On the Standard of Living

Australia has enjoyed a high standard of living for several decades now, but there several years now that standard has been slipping. This has been coupled with static wage growth an exponential increase in migration. However, with this has meant pressures on the existing infrastructure system and pressure to build at an exponential rate.

 

The Australian dream has always been to own a home, ideally on a quarter acre block close to public transport, shopping, schools, social establishments. But with large increases in migration, especially to the large metropolitan areas such as Sydney or Melbourne there is a lot of pressure on Australia’s infrastructure. As an example: roads are clogged, daily commutes increase in time, it takes more resources to get to work. In addition, foreign entities such as the Chinese Communists have taken upon themselves to buy up Australian assets. The policies relating to those issues need to change for the standard of living in Australia to remain high.

 

Now, I am all for migration, demographically essential for a healthy economy and for general well being of the country. But numbers need to be restricted. In that Australia accepts our quota of refugees, and migrants who are of benefit to Australia. But the essential thing is not to overwork our existing systems. Immigration has to be linked to performance of the migrant. One may say that it is, but those standards have to be strict. The main priority of the Australian government should be to improve the life of the citizens as currently their life quality is slipping.

 

For instance, in 1985 one could purchase a house for under 4 times the average wage in 2015 that changed to 11.5 times. There are many various tolls in major cities increasing the amount one has to pay to travel. The alternative, that is public transport, also increases over indexation every year. There is added pressure on the health and welfare systems especially in major cities. Increases in housing prices and high rental, have made them concurrently expensive. In addition, the government has liberalised the markets and making them accessible to foreign investors. The increases in population also puts pressure on food providers, which is further strained in times of flood or drought. Yes, Australia is a large land mass but those supplies are not inexhaustible.

 

As Australia reached 25 million residents in August last year, it was an appropriate time to put breaks on the ever increasing numbers of immigrants. I remember when Australia reached 20 million residents in 2003, 15 years later the population increased by five million people. We learned to cope with the increase however the there is strain, especially in the major cities. Post WWII European migrants stayed in regional areas, and I think that the same could applied today. The Labor opposition said that they want to build 250 thousand homes, and that is a good start to ease the affordability issues. Another side includes restricting the current crop of housing to foreign buyers and farm land, for that matter, on national security concerns. Lastly the Australian citizen should come first, charity begins at home, public money should be spent on programs and policies that benefit the Australian people, and in particular addressing wage stagnation especially among the working class.

 

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On Free Speech.

The indoctrination of political correctness is a direct opposite of free speech. I believe that anything short of advocating for violence should be allowed to be expressed in the public domain. Those opposite will have you believe that restraint is necessary, and being offended is somehow in vogue.

The perpetually offended would like to curtail anything that they find offensive. Given that in reality anything that offends is often something they disagree with, what offends is a very subjective, and it is impossible to police it. It might be controlled in an Orwellian type 1984 scenario. I posit that this is exactly what some of these free speech ‘control freaks’ want. That is place of where sameness prevails. In that its their way or the highway. In that respect it is a very authoritarian, communist way of perceiving the world. Now, it is a way to go about seeing the world, but not a particularly positive perspective.

The fact is that it is often from the comfort of a capitalist country instead of some collective that they imagine a Marxist utopia where people erect Stalin’s statue in the backyard, have Trotsky speeches playing on loop while they sleep and the best thing they ever read was Mao’s biography.

There is a persistent logic than permeates their thinking. Their online existence declares various virtues: refugee empowerment, rights of minorities, environment protection. This being an endless list of issues they claim constant engagement. However, as I discovered many times, these acceptance, tolerance and understanding goes out the window if they’re presented with a viewpoint that differs from their own.

Recently I blocked one such enlightened soul on Facebook as he exposed his real views following me posting something in support of Donald J. Trump. I don’t mind someone disagreeing with me, I encourage a healthy debate. This man knew my background, that I came to Australia as a kid after my parents sought political asylum. But decided to declare under my post: ‘We let you in, and that’s how you repay us”. So in his opinion I have to submit to a certain way of viewing the world or else I am not welcome in this country. This kind of attitude permeates a lot of progressive thinking and is in fact a weakness of their whole philosophy. Its only through free speech that people are able to build, develop and communicate freely. Changing this does, would not benefit anyone in fact it will hinder the status quo.

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Social Media Morality

Social media has permeated all facets of daily life of a large section of the world community. The role of the corporation becomes pivotal in upholding the standards during exchanges of communication between millions upon millions of users. Hence there is an onus on the corporate entity to uphold a morality that oversees the actions of countless users. That is always going to be a tough ask. How do you balance all providing a guiding code without infringing on the rights of users?  In affect the members of the online community who form legitimise and validate the social media platform, need to be at the centre of concern for those organisations.

