The Great Divide: Australia's Housing Mess and How to Fix It: Quarterly Essay 92, by Alan Kohler13/12/2023
Finance journalist Alan Kohler looks at Australia's current housing crisis According to Alan Kohler Australia's housing crisis is some twenty years in the making and is so baked in it will take at least a decade to unravel. And that unravelling will require not the current policy drift, but firm action and consensus from the electorate. As it currently stands, the majority of the electorate either own outright or have a mortgage, meaning any change to the status quo, that is, lower prices, is against their financial interests. Alan Kohler takes two historical views, the longer and the more recent. Australian property in early settler days was pretty much a land grab. Land was often gifted in large slabs by the British Crown. Some simply squatted on land and claimed it as their own, without a murmur from government. Australia was considered terra nullius – it was free for the taking. The shorter historical view, starting around the early 2000s, illustrates how the seeds of the current crisis were sown. A mixture of tax breaks and increased immigration under the Howard Government was rocket fuel to house prices. Everyone was happy – until they weren't. Prices were increasing at a rate of knots; it was money on a loop. Even if you hadn't entered the market, there was cheerful news that once you did, a pot of gold awaited. The results of those twenty years of rampant price increases are now in. What has turned housing into such a wicked problem is how entrenched it has become. It will take years to build our way back to housing affordability. It will also require national focus, of which Kohler says there is little, if any. A brilliantly lucid essay that explains how we arrived at such a mess. The Great Divide: Australia's Housing Mess and How to Fix it: Quarterly Essay 92, by Alan Kohler. Published by Black Inc. $27.99 Review by Chris Saliba What has happened to capitalism in the age of the internet? Yanis Varoufakis is an interesting mix of lived experience and academic theory. He was the Greek Minister for Finance when Greek government debt needed renegotiating with creditors during the country's 2015 fiscal crisis. Since then he has written several books on economics, the latest being Technofeudalism: What Killed Capitalism. It is written as a letter to his father, who was active in left-wing politics. The book centres around a question his father had asked him during the early days of the internet: will this new technology kill capitalism? The answer to that question is complicated, as you'd imagine. In essence, Varoufakis says that the internet has created a group of mega rent seekers. For example, Google Play and the Apple Store use third party creators to create products to put on their platforms. Google and Apple merely hoover up the rents from these poor workers – proles, as Varoufakis calls them – for allowing them to use their digital shop front. Worse still is the situation for the “serfs”, everyday users like you and me who give our data free to the big tech companies to monetise. In short, we've all made a Faustian pact with the internet. We've garnered all these digital free goodies, but we've had to sell our souls in the process. Technofeudalism is the story of concentrated power on steroids. The big tech companies offer the notion of “choice” - but there is none, really. It's either use their products or go without life's basic necessities such as banking, shopping, government and health services etc. Many authors have now tackled this subject, most notably Jaron Lanier and Shoshana Zuboff. Varoufakis offers an idiosyncratic history of capitalism, using Greek myths to get his point across. The result is a highly original yet contentious treatise on the state of the world's finances (much time is devoted to American debt and Chinese surpluses), written from an almost radical left-wing point of view. Many will find much to argue and wrestle with here, but also a range of thought provoking ideas to consider, coming from an original and unorthodox thinker. Technofeudalism: What Killed Capitalism, by Yanis Varoufakis. Published by Jonathan Cape. $36.99. Review by Chris Saliba An impassioned manifesto calling for fairness and equality for all. Bernie Sanders has the distinction of being the longest serving independent senator in US congressional history. Being an independent politician clearly gives him the freedom to call it as he sees it. His grievances are fairly simple: American capitalism is off the charts, creating obscene inequalities in wealth. Large swathes of the country live in utter economic desperation – without healthcare and existing on starvation wages that have been stagnant for the last fifty years – while a miniscule section of the population have more money than they can ever hope to spend. By any standards, this is a societal bonfire awaiting a match. It's Okay to be Angry About Capitalism is more impassioned manifesto than economic critique. Readers worried about getting bogged down in statistics, data and national budgets, can relax. Sanders gives the meat and potatoes of vital issues confronting Americans. He tackles the inequities and inefficiencies of the healthcare system, the poorly performing education sector, the