Australia – the wonky distribution of wealth

Inflation is rising all over the world, and Australia is not immune, so the RBA [Reserve Bank of Australia] is aggressively raising interest rates. The explanation given is that there is something like a 300 billion dollar slush fund, squirrelled away by Australians, that’s driving spending, and therefore inflation. To reduce inflation, this slush fund must be reduced.

The RBA’s weapon of choice is interest rates. By raising interest rates, it forces the commercial banks to raise their own interest rates, especially on mortgages.

Makes sense, right?

Well no, actually it doesn’t, because the people who have access to that slush fund are at the wealthy end of the spectrum, and for them, higher interest rates won’t mean a damn thing. Their ‘consumerism’ won’t be affected because they’re simply too rich.

But how rich is too rich?

Everyone knows that Gina Rinehart is the wealthiest woman in Australia, but most of us don’t know how wealthy. I was interested enough to find out.

The data in the spreadsheet below comes from a Forbes article from 2019 listing the 50 richest people in Australia:

38 Richest people in Australia

I recommend reading the entire article because it’s quite eye opening.

But getting back to wealth, someone’s worth is not the same as money in the bank. Worth is what they would have if they sold all their holdings and assets and converted them into cash. Clearly, Gina Rinehard does not have 14-plus billion dollars languishing in a bank somewhere. That would be ridiculous, but the grand total of 114.68 billion dollars in just 38 hands is even more ridiculous. And that’s just the people who are worth at least 1 billion dollars. There are 12 more people on the Forbes list whose worth is close to 1 billion. I didn’t bother counting them.

Nor did I count the baby millionaires, the ones who only have a few tens of millions…

-rolls eyes-

At the other end of the scale, are the millions of ordinary Australians who barely make ends meet. At the bottom of that list are JobSeeker recipients who are expected to subsist on $40 a day. A little further up the food chain are those on fixed incomes [pensions] who do NOT own their own homes. Someone I went to school with falls into that category. She’s in her sixties and lives in a boarding house.

Then there are people like me. Thanks to my parents, I have a house, but I have no superannuation, and the only income I have is the age pension. That just went up by, wait for it, $10 per week to account for the cost of living rises. As of yesterday, I now get $2014 per month.

I know we are amongst the lucky ones because we do have a roof over our heads, but keeping that roof is getting harder by the week. I won’t bore you with a list of all the things we can no longer afford, I’ll just say that every appliance in the house has gone past its use-by-date and is breaking down. That includes the plumbing…

I accept that inflation has to be curbed. That’s a given. But we are part of the huge underclass of Australians most vulnerable to increases in the cost of living because our safety margins are so low to begin with. Essentially, we are the ones being punished for the inflationary spending of those higher up the food chain.

Is it fair?

-makes rude noise-

It’s time governments and institutions like the RBA stopped plucking the low hanging fruit just because it’s ‘easy’. The further ALL Australians get from financial and political equality, the more shaky democracy becomes.

Marie Antoinette did not say ‘Let them eat cake’, but she lost her head anyway. Literally.

Australia is a long, long way from that kind of mass hysteria, but democracy is a lot more fragile than we think. To be quite blunt about it, the current version of capitalism is strangling democracy because money equals power, and the middle classes no longer have either.

Sadly, we are living in interesting times, and they’re becoming more interesting by the day.

Meeks

About acflory

I am the kind of person who always has to know why things are the way they are so my interests range from genetics and biology to politics and what makes people tick. For fun I play online mmorpgs, read, listen to a music, dance when I get the chance and landscape my rather large block. Work is writing. When a story I am working on is going well I'm on cloud nine. On bad days I go out and dig big holes... View all posts by acflory

33 responses to “Australia – the wonky distribution of wealth

  • Widdershins

    Our central bank moguls are doing the same thing here … and patting themselves on their backs while they do it too. 😦

    Liked by 2 people

    • acflory

      Yup, and apparently they get much of their information from…the corporate sector. Wow.

      Like

    • acflory

      p.s. is everything ok? Feels as if you haven’t posted in a while. Or did I miss something?

      Liked by 1 person

      • Widdershins

        I think I might be part tree, (an Ent perhaps? 🙂 ) wherein I’ve discovered I really REALLY don’t like to be uprooted. It was all necessary, of course, for all the reasons I’ve gone into on my blog, but I’m struggling to find my rhythms, my way of being in, and moving through, this new world.
        I know, and tell myself, that this too shall pass, but here in the moment being so anchorless sucks.

