I had not planned to write another post on the blog this year. If the analytics are correct, I doubt it will be seen by many people, but I’m going to write it anyway. Consider this an exercise in catharsis.
I live in suburban Melbourne. Badmouthing suburbia has been a favourite pastime of intellectuals for as long as I’ve been alive. I never understood why.
I’ve been fortunate to live in many different circumstances, from farmhouse to small rural township to rural city to massive Australian and European megapolis. Each of these had good and bad qualities, and it never seemed to me that the costs-benefit ratio of suburbia was noticeably worse than the others. I suspect the disdain of intellectuals towards suburbia has a lot to do with the bad memories they harbour from their childhoods rather than any objective analysis.
Suburbia is low-density housing. It emerged in direct opposition to the high-density inner city, which, even a hundred years ago, was a far from healthy living environment due to a combination of pollution, poverty, and ignorance. People moved to suburbia because they wanted a cleaner place to live. And that’s what they created. We forget also that another attraction of suburbia was the ability to be able to grow at least a share of one’s own food. To this day, older suburban homes invariably have a lemon tree. Once upon a time, they would have had a kitchen garden too.
The original spirit of suburbia, as far as I can tell, was a microcosmic version of the old aristocratic estates, which also had extensive gardens and produced most of their own food, albeit with a team of servants who did the work. A level of self-sufficiency was implied. This ethic translated into early suburbia, before consumerism undermined it. The suburban home owner didn’t have a team of servants and would have to do the work themselves, but the payoff was that they did get to live a little bit like a lord of old.
All of this was tied in with longstanding cultural and legal attitudes to the home. A man’s home was his castle (note the explicit comparison of the average citizen with the aristocracy). C.S. Lewis once stated that the whole point of politics should be the protection of family home. This tradition goes back many centuries in Britain and has a particular flavour that is different even from continental Europe.
Those of us who live in countries that were founded on that tradition, including Australia, simply take it for granted without realising its uniqueness. In many cultures, you would seek sanctuary and protection in a religious building. In Britain, the idea was that you could find the same protection in your own home, which even the king himself could not violate.
All of which is to say that suburbia didn’t come out of nowhere. It is the product of a culture. So, what does it mean that here in Australia we are in the process of dismantling suburbia? Clearly, it means we are in the process of a major cultural shift, one that nobody voted for, nobody wants and nobody seems even to be aware of. Within the last half a decade especially, little more than the blink of an eye in historical terms, suburban home ownership has become unattainable for the next generation.
How have our politicians responded to this crisis? Well, we’ll get to that.
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Let’s talk about inflation. No. First, let’s talk about the ascendancy of the managerial bureaucratic class in western nations in the post-war years.
Prior to WW2, the total tax take of the state was in the low teen percentages. It jumped into the 30% range during the war and never went back down again. That money wasn’t paying for the military in the post war years. It was paying for the bureaucracy.
In fairness, there were good reasons for this. Unemployment had been a huge contributor to the problems of the 30s which led to the war. In the aftermath, it’s not hard to see why leaders of western nations wanted to ensure it didn’t happen again. One of the ways to do that was to have the government employ enormous numbers of people, and that’s what happened.
The managerial class operates under the technocratic assumption that the only things that count in this world are the things that can be counted. Bureaucracies love numbers and statistics. For a while, it was probably not a bad thing to have some level of precision and accuracy in measurement as a guide to political decision-making. But, for a variety of reasons, the numbers and models used by the bureaucracy have become more and more opaque.
This process kicked into overdrive in the 70s as the economy started to hit the skids and political pressure was brought to bear to change the definition of economic metrics to make them look good. No conspiracy theory is required to explain this. It is a process that happens automatically in any organisation where managers govern by numbers and where subordinates have the ability to manipulate those numbers. With the rise of the professional CEO, management-by-numbers become the dominant way in which our society is governed in both the public and private sectors. That is what the ascent of the bureaucrats has meant.
Ok, now let’s talk about inflation. Inflation is one of those wonderful metrics that the managerial class uses to measure the economy and tell us how everything is doing great, and the average bozo who thinks things aren’t great is too dumb to understand the world they live in. Another thing that bureaucrats love to do is protect their turf. The more the average person points out problems, the more complex the metrics and models become. The goal is to make them indecipherable and immune to criticism.
All modern definitions of inflation are based on price, and there’s a hundred different ways to measure average prices, each of which keeps a small army of academics and bureaucrats in jobs while allowing the figures to be massaged into whatever format makes a politician look good. As a default assumption, any modern metric that is used for political purposes is complete bullshit until proven otherwise. That is especially true of inflation since it’s one of the main metrics upon which political decisions are supposedly based.
