Never been better off…

Possum’s latest post is, rightly, receiving a lot of attention. In the utilitarian economic equivalent of that American soldier in 2003 yelling at Iraqis to thank him for their freedom, he outlines the tremendous position we’re in with reference to two sources: OECD data on GDP and income growth and a Credit Suisse report on personal wealth (assets etc.). He convincingly argues that the economic policies of the past few decades have been tremendously on their own terms. There are three brief points to make about GDP and Possum’s frustration that we’ve “confused Cost Of Lifestyle with Cost Of Living”, “too many of us have demanded our dreams be handed to us on a plate” and “we’ve actually solved most of the big problems that other nations are still grappling with”.

Firstly, moralizing GDP growth has been something of a ‘third rail’ in Australian politics since John Howard’s infamous “Working families in Australia have never been better off” quip. Andrew Norton has covered the problems of conflating national wellbeing with GDP many times (see especially this post). Possum makes the same basic move (arguing that GDP growth reflects our national success) as those Norton criticizes, but from a opposite end: instead of arguing that we need to broaden our measurements of national wellbeing, he seeks to narrow national wellbeing to personal assets and national accounts.

Secondly, what Possum calls the ‘remaining’ difficult and sophisticated problems are not actually ‘remaining’ ones at all – nor are they insignificant. Rather, they are at least partly a consequence of the policies to maximize economic growth, narrowly defined that Possum advocates. The recent AMWU campaign is exemplary. It’s a direct attack not just on the mining boom, but seeks to revive Industrial justification outside narrow metrics of national accounting that Possum is so enamoured with. Much more could be said about the blowbacks and ‘externalities’ of our enormous coal exports…

Finally, there’s an air of nineteenth century positivism to Possum’s writing: policy should replace politics; and that any attempts to define the political outside of economic use (such as the Occupy Movement) is not only irrational (“unhinged”) but a waste of time. The problem here is that as, Max Weber recognized over a century ago, the utilitarian project can only be evalutated on its own terms. People have to find meaning too, and the fivefold increase in anti-depressant prescriptions in Australia during the 1990s suggest the blowbacks and overflows of economic growth are also psycho-social. I haven’t been able to find stats on the rates of depression over time (itself a difficult accounting task with changing fads of diagnosis), but the prominence of Movember, Beyond Blue and other headline mental initiatives suggest any conflation of personal wealth with satisfaction should be taken with a huge grain of salt. Will Davies brilliant recent piece in New Left Review draws this out.

Interestingly, in the UK, any ‘rehinging’ of policy is around remoralizing markets themselves. The task ahead for those like Possum et al complaining about pesky disatisfaction, depression and ennui at during a period of unprecedented economic growth is to ‘rehinge’ the minerals boom in an analagous way…


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29 responses to “Never been better off…”

  1. Link

    Thank you. Found Possum’s piece pretty ‘establishment’ and rather dreary.

  2. wilful
  3. fredn

    Possum used data, you waved your hands around. If you think it be the case, how about telling us how we are worse off.

  4. patrickg

    Your problem, fredn, is that like Possum you think facts are above politics. Facts can inform and illuminate politics, but they are not above them. They are inherently political, and I think in positing his own opinion – valid or invalid – as above politics he does it, and the public debate a disservice.

    *Why* do so many Australians feel hard done by? *How* are those feelings are transferred into actions, preferences etc? By defining his argument so narrowly, I can’t help but feel poss has missed the forest for the trees. Those questions are the core to his argument, but by dodging them, he leaves us what? Nodding our heads and saying “Australians are a pack of whinging bastards”? That is not enriching the dialogue.

  5. wilful
  6. patrickg

    The other thing I would say is that – whether Poss likes it or no – complaints along these lines of “you should be grateful”, “never had it so good” etc, rarely end up landing on the bourgeois targets he outlines.

    Instead these generalised notions of prosperity are more frequently applied to the most marginalised, at-risk, dis-enfranchised and poor in our society, usually under the rubric of “Things are going so well, why are you complaining?”, “You’re bloody lucky to get what you have”, and “there’s plenty of opportunity if you want it”.

    The fact is, swelling ranks for the middle class or not, there are significant numbers of people in Australia (as elsewhere) who, as it turns out, have never had so bad, who are genuinely struggling. Their realities seldom emerge from OECD data like this, and yet they are just as omnipresent.

    Targetting people who have taken out mortgages they couldn’t afford, rich people wanting tax breaks for nannies etc, and upbraiding them for their greed etc is political junk food; it feels good at the time, but it doesn’t change anything and may just exacerbate underlying issues.

  7. Robert Merkel

    Lies, damned lies, and statistics, fredn.

    Demanding everything be boiled down to numbers means that you end up prioritizing only what you can easily quantify.

    While I think Possum has a point – Australia has a remarkable ability to ignore its own achievements – it is also worth consideration as to whether in the rush to get rich we’ve sacrificed more important things.

