Downward pressure on Australian wages becoming the “new normal”

by Nick Beams, from WSWS

The continued downward pressure on wages, which has led to the lowest growth rates in more than 50 years, is not a cyclical downturn but is rapidly becoming a permanent feature of the Australian economy.

While this outlook was not explicitly spelled out, it was the central conclusion to be drawn from a speech delivered by the governor of the Reserve Bank of Australia, Philip Lowe, to a group of business economists in Sydney on Tuesday evening.

Lowe began his remarks by expressing something of the bewilderment which characterises central bankers and economic authorities around the world in the post-global-financial crisis environment. They confront a situation in which all their models of how the capitalist economy is supposed to work—supplying rising wages and living standards—have broken down.

Lowe began by recalling that in an address to the Australian Business Economists annual dinner five years ago he had addressed the subject of “What is Normal?”

“Five years on, we are still searching to understand what is normal,” he said. Around the world, real income growth has been unusually slow in many countries and not surprisingly “these households, including many here in Australia, wonder whether this slow growth in incomes is now the new normal.”

Lowe left the question open but the content of his speech made clear that the decline in wages is going to continue…

[read more here]

51 Responses

  1. FYI the Reserve Bank of Australia is NOT a privately owned bank. Just like the Federal Reserve is NOT a privately owned bank.
    Central banks have very little real power.

    • you always come in here and say that jag and I always have to take the time to show the people that yes, our central bank system is comprised of privately owned banks that receive dividend checks every quarter for their work as part of the central banking system. Every time a central bank story is posted here you make the same comments about it.

      • The member banks receive a dividend of 6% (set by congress) of the value of capital lodged (fixed according the individual bank’s size).
        They have no tradable shares and they have one vote per bank.
        All ‘profits’ are returned to Treasury.
        What private corporation would run like this?

      • jagoff the banker boy says that the rothschilds & warburgs, etc created the federal reserve out of the kindness of their hearts & only take a small dividend for themselves. and of course they have NO POWER in the world of politics — because money means nothing, dontcha know.

        • Just another strawman. The Congress created the Federal Reserve system by legislation.
          The power of bankers isn’t the issue.

          • you made it the issue by claiming they have no power. and of course you are entirely wrong.

            • What supernatural powers do you think the Fed has?
              It sets interest rates in line with the Treasury’s target rates and operates with Treasury to maintain liquidity in the payments system.
              Anything else?

    • yes, we know you like the central banks. surely it’s just a right-wing conspiracy theory to deny spending where it’s needed…
      just wait until that “gov’t owned” bank sticks the people with the bill for the debt. either way, it’s the citizens who will pay — but you think others are being misled by propaganda? you are a fool.

      • #LearnMMT, moron.

        • FYI
          Fed Chair Marriner Eccles to Representative Wright Patman, March 1941:
          “One of your favorite complaints is that the Federal Reserve Banks are owned by private bankers and that the Board of Governors in Washington as well as the Federal Reserve Banks are operated in the interest of private bankers. These charges will not stand up under examination.
          The Board of Governors, the members of which are appointed by the President and confirmed by the Senate, is a public body. As to the Federal Reserve Banks, you rest your case upon the slender point that the stock of the Federal Reserve Banks is owned by the member banks. Congress specifically provided for this, as well as for the rate of dividend, and Congress can change the nature of the stock and the rate of return at will. This so-called stock ownership, however, is more in the nature of an enforced subscription to the capital of the Federal Reserve Banks than an ownership in the usual sense. The stock cannot be sold, transferred or hypothecated, nor can it be voted in accordance with the par value of the shares held. Thus the smallest member bank has an equal vote with the largest. Member banks have no right to participate in earnings above the statutory dividend, and upon liquidation any funds remaining after retirement of the stock revert to the government.
          You greatly exaggerate the significance of this so-called stock ownership. At the current dividend rate of six per cent, it involves the payment annually of approximately $8,000,000 to more than 6,000 member banks, and could be done away with altogether without important effects except to put an end to an illusion created by you and others in the minds of some people. At the same time, it is my view that the Federal Reserve System should be unequivocally a public instrumentality but the ownership of the stock of the Federal Reserve Banks is not the determining factor.”

        • you want to throw around words like “moron” & accuse others of being “childish”? how ’bout you go fuck yourself, jagoff.

  2. The people own the ‘debt’. The Government ‘debt’ is a private sector asset.

    • your own argument says otherwise: you claim the right says they can’t afford this or that for the people, etc. but at the end of the day, it’s the citizenry who will pay the price. either way it’s we citizens who will lose. but you can’t figure that out?

  3. And no, I don’t ‘like’ central banks. That’s just childish.

    My comments seem to be being eaten.

    • you defend the central banks every time they are discussed on this site. i’d say it’s a fair criticism.
      “surely the money-men have no real power…” — but criticism of your beliefs are “childish”? gimme a break.

