenue.
Speaker:The public has been propaganda to believe that the USA is the home of the brave
Speaker:and the land of the free and will not accept fair criticism of us actions.
Speaker:So you're right, Joe.
Speaker:I did say now there are three cheek.
Speaker:Now there are cheeks appearing in these three th faces.
Speaker:So militarily Ukraine invasion shows that there's a limit to USA, military power.
Speaker:Russia has nuclear weapons and the USA can't respond as it would.
Speaker:China has built enough military capacity that it could defend
Speaker:itself from a us invasion.
Speaker:North Korea remains off limits, or as nukes, these countries have
Speaker:tightly controlled their societies.
Speaker:So it's difficult for the USA to engineer co attempts.
Speaker:So that's a chin in the military power financially.
Speaker:The us dollar is losing its Hege money.
Speaker:So China, Russia, Iran, India, Venezuela, and other C.
Speaker:Are looking to replace the us dollar with a combination of their own
Speaker:currencies in gold and the theft of central bank assets, thinking
Speaker:Afghanistan, Venezuela, and Russia will accelerate the need to ditch us bonds.
Speaker:So the USA does not produce anything of importance to Russia and China.
Speaker:They don't need to import us goods.
Speaker:They can survive without them.
Speaker:They can cut themselves from the USA without too much.
Speaker:Russia used to buy grain from the us.
Speaker:I dunno if that's still a thing yeah.
Speaker:With what happened when they imposed restrictions on Russia?
Speaker:Actually I think was Putin who.
Speaker:It was an advantage for them.
Speaker:They, a lot of industries have actually been revitalized because
Speaker:they weren't able to import stuff.
Speaker:So they started making their own cheese and all sorts of things.
Speaker:They can get away with, they don't need they don't need America.
Speaker:They can survive without them.
Speaker:It's friend in
Speaker:Russia was saying that he can still get his Guinness, although it sounds like.
Speaker:He's now drinking the Russian equivalent of Guinness.
Speaker:And I'm sure whatever they really need, they can get via China if
Speaker:it's something in particular.
Speaker:So unfortunately the propaganda power is as strong as ever.
Speaker:So America's prosperity has come from bullying, brown people
Speaker:and white people don't care.
Speaker:However, us demands that Europe stopped buying Russian energy will
Speaker:cause grief and resentment in.
Speaker:They will object to being cold and hungry.
Speaker:They will try to understand what is happening.
Speaker:And despite the propaganda, their faith in America may be dented.
Speaker:So the benefits of us Hemani has flowed to a small elite within America.
Speaker:There are signs that us employees are finally revolting.
Speaker:The Amazon union case is an example, hunger and pain may cause some Americans
Speaker:to look beyond the propaganda and see the corruption in their society.
Speaker:But Americans have been brainwashed for so long.
Speaker:I don't think they're capable of pulling themselves outta the mere.
Speaker:The Chinese state has restricted us propaganda in China.
Speaker:The average Chinese is supportive of the Chinese government and is
Speaker:suspicious of us foreign policy.
Speaker:And the Ukraine situation simply reinforces that China needs to
Speaker:be independent wherever possible.
Speaker:So the whole American style capital.
Speaker:needs growth.
Speaker:And since its inception has relied on conquest and acquisition, they, they
Speaker:basically had to conquer the west.
Speaker:Then they were basically conquering and acquiring.
Speaker:If not, if not in the, the case of installing governments
Speaker:and having their own C.
Speaker:In Latin America, United fruit and all the rest of it.
Speaker:The they've basically run out of countries to exploit at this point.
Speaker:And Trump exposed internal dysfunction.
Speaker:Ukraine is exposed in the limits of military power and Putin is now
Speaker:exposed in the loss of financial power.
Speaker:So what does this all mean for Australia?
Speaker:Those guys are going downhill.
Speaker:The empire is in decline.
Speaker:And if we think hitching our wagon to them is the answer.