        Liked by 2 people

        • acflory

          Oh Widds, I am so sorry. I’m a bit of an ENT too so I know how you feel. And it’s not as if you haven’t uprooted yourself once already, in a big way. I don’t know what your financial circumstances are like but could you maybe get a homebase of some kind? Some place to go back to when your summer travelling is over?

          Like

  • DawnGillDesigns

    Don’t get me started on our latest iterations of PM / Chancellor

    Liked by 2 people

  • The myth of the self-made billionaire | Meeka's Mind

    […] a previous post I talked about how rich 38 of Australia’s billionaires really are. Today, I read a brilliant […]

    Like

  • daleleelife101.blog

    Similar topic of conversation here too Meeks. Rising interest rates don’t just affect people with debt but also governments with debt and post-Covid governments have a lot of debt and balancing their budgets will impact most of us.

    Liked by 2 people

  • robbiesinspiration

    Hi Meeks, sadly, I think both capitalism and democracy are failed systems in the way they are currently implemented. On the other hand, communism doesn’t work either so I don’t profess to have the solution to the world’s problems. I would certainly support change that gives my children a future on a sustainable planet that isn’t on the brink of irreversible climate change and mass extinction of the animal world.

    Liked by 3 people

  • D. Wallace Peach

    This could be written about the US too, Andrea. It makes me angry and sad. Just how rich is rich enough? I don’t begrudge wealthy people their wealth – a few worked hard for it, and the vast majority of them made excellent choices along the way. But who really needs billions? At the expense of others, when that kind of wealth could improve the lives of tens of thousands. Capitalism is a failed system, old enough now that we’re experiencing its failure. It’s unsustainable in the long run. One option, besides revolution, is to vote for financial fairness, and because of that, in the US our vote is at risk.

    Liked by 2 people

    • acflory

      Yes, there’s a difference between being aspiration and excess. Oddly enough, I still believe in a version of capitalism, just not this ‘neo-liberal’ version we’ve now had for decades. I wish someone who knows how people tick would come up with an alternative that encourages the better side of our natures instead of rewarding greed and ruthlessness. 😦

      Liked by 3 people

      • D. Wallace Peach

        That’s interesting. Captilism here is all about wealth retention, and it’s bolstered by the conservatives, not the liberals. It relys a lot on consumerism, which is going to be a problem when no one has any money to spend.

        Liked by 2 people

        • acflory

          I’m not sure if there is such a thing, but I’d probably describe myself as a social-capitalist, small ‘S’, small ‘C’. I think people need to be rewarded for innovation and courage and determination, so if they come up with something new, and it takes off, they should be rewarded for it. These days, most new startups are gobbled up by multinationals to reduce competition rather than encourage it. Yes, the inventor may get a bigger, up front, cash reward for their brilliant idea, but who will remember them 100 years from now? Decades ago I used to know the name of the guy who invented DOS, which was the basis of the early Windows operating systems. Now all I remember is that Bill Gates acquired the rights to DOS and wrote himself, and Windows into the history books.
          Apologies for the rant but I truly believe ‘size’ matters. In a bad way. :/

          Liked by 3 people

  • Prior...

    Hi Meeks
    Interesting times indeed
    And hope the inflation issues do not continue to get worse – blah

    Liked by 2 people

  • Matthew Wright

    I used to work for the RBNZ (in communications) and was right there when they launched their attack on the last big bout of inflation, in the early 1990s. The way the disinflation process works is to crush demand down to the level of the money supply, ie: artificially depressing the economy. This affects the poor far more than it affects the rich.

    That said, there IS a way that inflation can help the poor and middle-income folks. Yes, it erodes the value of money, yes it creates hardships – and yes, it’s certainly bad when it runs away. But it also erodes the value of debt. And during the 20th century that was the main mechanism by which ordinary people could repay their mortgages, ie: a house bought in (say) 1950 for 3000 pounds was paid off in (say) 30 years. But over that same time the value of the principle was so eroded by inflation that, in effect, inflation paid it off. That’s how everyday middle-class people were, in practise, able to own their own homes.

    This isn’t to advocate for high inflation – on the contrary, it also hurts those on fixed incomes because they can’t keep up with rising prices. One of those ‘damned if you do, damned if you don’t’ arrangements. But the mechanism by which it repays debt is clear, and this is one of several mechanisms that the neo-liberals undid with inflation, cutting off the middle-classes from a significant way of growing their own wealth passively. To the neo-liberal mind-set of the 1980s and 1990s, inflation was bad because it eroded the wealth of the wealthy (not least by eroding what they lent), it made big-business planning difficult – cutting profits – and so it was crushed. The decision had nothing to do with benefitting the poor.