      • My opinion is that the primary function of the Fed i.e. running the payments system should be an office within Treasury.
        But do build all the strawmen you want.

        • there’s no strawman here; you say the fed is owned by the gov’t & i say that not only are you full of shit, but also that it won’t matter either way to the citizens.

          but you believe what you like, banker boy.

          • Learn to read a balance sheet, twit. The public can’t be on both sides.
            Government liabilities are private assets. Deficits add to private sector income and savings.
            The ‘national debt’ is the net savings of the private sector. To the penny.
            You don’t know what you’re talking about.

            • it’s you who have no idea, banker boy. as i’ve said before — and even as you’ve suggested in other statements — it’s the people who will be held responsible for the debt, regardless of who you think owns the fed (or even who actually owns it). get it? you probably don’t…

              your defense of the “money-changers” of our times is naive, to say the least — if not defiantly stupid in regards to the power of those who control our currency. but you say i’m “right-wing” for holding this belief? what could be more right wing than your defense of our phony monetary system?

              • Right wing libertoonian nonsense. The Federal government ‘controls’ the currency. It is the monopoly issuer of US$.
                #LearnMMT, retard.

                • are you the retarded child adopted by the rothschild family? you must be if you think criticism of the shell game we call our economy is “right-wing”. you’re just espousing typical right-wing “free-market” crap in defense of a phony system. but it’s everyone else who’s the right-winger, banker boy?

                  anyway, i’m tired of this conversation. i hope your stocks are doing well.
                  nighty night, jagoff.

  4. The Fed is not ‘owned’ by private banks.

    • what are you saying? the link you left for us to read, a letter from a Fed. Chairman in 1941, EXPLICITLY explains how the banks that make up the fed are indeed privately owned and they depend on the PROFITS made from the INTEREST they get to charge the AMERICAN PEOPLE… so much so, this part of the letter explains how if the congress changes the law and puts control of the American monetary system BACK in the hands of the government, then the goddamned banksters will simply jack up the rates on loans and checking accounts TO MAKE THE PEOPLE PAY FOR WHAT THE GOVERNMENT WAS CONSIDERING DOING.

      “~ 2 – At the outset I think it necessary to dispose of some of your misconceptions on the subject of the banking system. First of all, the interest received by the commercial banks of the country on their government bond holdings is not an unconscionable tribute, as one might imply from your discussion. The banking system of the country is an indispensable part of our capitalistic economy. Practically all the people make use of some banking service, either directly,or indirectly. How would these people be affected by your proposal? If the revenue from government bond holdings should be taken from the banks, they would seek some other source of revenue to replace it or reduce their disbursements. Obviously they could not raise their lending rates, since the huge amount of new money involved in your plan would drive interest rates even below their present low levels. The banks would be obliged to reduce still further the rate of interest paid on their savings accounts although the savers of the country are now receiving an excessively low rate of return. Beyond that, the banks would have to increase materially their service charges of various kinds, principally for checking accounts. These efforts to replace the revenue now derived from interest on government securities would impose a new burden upon the people of the country substantially in the same amount as the interest now received by the banks on their government bond holdings. There is this important difference, however, that the new burden upon savers and other individuals using banking services would fall most heavily upon the more numerous owners of small accounts whereas the burden of taxes collected by the Federal government to pay interest on its bonds falls for the most part upon those with ability to pay”

      I mean… do you read this stuff you link to or what man? You posted a link to this. Threats from the banksters toward the congress saying they will bleed the American people if congress takes back control of the fed. And you still say these central banks don’t PROFIT from running the “Federal” Reserve?

      come on man… what are you doing?

      • The member banks get a 6% dividend on their lodged capital (what you call shares.) That’s it. Set by congress. The district Feds make ‘profit’ from loaning reserves to member banks and providing other services to the members. All profits of the Fed system are returned to Treasury.
        Federal Reserve banks do not make retail loans so they are not ‘making money from the people’.

        The government does not borrow money from private banks. It is the monopoly issuer of the currency.
        Government ‘debt’ is private sector savings.
        Government ‘debt’ can only be bought with high powered money that the government has already spent into existence in the private sector that hasn’t (yet) been taxed away. These are savings accounts. And they constitute the effective money supply.

        • Government debt is money that a government creates by selling bonds, stocks, and making bills….. it is money that has to be paid back by the government. It is not a private sector savings.

          • No it isn’t. The government spends money ($) into existence by marking up accounts in the private sector when it buys goods or services or makes transfer payments.
            These $ are called reserves. Only reserves can be used to buy the bonds that the government issues.
            They are private sector savings i.e. the high powered money that the government has spent into existence but has not yet cancelled by taxation.
            That is how the system has worked since 1973.