Having a monopoly on something in the corporate world usually translates to responsibility and adhering to a social contract. Unfortunately a lot of online based companies such as Facebook and Twitter have proven that power indeed corrupts. They have to decide if they are a platform or a broadcaster. They are governed by different rules. If you are a platform then you should not censor views. Unless they call for violence, otherwise free speech should prevail. However Facebook has regularly censored free speech a number of subjective measures. One of those is through encouraging members to report others if they find something offensive. This in turn opens up a Pandora’s Box of issues. Anyone can be reported for anything, and being found guilty means is essentially a kangaroo court decision as any right to appeal is deleted. No response ever given to said appeal. The penalty can range from a twenty four hour ban to three consecutive monthly bans.

What gives the right to those companies to censor views or ban users? Because of the overarching market saturation Twitter and Facebook have should not give them the right to ban members for life, as there was a case with Twitter and YouTube many times. The social isolation caused by this, is not only at a cost to the individual users, its also a cost to the community at large. For example, the broadcaster Alex Jones has had his channel deleted off  YouTube several times. Granted, his content is controversial and really ‘out there’ but despite this its important that all views are represented and any banning of opinions will encourage them festering underground. It is for the interest of the community to that a range of opinions is entertained and debated.

The social media companies have as part of their mission statement an expressed desire to serve the community, adhere to a series of standards.  They need to make sure that all this inclusiveness and good will is more than just sanctimonious virtue singalling. The is a pattern that those organisations follow, and it involves having a great idea of an virtual community, and gaining popularity then instating a set of laws that tend to be fairly conservative and no longer look after the community as much as their shareholders. As if the entity became too big for its own good. This is akin to multi national companies in other sectors such as, in recent times, banking. As we saw through Australia’s Royal Commission the is a level of arrogance  that leads one to confirm the fact that power corrupts and these social companies need to adhere to a set guidelines they themselves set. At the very least.

Social media companies do provide an essential service, but they cannot be guided by a sense of their own morality, they have to fulfil public expectations, uphold democratic values, free speech. And redefine their role: Are they a platform or a broadcaster. These are seperate role. State that you have an agenda, and keep instating political correctness or be what you set out to be and let the users form their own meaning through interaction.

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The Rise of the Trump Doctrine

We’re seeing a strong return to the realpolitik world of the Cold War however now it is trade that is the weapon. China, Russia and the USA are clearly asserting their dominance through soft and hard power. Britain has too enacted those principles via Brexit and recently by deploying a craft to the South-China Sea and dismissing of Russian diplomats from their shores. Russia has replied in kind, and these tit for tat actions may not end there. However these actions are coupled with trade considerations.

 It’s a much different world to a decade ago were one might argue that the world was brought together by the GFS begun by irresponsible banking practices. Admittedly, in the decade since, the strengthening off banking practices and in consequence making the government institutions bigger and more pronounced.

However currently the same institutions have been blamed for the slowness of recovery and feared for the ostensibly high excessive amount of power that they now hold. For instance when President Trump signed a number of tariffs recently the Federal Reserve called it a negative step and the markets reacted, however briefly, to the news.

In his defence Trump was merely responding to the negative trade balance between US and China. As countries scampered for dispensations, USA was clearly seen as holding the trump card. The last time America had a trade balance positive was nearly fifty years ago. You can’t blame Trump for moving to change that, it was of course one of his election promises. He wants to American industry and jobs to be protected. Quite frankly I am not surprised.

The counter-narrative of this protectionism is that a trade war will ensue. This is of course a fatalistic proposition one that does not take into account all the checks and balances in place in the world economy. That is the agreements already in place that relate to international trading, such as unilateral and others and the necessity of trade such as in the case of steel and aluminum products. For instance China buys a huge amount of iron ore and metals in general but produces fridges, microwaves, watching machines and the like and sell those to America as value added products. The cost of labor is cheaper in China so it makes sense for the world economy that China is where those metal goods are produced. It also makes sense that regardless of the tariffs USA purchases those goods, as the cost of manufacturing is higher there. A tariff may lower amount of metal good purchased by America and China may respond by buying iron ore from someone else, but the US may turn to other emerging economies for metal products thus stumping China in the process. Trump says: it takes two to play the game and if you won’t follow the rules, tough luck.

 China had it coming, quite frankly, and I would not be surprised if this is only the start of US trade actions again it. For years the Chinese have broken every conceivable trading rule under the sun, yet the liberal media and central banks attack the US. They have made copyright infringements, pegged their currency to the dollar, and were involved in trade piracy. Other countries are dependent on cheap Chinese imports. However that is about to change. And it’s a good thing.

Soon many developed countries will source their products from other developing economies such as India, Bangladesh, Vietnam and Indonesia. Just to mention the Asian Chinese competitors. It is high time that the developed economies lowered their heavy reliance on China and spread their trading amongst other partners, including Africa. This will naturally lead to a lowering of the importance of the Chinese producers. It is the countries that heavily depend on China who have expressed the greatest concern to Trump’s measures. However the status quo can’t prevail and Trump’s way is the right way.

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Public Housing as State elections draw near.