concentration of media ownership and the reasons why billionaires should not exist. Sanders examines the failures of the Democratic party, which has not done a good enough job of defending the rights of working class Americans. The Democrats have sided with the rich, rather than the poor. Furious working class Americans have deserted them in droves, and parked their votes with Republicans. Gross inequalities in wealth, according to Sanders, can go some way to explaining the success of the Republican Party, especially under Trump. Americans are fed up, but have nowhere to turn. The answers to these problems are all simple: tax the mega rich and stop giving tax breaks to behemoth corporations. And fix up campaign donation laws so American democracy can no longer be bought and traded. Should Australians read this book? If you want to see how bad things can get when wealth is concentrated and greed lauded. Reading this book will make you thankful for living in a country with free healthcare, compulsory voting, a well funded public broadcaster and fair elections, overseen by the independent Australian Electoral Commission. It's Okay to be Angry About Capitalism is a fiery, gutsy, passionate book that holds no punches. It's a reminder that the price of democracy, economic security and freedom is eternal vigilance. It's Okay to be Angry About Capitalism, by Bernie Sanders. Published by Allen Lane. $35 A major road project takes a belly flop. Here's an extraordinary story of infrastructure planning gone awry, costing the taxpayer a billion dollars. The idea of an East-West road link had been kicked around policy circles for years and was finally taken up by Victorian Premier Ted Baillieu in 2011, just after his 2010 election win. Baillieu was seen as a weak, ineffectual premier, and his enthusiasm for the road project was lukewarm. Seeing his support as premier crumbling, he jumped ship before being pushed. His successor, Denis Napthine, wanted to appear a man of action and with a strong sense of mission. He took up the East West Link with gusto. So far, so good for the new Liberal Premier. Trouble was soon brewing, however. Locals who would be affected took umbrage – and then took up arms, or at least protest placards. There were court challenges and activists physically disrupting machinery, stopping works commencing. The Murdoch press portrayed the protesters as Luddites and greenie agitators. The Herald Sun covered the protests intensely, inadvertently helping the protesters' cause by keeping it relentlessly in the public eye. Enter the Labor party. With many an inner city seat at risk of succumbing to the Greens, the party moved in support of the protesters, even though there was much in principal support of the East-West Link within Labor. Finally, weeks out from an election, Daniel Andrews vowed to rip up any contracts that had been signed. Denis Napthine, despite this, committed the state to the project. Melbourne University academic James C. Murphy's main interest in the East-West Link story – or fiasco, as it is often gleefully referred to in this book – is to examine where power is located when it comes to decision making for major infrastructure projects. As he notes, public infrastructure is intensely political, as it involves public space and directly affects people's lives. His conclusion is that the East-West Link got up and running due to the influence and co-ordination of roads bureaucrat Ken Mathers. Mathers had three decades experience in roads bureaucracy, was well connected and skillfully orchestrated industry groups and other various boosters in favour of the project. Baillieu and Napthine appear as hollow men, holding power but not having any actual policy convictions. That the project was defeated appears to be almost random. The various protest groups that arose were not co-ordinated, more scattershot. But their vehemence and commitment won the day. The Making and the Unmaking of the East-West Link mixes theories of political science with a real life test case. Who holds power? How are major projects decided? Are community protests effective? Do faceless bureaucrats exert too much influence? These are some of the questions Murphy tries to answer, often with a sly sense of humour. The truth is governments can waste extraordinary amounts of money and we should probably pay more attention than we do. The Making and Unmaking of the East-West Link, by James C. Murphy. Published by Melbourne University Press. $34.99 Review by Chris Saliba The story of how worker rights and wages have been slowly eroded over past decades. Income inequality fell in Australia during the postwar period, and by 1979 inequality was at its lowest. Then neoliberal economics took hold, championed by leaders such as Ronald Reagan and Margaret Thatcher. Economic liberalisation started under the Labor Hawke/Keating governments, and was accelerated under the Liberal Howard government, with its anti-union policies and increase in temporary foreign workers. Age journalist Ben Schneiders has broken major stories of employee underpayments involving some of the biggest names in business. While that reporting has rightly sent shockwaves through the community, it is the bigger picture of how we got here that is even more compelling. A whittling away of workers’ rights and the large-scale