Speaker:We're just kidding ourselves.
Speaker:And I'm really worried that labor seems committed to this all the way with LBJ.
Speaker:Oh, if somebody sees something in the media where labor
Speaker:starts to make noises about.
Speaker:Being more independent of the USA.
Speaker:Please show it to me.
Speaker:I can't wait to see it, but I'm not gonna hold a breath.
Speaker:They did
Speaker:mend fences with the French.
Speaker:Yes, that's true.
Speaker:Yep.
Speaker:Surely the French should be whispering.
Speaker:Surely McConn should have whispered into Albania's ear
Speaker:and said, what are you doing?
Speaker:You can't rely on those guys.
Speaker:Iran loves Macon's probably, I don't know what sort of Frenchman he is.
Speaker:Is
Speaker:he's not a what it who's the, he's not a go list.
Speaker:Okay.
Speaker:Who believe in an independent France?
Speaker:No.
Speaker:Which is why?
Speaker:Yeah, that, that was why they got outta NATO.
Speaker:Was they didn't trust NATO to protect them.
Speaker:They got back in 10 years ago
Speaker:now.
Speaker:Okay.
Speaker:But
Speaker:I certainly remember yeah.
Speaker:As a child with the cold war still in full flight, that France was not part of NATO.
Speaker:France was independent.
Speaker:Yeah, probably Maran is us friendly.
Speaker:Probably.
Speaker:I would've thought so.
Speaker:I saw this tweet which said.
Speaker:This final season of America has been absolutely amazing.
Speaker:It starts with an attack on the capital and ends with a new Supreme court that
Speaker:is actively dismantling democracy.
Speaker:That's some topnotch writing and it perfectly sets up the civil
Speaker:war miniseries that will follow.
Speaker:I think at what wrote this, didn't she
Speaker:that yes.
Speaker:Ted in that way.
Speaker:Isn't it?
Speaker:Who's that?
Speaker:There's a politician there.
Speaker:MTG Marjorie Taylor, green.
Speaker:Green.
Speaker:Yes.
Speaker:She openly came out on this thing saying I believe temple fruit loop.
Speaker:I believe, we should openly aim to, we are, we should be a Christian
Speaker:nationalist country and it's just openly.
Speaker:Saying just some crazy shit.
Speaker:And she was challenged in her primary, but got like record support and survived.
Speaker:And so she's just a complete Nutter.
Speaker:That is gonna be fine for another term.
Speaker:Didn't
Speaker:follow up to find out whether that Marial candidate won the
Speaker:Jesus gun's baby's candidate.
Speaker:I don't know.
Speaker:Just you remember the sign.
Speaker:What did the sign say?
Speaker:It was on the side of the coach.
Speaker:She was driving around and it was literally Jesus guns, babies,
Speaker:right?
Speaker:Not necessarily in that order.
Speaker:There's one politician who said I would kill my BA I would kill my
Speaker:grandchildren in order to make sure that this legislation got through
Speaker:this antiabortion legislation.
Speaker:Like I said, some crazy statement about literally willing to kill
Speaker:her grandchildren to make sure.
Speaker:If it meant that this legislation would get through oh, elected politicians.
Speaker:Yeah.
Speaker:Where are we up to?
Speaker:It is getting depressing.
Speaker:Isn't it?
Speaker:I'm mindful of that.
Speaker:We're 55 minutes in.
Speaker:Yeah, maybe I should end.
Speaker:Maybe should end this one.
Speaker:Yeah.
Speaker:Dear listener.
Speaker:Because of technical issues.
Speaker:I'm gonna keep this one under an hour.
Speaker:And and next week you'll hear from Joe and I we'll really be talking
Speaker:about the second part of our conversation, which we 25th of July.
Speaker:Yeah.
Speaker:Continuing our rant.
Speaker:All right, we'll finish this one here.
Speaker:Talk to you next week.
Speaker:Bye.
