Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate. Purge the rottenness out of the system.
The famous advice of US Treasury secretary Andrew W Mellon to then-president Herbert Hoover as the Great Depression enveloped the United States seems to have found a home at The Australian Financial Review, especially after yesterday’s unexpectedly large drop in inflation.
The Australian Bureau of Statistics reported that its monthly inflation data for May showed inflation on an annual basis — 5.6% — falling to its lowest level since April 2022, surprising economists. Even when volatile items were stripped out, May saw slightly lower inflation — 6.4% — than April, and was well down on 7.3% last December.
Both indicators suggest inflation peaked over summer and has been falling fairly consistently since as the Reserve Bank has belted the economy with rise after rise to interest rates — despite extensive evidence that profit gouging by firms is the key cause of inflation.
This was welcomed as confirmation that the RBA doesn’t need to continue its relentless rate rises, especially as the impacts of this year’s rises have barely been felt yet, and given prominent economists are warning there’s already a one-in-two chance of a recession. Except at the AFR.
“The monthly consumer price index indicator is not as good news as it may seem,” economics editor John Kehoe warned. “Rising house prices, higher wages and weak labour productivity will also force the RBA to prepare to increase the cash rate.”
The AFR‘s editorial also insisted two more rate rises were needed. Why? Workers want wage rises. Childcare workers, warehouse workers, airline workers — everywhere you look, nasty workers want more pay. The editorial writers threw in a bit of racist paternalism to spice things up: “Even migrant farm labourers from South-East Asia, who some would suggest have limited bargaining power, have gone on ‘mogok’ — or strike — and are picketing their business that supplies salads to supermarkets.”
Yep, “some would suggest” that migrant agricultural workers — whose systematic exploitation in the industry has been documented for years — “have limited bargaining power”. That’s what an industry known for organised wage theft, shocking conditions, sexual abuse, visa rorting and modern slavery looks like when you run a business newspaper.
Jennifer Hewett joined in, arguing wages growth would cause the RBA to lift rates again. Economists were cited to explain that, yes, rates needed to rise. Just for a change, a fund manager was found to blame Labor’s loose fiscal policy, rather than workers, for inflation.
Liquidate, liquidate, liquidate is the mantra at the AFR, which wants to see interest rates continue to rise and, presumably, the economy sent pell-mell into recession.
Why? What’s the rottenness in the system that the AFR wants to see purged? The clue is in the incessant and deceitful emphasis that inflation is being driven by wages. The “rottenness” is workers — and their ability to seek at least nominal wage rises in a tight labour market, one where the impediments usually restricting workers and unions negotiating meaningful wage rises have been more easily overcome.
The AFR won’t stop urging interest rate rises until unemployment has been forced back to levels where workers will have to again endure the kind of real wage cuts that have marked recent years in Australia.
The real rottenness in the Australian economy is large corporations leveraging their power in highly concentrated markets to gouge workers, consumers and other businesses, which has been the biggest contributor to inflation, well ahead of the small impact wage rises have had.
But powerful corporations in uncompetitive markets are good for shareholders and company executives who enjoy far higher wages growth than workers — the AFR’s target audience. That’s one of the reasons you’ll rarely find any acknowledgment of the extensive evidence of the role of profits in inflation in the paper, except to deny it.
It’s very similar to the way the AFR at first eagerly reported the bonuses that a few US companies were handing out after the massive Trump company tax cut in 2017, as part of the idiot narrative that company tax cuts increase wages — only for those reports from the US to dry up once it became clear that US wage growth hadn’t shifted at all in response to the Republicans’ largesse to some of the world’s biggest firms.
The obsession at the AFR with punishing workers has its downside. If the recession its senior staff long for arrives, and corporate profits evaporate as households pull their heads even further in and joblessness grows, company profits will suffer and investors will also lose — albeit not anywhere near as much as the unemployed.
The AFR’s ever-diminishing ad revenue will also take another hit. Be careful what you wish for, even in a neoliberal fantasy land.
The gouging by our big 2 supermarkets must be a joy to behold for corporate profit chasers. In early 2022, Coles sold shredded cheese by the bag for $6. Now, that same bag of tasty cheese is $10. In that same period, the wholesale price of milk–which makes up 76% of the ingredients to make that bag of cheese–has dropped by 14%.
It’s the same pretty much across the aisles at the supermarket. Lamb farm gate prices have dropped 40% in 12 months, but not on the supermarket shelves. Similar numbers for beef.
In France, the government has implemented price controls to stop corporate gouging. In Australia, government bodies are actively working at lowering corporate labour costs so the corporations can increase their profits further. Maybe it’s time for Australian citizens to take a leaf out of the French citizen playbook and riot on the streets when the government actively works against the best interest of those it’s meant to represent.
I want to live in an Australia that knows lefty riots so bad, but that loss of apathy has to be twenty years away.
‘…take a leaf out of the French citizen playbook and riot on the streets…’
But not in South Australia where Labor recently passed legislation (at lightning speed) whereby protesters can attract a $50K fine or three months’ gaol. This from a Labor government. Fortunately the legislation doesn’t cover lopping off the heads of the elite…
we had a referendum in 1973 or 74, which would have given the Feds the power to regulate prices and wages. Like most referenda,it was soundly rejected.
Could we expect anything else from the Fin? It is the paper that represents Australia’s Rich, the almost-nobility cruelly denied Title and Estates by the latent communism of our flawed society. The Fin knows that the Wealthy are the only true Australians worth considering, and that the poor – those maggots, those filth, those squirming masses noisily wailing for fair treatment – are, at best, the equivalent of livestock. Of course, the poor should pay for inflationary measures! What happens in a drought? The landowner gets out the .22 and eliminates redundant stock. That’s the problem; too many poor. How the AFR must yearn for the days when a good war took care of the rubbish.
The days when the AFR reported honestly, offering information necessary for businesses to handle changing environments appears to be over. It is more an advocate for
Government intervention
Try rent seeking.
It’s also contradictory in its framing and almost anti-business i.e. outside of the large public companies who can raise equity, down the line are private, SME and sole operators who do and will have to pay punishing interest rates on bank business loans (if they can get them), overdrafts, inventory, investment etc.?
However, higher interest rates also help increasing masses of retirees with super, to invest in income streams, who can also benefit from higher deposits now approaching 4-5%?
Of course what business media, think tanks and LNP don’t want to consider, as opposed to interest rates rise, is an increase in employees’ SCG Super Contribution Guarantee that has a similar deflationary effect? However, that is verboten as it would make super look useful, more sustainable and wealthier for working age Australians?
A bit of old fashioned price control on effective monopolies would go a long way to fixing this problem. Trouble is, they have already got away with far too much, so the base line is much higher than it should have been.
Could someone liquidate channel 9?
Under its stewardship half even decent publications such as the SMH have gone to the dogs.
Can’t say the same for The Fin Review. It was always crap.
I guess Philip Lowe subscribes to the AFR.
The RBA subscribes ,and Dr Lowe gets to read it free.