reduction in trade union membership has paved the way for systemic exploitation and underpayment. (Schneiders also exposes how some corrupt unions have colluded with big business to exploit their members.) Shareholder capitalism, demanding ever- bigger returns, continues to ruthlessly crush labour. As Schneiders shrewdly observes, we live in a democracy, but many a workplace is authoritarian. The work of restoring lost equality will take decades of activism and commitment. It’s hard to understate how essential Schneiders’ book is to our understanding of how worker rights and wages have been steadily eroded over decades by both Labor and Liberal governments. Hard Labour is a vital and illuminating contribution to the equality debate that deserves a wide readership. Hard Labour: Wage Theft in the Age of Inequality, by Ben Schneiders. Published by Scribe. $32.99 (Release date 18th October). This review by Chris Saliba first published at Books + Publishing. Everything you wanted to know about banks, fintech companies and crypto currencies, but were too afraid to ask. Brett Scott is a former banking insider turned campaigner. What he campaigns for is quite simple – and surprising. His book is called Cloudmoney, but could more accurately be titled "In Praise of Cash". We are all now well versed in concepts like “big data” and “surveillance capitalism”, where our every click online is collected and owned by big corporations. But we tend to forget that every tap we make with our credit card, every online purchase, is recorded and kept. Banks and increasingly, fintech companies like PayPal and Amazon, have extraordinary power, which is becoming more and more concentrated. How to fight this concentration of power? The answer lies in cash. Cash is anonymous and offline. Every cash transaction chips away at the powers of fintech companies. To pay in cash can be considered almost a revolutionary act. As fintech companies and banks consolidate their power and control over currencies, they try at every step to veer us away from cash transactions. Amazon has even campaigned against laws that would require retailers to accept cash. That is a simple summation of Cloudmoney. Brett Scott is an excellent explainer of the arcane world of money and finance. He starts with a brief history of exchange systems, through to banking and state issued money, and finishes with the mind boggling world of crypto currencies. The latter, with their ability to remain anonymous, offer some alternative to evading the tentacles of the fintech behemoth. However, Scott believes crypto is a complicated story, one yet to be fully played out. A excellent primer on the how money systems work, and how they have accrued too much power in the digital age. Cloudmoney: Cash, Cards, Crypto and the War for our Wallets, by Brett Scott. Published by Jonathan Cape. $35 Review by Chris Saliba Economic commentator Satyajit Das gives some tough policy advice. Satyajit Das is a former derivatives trader turned author. He is a familiar face on television chat panels and has written several well received books on global finance and economics. In Fortune's Fool: Australia's Choice (part of the “In the National Interest” series of long essays) Das gives a brief but concentrated overview of all aspects of the Australian economy. His analysis finds the old problem that Donald Horne addressed in The Lucky Country: we have relied too much on good fortune and failed to innovate our way to prosperity. Currently, according to Das, Australia relies too much on “houses and holes”. We have a perverse property market that encourages exorbitant prices and we rely too much for income on volatile commodity prices from our mining sector. To maintain our current lifestyle, we'll need to invest the country's income more wisely rather than promising tax cuts and encouraging consumer spending. Increasing or extending the GST will one day have to be confronted. Tackling climate change may even require a reduced standard of living. The tough lesson we must learn is that while reform is necessary, it doesn't always promise success. But not acting will ensure failure. Grim but fascinating reading. Forutne's Fool: Australia's Choices, by Satyajit Das. Published by Monash University Publishing. $19.95 Review by Chris Saliba The story of how one of Silicon Valley's dark princes made his billions and wields his influence. Peter Thiel is not a name as well known as Jeff Bezos and Mark Zuckerberg, yet he's had considerable influence in the tech world and has attempted to push his ideas into the sphere of politics. Born in West Germany in 1967, his family moved to the United States the following year. A mathematics wiz and chess aficionado, he studied philosophy at Stanford University. His literary influences included Tolkein and Ayn Rand. He soon got involved in campus culture wars through the university's newspaper, The Stanford Review, which Thiel co-founded. The paper's bugbears were political correctness and identity politics, but some of the articles pushed boundaries into racism, sexism and homophobia. After Stanford, Thiel went into law, but soon got bored and dropped out of the corporate world. Instead he co-founded PayPal, the electronic payments system that revolutionised online shopping. Thiel was never really a technologist; investing