60 Minute Australia aired an episode about the high costs of living crisis in Australia, which includes the high cost of goods and services that occurred due to the pandemic. Around the world, countries are raising interest rates to handle and tame the raging inflation. Basic economics, right? Inflation came from the money printing machine, aka from the fiscal/monetary policies when everyone was locked down. Some argue inflation comes from the markup of prices from companies. But maybe it is just a cascading effect that companies are trapped in when inflation or when the purchasing power of money decreases.
Most importantly of all, the high costs of living primarily are from home and rent prices skyrocketing. “In a survey conducted in Australia in 2022, over one-third of respondents indicated that they spend between 16 to 30 percent of their weekly income on rent. Over four percent of respondents spent between 61 and 75% of their weekly income on rent.”
Firstly, the gall and the audacity of the women economist from 60 Minutes Australia to say that people being “lazy and complacent” is the reason for the high costs of living. That analysis contradicts with the many people who are working yet are still struggling. I would not be offended and would partially agree if she had said “Americans were lazy,”. But surely, the rest of the world can’t be just as lazy as Americans. “Laziness” is not the root cause! Some economists like her have lost touch with reality, and are causing more harm than good.
The same economists mentioned how the government is not going to save us and we got to pull ourselves up from our bootstraps. So I ask, why have a government at all? Why pay taxes if they are not solving big issues like homelessness, or rent increases? Would eliminating government make the world a better place? Would eliminating economists make the world a better place?
The media will have you turn your attention and make you believe that low-interest rates during the pandemic fueled the skyrocketing prices of assets like homes. Which is partially true, I don’t disagree with that. Now that interest rates are going higher, more people are less likely to buy a home. Rising interest rates make home prices more expensive, which has the adverse effect of making rents go higher since more people are competing for rent spaces, or when there is not “enough supply of homes or rental spaces.”
But we also have to turn out attention to why property value and home prices continued to skyrocket even before the pandemic began. In other words, why was this an issue for the entirety of the 2000s, and 2010s, and continues to be now in the 2020s?
Don’t be fooled, Australia has had a home/renting crisis for years, pre-pandemic. Instead of only focusing on inflation, the real dilemma is land/property value. I argue that it is the system in place which includes economic policies is the main culprit to the high costs of living. Real estate lobbying and people voting are a part of the system, so yes, we are all culpable. Lobbying is legal and essential for a democracy to pass or reform laws. Bribery in the form of lobbying is a whole other issue and should be outlawed. Watch YouTuber, Louis Rossman’s (small repairman business owner) video on lobbying for more on that and how he fought for the right-to-repair bill.
The answer to skyrocketing home prices will never be only to build more homes. That’s a partial solution to a much more systemic query. The answer to skyrocketing rent prices will never be rent stabilization, wage increases, or even a “minimum/maximum wage.” This is the immediate reaction or response by the public at large. It’s an impulse or an instinct that is damaging to everyone’s interest and is extremely counterproductive. It may seem counterintuitive, but increasing wages and a minimum wage will only exacerbate the issue because it will only push prices further up and hurt everyone in the long term.
Henry George (Georgism) found one powerful solution and made the argument a century before, with which libertarian, free-market economists like Milton Friedman agreed with. A progressive man ahead of his time Henry George was indeed.
In an ideal world, eliminating the landlord/tenant situation is best, in the same way, the master/slave dynamic was abolished. But in the meantime, supposing we cannot eliminate this relationship and this “road to serfdom,” the best option is a smart property tax. If that’s not the solution, then other solutions can be found and extrapolated in the documentary, Real Estate 4 Ransom. It’s an underrated film that was released in 2012 discussing the speculation of property (a by-product of the 2007 housing crisis). The film gives a quick glimpse of the same issues that are still present in Australia and the rest of the world.
P.S. 60 Minutes Australia mentioned Switzerland, and how it handled inflation well. And in the Georgism video, mentioned how it was implemented in Singapore. I wanted to know if there was a relationship between the two countries.
Social Scholarly 