        • you don’t even recognize that bankster was threatening the congressmen by saying they would put the squeeze on the people if congress voted to take back control of the Fed. Really? come on man… it was YOUR LINK.

          • It isn’t a threat. It is a practical statement of an aspect of the payments system.
            The natural rate of interest is zero. Paying interest on bonds is the means that the government uses to ensure that there is an interbank market for excess reserves.
            What he is arguing against is not what you think.

            • right. he says Big Banking will SUCK THE PROFITS out of the population in order to MAKE UP FOR the profits they would lose by not being able to charge INTEREST on “loans” made to the government. What part of that do you not understand? He makes it very clear. And you can say “that’s not what he’s saying” all day long… but there it is, in YOUR link, written by one of those FOR PROFIT banksters running the Federal Reserve that YOU SAY isn’t run FOR PROFIT.

              go ahead, keep talking in circles. Wont make any difference. The evidence is right there… provided by YOU by the way… anyone can go read it, read the clip I posted in my comment, and judge for themselves what the meaning is… but it’s pretty clear…

              conclusion? The Fed is PRIVATELY OWNED and they COUNT ON THOSE PROFITS and will THREATEN THE GOVERNMENT if someone dares attempt to take the profits away from them.

              • Nope. Banks don’t make loans to the government for a start.
                What he’s saying is that if bonds don’t pay interest then banks would be forced to charge depositors for parking their funds and not be able to pay interest on savings accounts.
                Which is true.
                Government ‘debt’ is the principal means of earning interest on savings. So if the those ‘debt’ instruments don’t pay interest then depositors would a) get no interest and b) would need to be charged.

              • The Fed returns ALL of its profits to Treasury.

  5. Fed Chair Marriner Eccles to Representative Wright Patman, March 1941:
”One of your favorite complaints is that the Federal Reserve Banks are owned by private bankers and that the Board of Governors in Washington as well as the Federal Reserve Banks are operated in the interest of private bankers. These charges will not stand up under examination.
    The Board of Governors, the members of which are appointed by the President and confirmed by the Senate, is a public body. As to the Federal Reserve Banks, you rest your case upon the slender point that the stock of the Federal Reserve Banks is owned by the member banks. Congress specifically provided for this, as well as for the rate of dividend, and Congress can change the nature of the stock and the rate of return at will. This so-called stock ownership, however, is more in the nature of an enforced subscription to the capital of the Federal Reserve Banks than an ownership in the usual sense. The stock cannot be sold, transferred or hypothecated, nor can it be voted in accordance with the par value of the shares held. Thus the smallest member bank has an equal vote with the largest. Member banks have no right to participate in earnings above the statutory dividend, and upon liquidation any funds remaining after retirement of the stock revert to the government.
    You greatly exaggerate the significance of this so-called stock ownership. At the current dividend rate of six per cent, it involves the payment annually of approximately $8,000,000 to more than 6,000 member banks, and could be done away with altogether without important effects except to put an end to an illusion created by you and others in the minds of some people. At the same time, it is my view that the Federal Reserve System should be unequivocally a public instrumentality but the ownership of the stock of the Federal Reserve Banks is not the determining factor.”

  6. Here’s another Counterpunch article.
    https://www.counterpunch.org/2016/08/01/employer-of-last-resort-a-completely-american-solution-to-unemployment/
    As for ad hominem, your Mercury friend is the guilty party.
    I’m no banker. I’d have no privately owned banks and the Fed wouldn’t exist outside Treasury.
    You have the completely wrong end of the stick about me. And you don’t understand enough about the system to understand.
    The fact is that the private Fed theory is a right wing disinformation narrative.

    • You are not able to understand what you read….. that is bad…. but to take your ignorant thoughts and try to make a truth out of them is beyond bad…
      I don’t know why Scott hasn’t banned you.

  7. The reserve bank of australia, while not privately run, is run by representatives of the big four private banks, as appointed by the chairman of the RBA and the federal treasurer (tick yes to avoid political and post-political and possibly literal suicide).

    The formation of the RBA came with the privatisation of the commonwealth bank, the state ran institution that held the trust of a majority of Australians, despite endless scare campaigns ran by media oligarchs.

    The privatisation itself was lead by Paul Keating, in my opinion the most damaging prime minister in this nation’s history. Yes, even worse than John Howard himself. Without Keating setting the stage, Howard could have never ever gotten away with the sweeping neoliberalist policies.

    If you bother to look into any of the media of the day, the privatisation of the CBA was sold as the way to save a slowing Australian economy (it wasn’t slowing by any statistical measurement) and align Australia with American corporate interests (less emphasis on this, the American ruling class was never held in high regard by the hoi polloi here, probably even less then than now).

    Basically the whole debacle parallels neoliberal victories prior and after.

    And as an Australian, yes wages have moved barely a mm in the past two decades, while the cost of living has risen thricefold at minimum.

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