    For what it’s worth (and I know it’s not shared by many LP’ers), my view is that much of Australia’s manufacturing industry was going to die, and propping it up would have inflicted more pain than it would have avoided. But there are other instances – coal seam gas seems to be one – where the rush to maximise economic growth may not be worth the social and environment harm.

  8. Robert Merkel

    That said, patrickg, we all laughed at the “battlers” on 150k dug up by the News Limited papers in the context of the carbon price compensation.

    There do seem to be people, who by any rational measure are doing very well for themselves, who perceive themselves hard done by.

  9. patrickg

    I’m not refuting that Robert, by any means, but I just feel Poss’ focus is seeing an awful lot of trees but little in the way of forest. Working in the bohemian enclave of a university ( ;) ), you would have seen more derision. In my corporate job, I literally actual people forwarding those articles were distressed at the thought of losing benefits, who did indeed feel hard done by with their 130k salaries, 900k mortgages and nannies etc.

    It made it harder for me to laugh about it when it was reflected in my working environment, and the doublethink these people leapt to engage in meant that the tele demonising bourgeois (for a change!), amounted to nothing.

  10. Katz

    1. Possum’s international comparisons would look very different if the $A were valued at US$0.60 instead of US$1.10.

    2. And then this:

    And this didn’t happen by accident.

    This happened by design.

    This happened because of 30 years of hard, tedious, extraordinarily difficult policy work that far, far too many of us now either take completely for granted, or have simply forgotten about.  We have, without  even realising it, created the most successful and unique economic and policy arrangement of the late 20th and early 21st century – the proof is in the pudding.

    No policy makers ever put mountains of iron ore and coal under our desert sands. Certainly, these same policy makers have made a reasonable fist redistributing the proceeds of this bounty of nature. Without this bounty Australia would look like New Zealand minus all those bungy jumping enterprises.

    Mining booms always end. I fear that Australia is even worse prepared for the end of this one than it was for all the previous booms. The property bubble and the high level of private indebtedness leave many Australians horribly vulnerable to an economic downturn.

    There will be many tears before bedtime when that happens.

  11. Chris

    The fact is, swelling ranks for the middle class or not, there are significant numbers of people in Australia (as elsewhere) who, as it turns out, have never had so bad, who are genuinely struggling. Their realities seldom emerge from OECD data like this, and yet they are just as omnipresent.

    I don’t dispute that there are people genuinely struggling (and many more who believe they are struggling) but have you any data for your assertion that that there are significant numbers who have never had it so bad?

    Facts do inform political debate – and perhaps one lesson to be learnt from this analysis is that if governments want to enable people to be happier that they should concentrate on things other than that income growth. Most people think that with just a few more dollars a week they would be much better off, but the reality is for many of them it will make little difference to their happiness because it will be absorbed into their regular spending and soon they will again be thinking just a few more dollars will make things much easier.

  12. fmark

    Thanks for the link to Will Davis’ article, it is a fabulous piece.

  13. NotZed

    As my contemporaneous colleagues and uni mates gained experience and climbed the income ladder in the reasonably lucrative but not outrageous IT industry, some of them generally got more unhappy – because they specifically worried more about every dollar they earnt for every hour worked (and the nasty ‘tax man’) than when they had none to spare. Greedy bastards in short.

    I on the other hand merely remained about as unhappy as I started (because of other external factors unrelated to surplus bank balance), but such is the way of things I suppose.

  14. Robert Merkel

    Katz, Australian households have dramatically increased their savings rate over the past few years since the GFC.

    We’re socking cash away at rates not seen since financial deregulation.

  15. chrispydog

    As Steve Keen likes to remind us, private debt has grown exponentially in this country for quite some time, helped along by those ever generous government protected species (aka ‘banks’) and all predicated on rising asset values. It may not be the Ponzi scheme that Keen portrays it as, but it surely gives one pause to ask just how long such an arrangement can continue. Possum puts this stuff in the ‘minor problem’ category, but then I seem to remember no less an economic eminence as “the Ben Bernank” telling us that the subprime ructions would not be a problem to the US economy and would be ‘contained’. Of course that was just before it blew up and brought down the US financial system and most of the worlds’ along with it.

    Sure, this isn’t the USA, a crop of poor borrowers have not been milked by the financial industry, but we’ve driven up home prices and banked on them staying there. What if they don’t?

  16. Katz

    Robert, see the graph provided by Steve Keen here:

    http://www.incrediblecharts.com/economy/keen_debt_gdp.php

    As is clear, since the outbreak of the GFC, private debt as a proportion of GDP has increased.

  17. Link

    Based as it is largely on the neolithic digging up and destruction of the countryside, I don’t find Possom’s piece particularly inspiring or convincing. Poverty is relative to where you live. I don’t think it’s an either/or had it so good or so bad choice. Global markets are spooked by the inevitable shit/fan scenarios which are occurring on several fronts.