Inflation has been tortured into unrecognisability by successive generations of academics, bureaucrats and politicians. Inflation has seen some shit, man. If you want to know what kinds of semantic torture goes on in the dark rooms of a modern bureaucracy, consider that our modern managerial class has changed the definition of a woman. If they can do that, they can do anything.
The good news is that we can do much to improve our understanding of what’s really going on in the world by going back in time to a point before the bureaucrats got their grubby little hands on power. Anything prior to WW2 is safe, at least safe from obvious political distortion. Back then, there was a different definition of inflation, one that anybody could understand.
The definition of inflation was this: inflation is what happens when an economy cannot provide the goods and services demanded of it.
Simple, right? Note that this definition does not say anything about price. Prices may rise as a result of inflation, but we must always understand that in terms of fundamentals. Inflation is always about too much demand and not enough supply.
When we apply this model to what is going on in Australia and other western nations these days, we can sum it up very simply: there is too much demand and not enough supply. Still, that is no longer a surprise since even the doctored official inflation statistics tell us that we have inflation now. But when we apply our broader understanding of inflation, we find that there are many types of real inflation that are not being captured in the official statistics. Inflation is far worse than what we are being told. This will not be a surprise to a person who knows how to use common sense, but such people are in short supply these days.
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Let me return to where I started this post. I live in suburban Melbourne. The house across the road from where I live was recently demolished. It was an old but still neat and tidy brick home on a quarter-acre block. As I write this (on a Sunday morning no less!), there are builders at work across the road constructing three (or maybe four) townhouses where one house used to be.
At the end of my street, a block was subdivided a few years ago and a new house was placed on the southern half of what used to be a slightly less than quarter-acre block. Two houses now take up almost the entire space, with tiny little backyards and even tinier artificial lawns at the front.
The kicker, however, and the thing that prompted this blog post is another property on the next street over which, until last week, had a beautiful big oak tree in the backyard. The tree must have been 30 metres tall. I could see it from the window next to my desk, where I’m typing these words. I used to enjoy watching the myriad of birdlife that made use of its majestic branches, mostly magpies, crows and cockatoos but occasionally falcons would drop by.
I heard the chainsaws going in the morning but didn’t think much of it. Around lunchtime, I caught the first sight of the arborist, who had now worked his way to about the midpoint of the tree. By the end of the day, the oak was gone. Out of curiosity, I walked down the street to have a look. Sure enough, the house on that block has also been demolished and will be replaced by townhouses.
There are 50 houses on the street where I live; four of them have disappeared in just the last four years. Linear extrapolation is always a dangerous thing, but on current trends, the majority of this area will be townhouses in just a few decades. Low-density suburbia will have been swapped for medium density something. All of the benefits of low density will be gone, and the criticisms of the intellectuals who have been hating on suburbia for as long as it has existed will actually come true.
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Inflation is what happens when an economy cannot provide the goods and services demanded of it. The Australian economy can no longer provide the suburban housing that is demanded of it. This is a trend that has been going on for more than 20 years. For most of those 20 years, the manifestation of that has been absurd price hikes that were completely disconnected from economic fundamentals. That was bad enough. What we have now is worse.
It seems we have now entered a new phase. It’s the phase in which suburbia is being catabolised and replaced by the simulacrum of suburbia. Rather than admit that our economy was not providing what was demanded of it and take measures to address the situation, we will turn suburbia into something qualitatively different while pretending that everything is fine.
But the problem is not specific to housing. Everywhere we look in the Australian economy, we find inflation. Let’s repeat it one more time: inflation is what happens when an economy cannot provide the goods and services demanded of it. Across Australia, there are shortages of teachers, nurses, doctors, police officers, tradesmen, and more. That means the Australian economy cannot provide the teaching, medical, police, and construction services demanded of it.
What does this mean in practice? You send your child to school expecting them to be educated, but there are not enough teachers, and so classes get cancelled. The school cannot provide the services that are demanded of it.
You need to call on the police for one of the many services that they have traditionally supplied, except the police station doesn’t have enough officers and is no longer performing non-essential work. The police station can no longer provide the services demanded of it.
You have an annoying but non-life-threatening medical problem that requires surgery. The hospital tells you that the waiting list is now eighteen months long. The hospital can no longer provide the services demanded of it.
None of this is included in the official inflation statistics, and a big part of the reason why is because these are all government services that are paid for out of taxes. Well, they used to be paid for out of taxes. Nowadays, the government finances them through debt. The Victorian government is particularly good at this, with a debt bill approaching the $200 billion dollar mark. Instead of counting them in the inflation statistics, we count them in other statistics and pretend that the two things have nothing to do with each other. This is another way in which numbers can be fudged for political purposes.
Once we understand that inflation is nothing more than an imbalance between supply and demand, the solution to it becomes really simple. Either you reduce demand or you increase supply. Once upon a time, we used to allow demand and supply to re-establish equilibrium by having a recession. Ever since the neoliberal reforms of the 90s, however, we don’t have recessions anymore. Even the very thought of a recession sends chills down the spine of every technocrat in Canberra. Apparently, we will now do absolutely anything to avoid having a recession.