I’d like to write a few words on public housing in Sydney and other centres. Not only as the New South Wales State elections are coming up in March this year more importantly that there is a need to provide housing assistance, the priority being the nearly 60 thousand people on the waiting list. Currently the chance of being placed on priority listing is minimal while the alternative being a ten year plus wait to be housed. The people placed on the priority housing list face up to a two year wait to get housed. However it is only ten percent of applicants who are in this privileged situation. Most, including the mentally and physically ill can look forward to years of unstable living conditions and an elevation of their illness. That is unless they meet stringent conditions governed to gain priority listing.

My main question with the status quo is that there isn’t enough housing being provided. Put on the market as it were. In a society that prides itself on egalitarian values there is as per usual a group of citizens that is left behind. What’s concerning is the hardships that these people are facing. These are not being met by the State Government in any way, shape or form. I mean if those people were a part of a lobby group the powers that be would take notice.

What could happen in this instance is involvement of private institutions. Homelessness is a problem that is prevalent across society thereby it should be solved by a concerted effort. In this respect I envisage private-public partnerships in building, fixing and providing accommodation. I am not calling for a privatization of the service, it’s a scary thought being an untested proposition. As public housing should remain just that. However corporate Australia should help out in providing and maintaining this essential service.

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Increase the minimum wage increase the GDP??

One of the of the ideas that I’ve been pondering about during the week is the idea that an increase by increasing the median wage through for instance increasing the minimum wage. Ostensibly it is a possiblity as spending has been linked to increased economic activity and thereby increasing one of the factors contributiong to the GDP. Such may’ve been the logic at play for the thousand dollar payment to every Australian taxpayer in 2009. However what about if we do a little comparison to find out if increasing the minimum wage would increase the GDP?

Poland recorded some of the greatest increases in GDP growth over the 1990 to 2007 period. In fact according to the IMF, Poland’s annualised GDP per capita growth between that period is fourth highest in the world at 11.64 per cent per annum. OK so China and Vietnam are doing better but one is in good company. Moreover Poland was the only of the European economies not to dip into recession during the economic crisis. That’s from over 50 economies. It is also worth noting that the Poland’s current GDP  (PPP) per capita is 20,137 US dollars per annum. This is on par with ostensibly more afluent countries such as Portugal: 23,205 US dollars. However at just over 50 per cent of Germany’s figure: 37,936 US dollars. Concurrently if we compare gross average monthly wages between these three countries we see larger differences. Poland’s average wage is 759 US dollars per month, Portugal’s is 1079 US dollars whilst Germany 2865 US dollars. In terms of percentages Portugal and Germany have GDP (PPP) per capita annual rates respetively 15 and 88 per cent higher than Poland. However with respect to monthly incomes Portugal’s median wage is 42 per cent higher than Poland. Whilst Germany’s figure is 377 per cent higher than Poland.  Although I do not want suggest that there is a causality between the levels of GDP and a median wage, one has to ask the question why is there such a difference between the two figures?

Without considering the economics increasing the minimum wage leads to a more satisfied workforce. This in itself creates an economic benefit in productivity of the workforce. However if one has worked hard one’s wages should surely increase not only as an incentive but as a reward.

The fact that there is such a difference between performance and benefit in this instance is important as it shows that all the benefits of a roubust economy are not transfering to Poland’s labour market. One can also argue that this is a hiderance and a weakness in the distribution of income. By weakness I understand the lower incomes, especially ones that osillate around the poverty line contribute to the formation of an underclass, which in itself is a hinderence. It can be argued that increasing the minimal wage will not only aid in elevating poverty but will also have a positive effect on GDP growths as there will be substantially more funds fueling the economy. However there needs to be enough political will for this to take place. What is important is a holistic picture for an overall heathy economy. Building an underclass by keeping wages low is not what I would consider healthy.

Would this result in investor flight and unemployemnt? I do not thinks so. Firstly increased spending that would follow on from increases in incomes would directly stimulate the economy, this economy would have more participants in it and flow on benefits for all sectors. Would investors shy away from investing in Poland. I do not think so. One reason is that much of the investment in this 40 million dollar market is direct, via for example Poland being a host to a foreign company’s operations. The amount of FDI that Poland receives is on par with Japan and India, increasing minimum wages to 1000USD per month will still afford substantial economies of scale for these producers.

I guess the real question should be would increasing the minimum wage negatively impact GDP growth. I think I presented enough arguements here to show that this is not the case. A gradual increase to a minimum wage of say 1000 USD in Poland should be viewed as an investment in the health of the economy and the its people.

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So we’ve reached another end of the year. Personally its been a good year, for one the world didn’t end on the 21st of December. It also has hasn’t ended because of the Fiscal Cliff nor any other misandventure. As we enter the fifth, yes 5th, year of GFC, its become apparent that the GFC as horrid as it is will also not end the world. After a brief, in terms of economic history, flirt with free market economics. Most have returned to the sound basics of Keynesian principles. What will 2013 hold? I dare to suggest the R word, that is Recovery. If the last 4 years have thought policy-makers it would be how to exaust their abilities for little reward. That said however, I am optimistic that in 2012 we have turned the corner. Bring on 2013!

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