    But it’s also true that our poorest 10% of households [Australian] experienced faster income growth than any country other than Spain and Ireland (who are now quickly reversing that growth with their economic woes)

    (From Poss’s post.)

    I don’t actually find this bit of information particularly encouraging or necessarily a good omen as to us being on the right track. Quickly reversing is right. And how.

  18. Mindy

    @Chris – start by looking at people with disabilities who got kicked off the Disabled pension onto Job Start.

  19. Adrien

    …the fivefold increase in anti-depressant prescriptions in Australia during the 1990s suggest the blowbacks and overflows of economic growth are also psycho-social…. suggest any conflation of personal wealth with satisfaction should be taken with a huge grain of salt.

    Any conflation? I think this goes too far the other way. It’s like you’re saying that wealth and satisfaction have nothing to do with each other. This is, shall we say, a middle-class viewpoint. If on the other hand you might say that the equation of wealth and satisfaction are to be taken with the salt, well…

    People have to find meaning too

    I have my most sincere doubts that any new metaphysical cushion for our existential anxieties will come from the papers of policy whatever its ideological assumptions. Methinks the ideologies extant in modern society are representatives of interests. To try and put them aside merely makes things worse. It’s the style of nineteenth century thought, of which Positivism and Utilitarianism are species, that is still prevalent in all mainstream political organizations. This style strips human organization down to rational formula excluding the nuances gifted by experience, history and literature.

    And this article is an example. The quotation of measurable data to assert a point based on feeling. It’s not that the feeling is wrong, it isn’t. But the purpose of the discourse is to assert a programme, to maintain power by certain parties. Our malaise is not the result of the predominance of this or that ideology and’s best expressed in verse:

    You see everything you celebrate
    I can barely tolerate, but
    I wasn’t looking for a fight
    ‘Specially seeing how
    We’re all walking to the liquor store now
    As if there was a rainbow
    That ended at its door.

    IMHO

  20. Chris

    dk.au – do you think our quality of life would reduce significantly if the dollar dropped back down to say 70-80c though? The prices of some goods would increase (although a lot of local retailers/wholesalers have not reduced prices while the dollar has risen) but it also makes it easier for our exports too (more local jobs, potentially higher salaries in $AUD)

  21. John Edmond

    FWIW, people genuinely trying to engage or start a discussion don’t liken arguments to the Iraq War in their preamble. And everybody knows this.

  22. John Edmond

    Yes, but when you write an introduction like that you give him permission to call you an unhinged lunatic, and to ignore this discussion, and to seem reasonable. Which is what happens when you write an introduction designed to shut down discussion. Contrary to popular opinion it’s not anybody’s job to stumble past trolling in order to post comments on a random blog post.

    For what it’s worth I agree with the general thrust of the post.

  23. John D

    A few figures from Saturday’s SMH Irvine index:
    Share of total national income going to top 1%: 4.8% for 1980, 8.8% for 2008.
    Top marginal income tax: 60% for 1981, 45% today.
    Average earnings of Australia’s top 10% as a multiple of bottom 10%: 8 for mid 1990′s, 10 for 2008.
    Average income of bottom 10% in 2008: $13,700.
    In addition, for the bottom 10%, far more people are working casual and part time who really want permanent and/or full time work.
    Relatively speaking there is no doubt that the people at the bottom are worse off than the were.
    It is also worth noting that egalitarianism has a bigger impact on satisfaction with life than average earnings.

  24. Adrien

    It is also worth noting that egalitarianism has a bigger impact on satisfaction with life than average earnings.

    Yet despite all your figures you fail to demonstrate this, nor do you explain what you mean by ‘egalitarianism’. But then it’s all just a front for the preeminence of your preferred political faction.

  25. Steve

    I think that Possum was trying to make a point, and dk.au simply ignored this and instead is introducing a completely new point almost unrelated to the point of the original article.

    Possum’s point: It is bread and butter for the media and politicians (esp the opposition) to try and score points or generate interest by playing on people’s fears, and probably *THE* most common fears that get played upon are those relating to cost of living, fear of not making ends meet financially. Possum is pointing out that, in Australia, these fears are getting too much air time, because, relative to most other countries – even the 1st world – Australia is doing well.

    It is a good article by Possum I think, a timely antidote to the avalanche of news that we are all somehow doing it financially tough, and a nice counter to some of the nonsense from the opposition re the carbon tax, the mining tax, and the level of govt debt. I think it also offers some indirect criticism of materialism (ie that spending beyond our means for lifestyle and possessions is the path to happiness).

    dk.au is arguing across this on a different issue, by saying that maybe economic considerations are not the best measure of wellbeing.

    I don’t think Possum would actually argue with what dk.au is trying to say. Its just that it is not the point Possum was trying to make. Possum is talking politics/media, dk.au is talking sociology.