So, it looks like we’re heading back into recession. US growth forecasts for the next quarter have been slashed to barely the rate of population growth. Australian unemployment has risen (although not anywhere near as much as ours). New Zealand manufacturing dived back into contraction in July.
The situation is likely to worsen because a return to robust growth is dependent on over indebted consumers magically starting to take on more debt and upping their consumption. Eventually even our Treasury will catch on and downgrade its growth forecasts.
We’re going to have to get used to the idea that we can’t depend on perpetual economic growth to deliver rising living standards to all, masking the truely horrendous inequality of the distribution of wealth.
Fortunately, we can easliy afford to make the majority of people much better off even without the economy growing. The New Zealand economy produces about $180 billion worth of wealth a year, that’s over $100,000 per household. And the coutnry has hundreds of billions of worth of capital. But nearly all that annual production, and even more of the capital, is controlled by a tiny elite. We can enrich nearly everyone without a growing economy just by making the distribution of wealth more equal (more on how to do that in later posts, although its all been discussed before here and elsewhere).
But exactly the opposite is happening. While ordinary families are cutting back on the basics, luxury goods consumed by the elite are flying out the door from top end cars to grouse shooting estates to superyachts. The rich are still getting richer.
With a shrinking economic pie, the larger slices for the elite are coming at the cost of the rest of us though lower wages and job losses.
The rich get tax cuts paid for by cuts to the social wage, the public services we all consume that effectively form a large part of our income. Paul Reynolds gets a $250,000 tax cut on his $7 million pay packet; you and I get health cuts, education cuts, benefit cuts, pay cuts, overtime cuts, and job cuts.
This is simply class war; a battle over shares of a diminishing prize. And we’re letting the rich win.
How can this be redressed? How can we improve the living standards of nearly everyone while the total wealth pool isn’t growing? It isn’t so hard. We just have to start winning the class war.