One of those things involves the mass importation of people into the country. That’s another thing that’s happening in every western nation these days. The only difference is the method by which they arrive. Here in Australia, we do it in an orderly fashion, very well organised and official.
When we translate it into inflation terms, however, it’s as plain as the nose on your face that immigration will increase the demand for goods and services that already don’t exist. It is the exact opposite of what you would do if you actually wanted to stop inflation. This is especially true because the inflation we see in Australia is in the basic services that everybody requires: education, health, home construction. Most of the people immigrating to this country are young adults who are going to call on those services immediately.
The things that we can still provide in Australia are not produced in this country. The main implementer of the neoliberal agenda here was ex-treasurer and prime minister, Paul Keating. I saw an interview with Keating a few years ago where he was asked what benefit Australia got from allowing China into the global economy as part of the neoliberal reforms. Well, they solved our inflation problem, he said with a smirk.
That is somewhat true. Consumer items are in abundance, and anybody moving to Australia can count on buying all the appliances and knick-knacks they might need to furnish their place of residence. All of that stuff is made in China, however. It is no coincidence that some of the biggest supporters of immigration are the retail corporations that import stuff from China. For them, the only way they can grow their business is to have more consumers to buy stuff, and those consumers need to be physically present for that to happen.
If Paul Keating had got up in the early 90s and told the public, “I’m gonna make consumer goods cheap and housing unaffordable,” nobody would have voted for him. But that’s what happened and it was the entirely predictable outcome of neoliberalism.
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There is a huge irony that sits at the heart of the neoliberal agenda, or at least the way that agenda has been sold to western publics. We were told that letting China into the world system would see democracy (liberalism) flourish in formerly communist countries. Instead, we are turning into China.
To fix inflation you must either reduce demand or increase supply. In the name of increasing supply, the governments of this nation are progressively getting rid of those terribly old-fashioned planning rules which actually allow citizens of a neighbourhood to have a say in what kinds of construction is allowed to go on around them. Apparently, we now need to dismantle democracy to solve our economic problems. Planning power is being given directly to state governments, who have made clear that their vision for the capital cities of Australia is high-rise apartments.
I have been fortunate to travel to China on several occasions. Modern Chinese cities are full of, you guessed it, high-rise apartments. If nothing were to change from its current trajectory, in just a few short decades, Australian cities will be indistinguishable from Chinese ones. Presumably Australia will still be importing all of our consumer goods from China, y’know, to stop inflation. Maybe another “pandemic” will break out and Australian governments will once again follow China in implementing lockdowns.
The truth is, our managerial bureaucratic class love China and see it is a model to be copied. China doesn’t have to get rid of its democracy, it never had one in the first place. The hippies who grew up reading Mao’s little red book are now the senior bureaucrats salivating at the prospect of reshaping the nation at the flick of a pen.
On a bureaucrat’s spreadsheet, whether you live in a shoebox apartment or a suburban house makes no difference. Both can easily be labelled a “home”. Shoebox apartments increase the number of homes available. Problem solved. That is the difference between understanding housing as an economic object to be bought and sold and understanding it as a cultural entity that reflects the values of a society.
Here is another thing that we have in common with the Chinese. The Chinese have been demolishing their rural culture and cramming people into high rises in the cities. We have now begun demolishing our suburban culture with the same goal in mind. Since the intellectuals who hate suburbia have all gravitated to academia and bureaucracy, this a feature not a bug for them. They get to enact their values at the expense of everybody else. At least as long as democracy can be held at bay.
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Politics normally runs on little white lies, and we let our politicians get away with it because that’s the way the wheels are greased. The neoliberal agenda was not a little white lie. It was a big, fat, dirty lie. We need different words to describe it: deceit and fraud come to mind.
Another word that comes to mind is weakness. As a society, we failed to make hard decisions that addressed hard realities. We have been on a decades-long departure from reality in the West, bamboozled by the nonsensical metrics of a bureaucratic-managerial class that we can no longer afford in either a literal or a metaphorical sense.
Everything that is happening now was perfectly predictable. We know that because there were people who predicted it. My recommendation for anybody who wants to explore the issue in detail is to check out Sir James Goldsmith. One of the books he wrote on the subject is freely available from his website. It outlines in very specific and precise detail what happened and why.
There’s also a number of interviews with him online. My favourite is his 1992 Schumacher lecture where, among other things, he warns that we shouldn’t be mucking around with viruses in laboratories. Talk about prescience.
Goldsmith made what should now be a very obvious point: the economy should serve society, not the other way around. Either we stop worshipping the god of money, or we get what we deserve.