    The reason why consumers’ price inflation has taken off just now – openly hurting even middle-income earners, and hard on the heels of a house-price boom that has put housing out of reach of the poor – is due to some utterly idiotic policy decisions, globally, by central banks in response to Covid lockdowns and supply issues. They flooded the world with money, sending money supply well ahead of demand. This was only going to do one thing: inflate prices. Here in NZ it blew out fixed asset prices (houses) by about 30 percent in 12 months, and now it’s blasting consumers’ prices. Kind of ironic: just before I left the RBNZ there was a clear attitude that inflation had been permanently conquered, the monetarists had won and that was that. Quite wrong, of course.

    What worries me is that all the signs are there that the whole lot is about to go bang, certainly economically. And all of it a consequence of the neo-liberal version of capitalism. Sigh…

    Liked by 3 people

    • acflory

      Thanks, Matthew. My grip on economics is no higher than my ability to handle a household budget. Your explanation goes a long way towards making the inflation debacle understandable.
      It would be really, really nice if the current Labor government did a rethink on inflation, but I suspect that would be a giant step too far. Like you, I fear things will have to collapse in a heap before any significant change happens. :/

      Liked by 3 people

      • Matthew Wright

        Thanks. I know the stuff by osmosis – I got a comms job with the RBNZ as a writer/editor/media minder and ended up editing most of the official output of the economists, then working on the RBNZ museum project, which was all economic history. What I found intriguing was that, once stripped of the maths, economics was similar in general principle to the field I was actually trained in, history. Both, really, are branches of sociology.

        I eventually co-wrote a paper, incidentally, on the MONIAC analogue computer from the late 1940s, which the RBNZ Museum acquired on loan and which uses water to calculate economic solutions. Seriously. I mean, how cool is that? Just to add to its ‘coolness’ rating, it was parodied by Terry Pratchett as the ‘Glugger’. The machine I was involved with was the twin of the specific one he lampooned, over in the London School of Economics (the RBNZ’s had pipe connections designed to link to that one). Apart from highlighting its sheer coolness, I mention it because it also captured the pre-neoliberal version of capitalism, one virtually forgotten today.

        Apart from writing the paper I also produced and featured in a video about the MONIAC (along with a real economist), here: https://www.youtube.com/watch?v=rAZavOcEnLg

        Despite the date of loading, it was actually made in 2014 – it had to be reuploaded a few years later. I’ve long since left the RBNZ but it was a fascinating experience to work there.

        Liked by 1 person

        • acflory

          This totally blew me away, Matthew! I’ve just published a quick post about MONIAC and the video. Thank you so much. My baby Geek is dancing with glee. 🙂

          Liked by 2 people

          • Matthew Wright

            The MONIAC is completely geeky! As was Bill Phillips, the inventor – he came from Dannevirke, and the water wheel his family farm used is sitting in a sunken garden on the Napier foreshore, of all places. I keep thinking there was a connection…

            The economists I worked with loved using the MONIAC. What the video doesn’t show is that it was actually sitting in a stainless steel shower tray, owing to leaks. There were also issues with the water: the Wellington supply is chlorinated and did a mischief to the perspex. After this video was made it was switched to deionised and purified water otherwise used for topping up lead-acid batteries. Only 14 Moniacs were ever made – I believe there’s one in Australia (possibly Melbourne) but it’s inoperative. Getting this one going was a huge job mostly carried out in the Reserve Bank’s building maintenance workshop.

            Liked by 1 person

          • acflory

            One in Melbourne? Oh…I’ll have to look that up. If nothing else it should be in the Science museum!!!!!

            Had to laugh about the leaks. As for the inspiration…my Dad was a mechanical engineer so I can almost picture how Phillips’ brain must have worked. Just brilliant. 🙂

            Like

  • davidprosser

    THE WORLD IS BECOMING STUPID AND SEEMS READY TO ACCEPT THE NEW DICTATORSHIIPS ASTHEY POP -UP WITH THEIR USELESS IDEAS. OUR NEW PRIME MINISTER IS INFACOUR OF INTEREST RISES BUT ALSO HAS ALLOWED TAX BREAKS AT THE TOP END OF THE EARNINGS SCALE TO ALLOW FOR DISCREDITED TRICKLE DOWN ECONOMICS.nOW SHE’S ALOWING FOR NEW OIL DRILLING AT A TIME WE’RE TRYING TO REDUCE THE co2 LEVELS WORLDWIDE. jUST WHOSE SIDE ARE THESE PEOPLE ON?

    Liked by 3 people

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