was his true calling. His investments (including an early bet on Facebook, giving him a 10.2% stake in the company and a place on the board) made him a billionaire many times over. So much wealth, one would think, would result in overwhelming joy, but Thiele remained restless and continued his Stanford University culture wars. When gossip blog Gawker outed Thiel as gay, he sought revenge by suing the media outlet through various proxies, keeping his involvement secret. He would eventually bankrupt Gawker. It was seen by some as deeply disturbing that a billionaire investor could shut down a media company, seemingly at whim. Thiele's far right activities reached their peak when he met political strategist Steve Bannon and gained entry into Trump's circles. He would publicly endorse Trump at one of his rallies and donate one million dollars to his campaign. Business journalist Max Chafkin has called his biography of Thiel The Contrarian. This is due to his subject's ability to hold various competing (or flat out contradictory) positions at the same time. As Chafkin writes: “How exactly could a hedge fund guy who was effectively shorting the American economy also be a wide-eyed futurist? What kind of libertarian sold spy technology to the CIA? What kind of gonzo risk taker says no to an early investment in Tesla?” The Contrarian reads as both a jaw-dropping biography of a cold nihilist and a well researched history of Silicon Valley, its personalities, energy and ethos. So many tech companies started out as sunny, optimistic, idealistic outfits, promoting themselves as striving to make the world a better place. But as they grew and became more powerful, businesses like Facebook and Google would start courting authoritarian regimes like China. (Mark Zuckerberg requested President Xi Jinping name his unborn child at a White House dinner.) A powerful book that raises a lot of questions about the power of technology and the lack of accountability surrounding it. The Contrarian: Peter Thiel and Silicon Valley's Pursuit of Power, by Max Chafkin. Bloomsbury. $29.99 Review by Chris Saliba The shocking story of Australia's inequitable water market. Once upon a time Australian farmers traded thousands of megalitres of water for something as simple as a slab of beer. Then the economic mood changed. The 1980s brought political leaders such as Margaret Thatcher and Ronald Reagan, spruiking the invisible hand of the free market. By the early 2000s, Australian water was transformed into an aggressively traded financial product. Early water policy in Australia, influenced by the work of Alfred Deakin, deemed that water should not be monopolised or exploited by individuals. Water was to be allocated fairly through bureaucratic systems. This consensus changed in 2004 with the National Water Initiative, allowing water to be traded separately from land. Enter the sophisticated traders of the financial markets, with their fast computers, superior knowledge and market manipulation. By 2018, the Register of Foreign Ownership of Water Entitlements showed that 10 per cent of all water assets were held by foreign entities. The great tragedy of this “hydrological casino” is that Australian farmers don't have a hope of competing in such an asymmetrical market. Opening the trade in water was supposed to make its allocation more efficient, but as authors Scott Hamilton and Stuart Kells show, it has created a whole host of perverse outcomes. With its mix of anger and urgency, this is essential reading on an arcane subject that Australians should know more about. Sold Down the River: How Robber Barons and Wall Street Traders Cornered Australia's Water Market, by Scott Hamilton and Stuart Kells. Published by Text. $34.99 First Published at Books + Publishing. Review by Chris Saliba A snappy, fast-paced primer on China's technological rise. China's pursuit of technology dominance has progressed through three stages, according to business writer and China expert Rebecca A. Fannin. The period between 2003 – 2010 saw the flourishing of internet start-ups, phase two saw a boom in mobile phone-centric start-ups and today China is putting up stiff competition in artificial intelligence, biotech, self-driving cars, robotics, mobile payments and more. At first China was a quick and effective imitator, but is now pulling ahead in key areas. While there are pitfalls for China's tech titans – a repressive government that could close shop on any business that gets too powerful, a lack of profitability for many emerging start-ups, despite large market share – the overall picture is of an emerging tech dragon to rival the West. The way Fannin paints it, China could be on the cusp of global tech dominance, leading to economic dominance and a shake-up in the world order. Nothing is assured in this cut-throat world, but the sheer speed with which China has caught up with the West is no doubt ringing alarm bells in government and policy circles. A fast paced overview of a quickly evolving tech sector with enormous potential for global disruption. Tech Titans of China: How China's Tech Sector is Challenging the World by Innovating Faster, Working Harder & Going Global, by Rebecca A. Fannin. Published by Nicholas Brealey. $29.99 Book review by Chris Saliba |
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