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Divided down under

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Australia is the latest democracy to discover that climate emergencies are incompatible with neoliberal inequality.  In a repeat of the 2016 Brexit and Trump votes, all of the polling for last week’s general election predicted that a strong environmental platform would propel the Australian Labor Party into government.  Instead, in defiance of the opinion polls, the Liberal/National coalition was re-elected with what the BBC reported as a “miracle” majority.

The discrepancy between the polling and the actual vote is merely the latest example of the “shy Tory” phenomenon observed in the 1992 UK general election.  When polled, people claimed to support Labour policies on public services and nationalised industries.  But in the privacy of the voting booth, they opted for a Tory tax cut instead.  Something similar occurred in 2016, when people who raised concerns about the level of immigration or the neoliberal assumptions built into European Union treaties were routinely accused of being morons, racists or fascists.  Understandably, when asked, they voiced the “official line” and professed support for Remain; giving that campaign a ten percent lead in the polls on the morning of the vote.  But in the privacy of the voting booth, 17.5 million of them expressed their true feelings.  In even more dramatic fashion, US opinion polls in November 2016 suggested that Donald Trump was going to suffer the worst defeat since Walter Mondale lost 49 of 50 states against Ronald Reagan in 1984.  Instead, Trump won enough states (but not the popular vote) to win the election.

Unlike these earlier votes, climate change played a more prominent role in the Australian election.  Following the US Democrat’s Green New Deal proposals and the various European declarations of a “Climate Emergency,” environmental policy had been expected to play a large part in last week’s election between the pro-fracking/pro-coal Liberal-National Coalition and the more environmentally ambitious Labor Party.  As Matt McDonald at ABC News reflects:

“It was supposed to be the big issue of the 2019 Australian federal election: climate change. A range of polls and surveys had left many analysts, myself included, with the sense that this would be a crucial issue at the ballot box.

“The annual Lowy Institute Poll demonstrated stronger support for climate change action in Australia in 2019 than in any previous survey since 2006…

“Crucially, those identifying it as the most important issue had risen from 9 per cent in 2016 to 29 per cent in 2019. Advocacy groups and even media outlets also encouraged the view that 2019 was, and should be, Australia’s climate election.”

The reason Australia re-elected a pro-fossil fuels government turns out to be the same as the reason Americans have Trump as president and why Britain is currently paralysed in its attempt to leave the EU without actually leaving… in a word: inequality.  As McDonald goes on to explain:

“…support for climate action looks broadly consistent with a ‘post-materialist’ sensibility.

“Here the emphasis on quality of life over immediate economic and physical needs encourages a focus on issues like climate change. But this is a sensibility that speaks to those in higher socio-economic brackets, and principally with higher levels of education.”

While voters in the affluent suburbs of Sydney may have felt economically secure enough to vote against one-man environmental catastrophe and former Prime Minister Tony Abbott, the same was not true for Australians whose communities and employment continue to depend upon industries that would have to be shutdown to meet more ambitious carbon-reduction targets.  Like their US and UK counterparts, sufficient numbers of Australian voters used the privacy of the ballot box to prioritise their personal economic security over amorphous promises about renewable energy and “green growth.”

As with the other neoliberal democracies, income and wealth inequality has grown dramatically in Australia since the 1980s.  And while government bailouts in the housing market spared (for the time being) Australians the worse of the post-2008 recession; this has served to widen the wealth divide as, according to a recent report by the Australian Council of Social Service and the University of New South Wales:

“Australian households are wealthy by world standards. In 2016 we had the second highest average wealth per adult (at $US376,000) in the world after Switzerland, with a relatively high share held in real estate… However, wealth inequality in Australia is increasing…

“The average wealth of the highest 20% rose by 53% after inflation adjustment (to $2.9 million) from 2003 to 2016, while that of the middle 20% rose by 32% and that of the lowest 20% declined by 9%. The wealth of the highest 5% grew even more rapidly, by 60% over this 12-year period.”

The over-reliance upon property as a store of wealth has had a particular impact on younger people similar to that experienced by the under 35s in the UK; many of whom have all but given up on finding secure housing.  While a small minority of under-35s have enjoyed growing wealth, the majority are worse off:

“That is, the divide between wealthier and less wealthy younger people grew in the period.  This was mainly due to rapid growth in the average value of shares, financial and business assets and investment property held by younger households, and the concentration of these assets in wealthier, younger households.”

As with all neoliberal democracies, the Australian state has been engaged in the systematic revision of statistical data in order to present a rosier picture of the economy than is actually the case.  For example, the use of average rather than median incomes serves to disguise low pay at the bottom:

“Many people in high-income households wrongly assume they sit in the middle of the income distribution because their earnings are close to ‘average’. If we multiply average full-time total earnings in 2016 by two (assuming typical middle-income households have two wages), that gives us a weekly household income before tax of $3,240. Yet this is above the average income of the second-highest 20% ($2,900 per week) and well above that of the middle 20% ($2,100).”

Add part-time earnings into the mix and a very different picture emerges.  The median income for all wage earners in 2016 was $1,060 per week before tax; just a third of the income that people in high-income households believe the average to be. 

While these statistical fiddles serve to allow governments to claim they are performing far better than is actually the case, they are disastrous in the end precisely because they give rise to “surprise” and “unexpected” electoral outcomes when the “left behind” are presented with an opportunity to wreak revenge at the ballot box upon those who have ignored their plight.

Even the ACOSS/UNSW report underestimates the scale of the Australian inequality problem since, like many similar studies, it fails to distinguish discretionary and non-discretionary income.  What matters to most households – even wealthy ones – is not how much income they have; but how much money they have left after (all – not just income) tax and after essential bills have been paid.  While Australian incomes have been stable since 2008, the same is not true for discretionary income.  As Tim Morgan recently explained, when these considerations are taken into account, Australian prosperity has declined by 23.4 percent since 2007:

“This discretionary effect helps to explain why the popular backlash has been so acute in France. At the overall level, the decline in French prosperity per person since 2007 has been a fairly modest 6.3%, less severe than the experiences of a number of other countries such as Italy (-11.6%), Britain (-10.3%), Norway (-8.4%) and Greece (-8..0%). Canadians (-8.1%) and Australians (-9.0%), too, have fared worse than the French…

“Take taxation into account, though, and France comes top of the league. Back in 2007, prosperity per person in France was €28,950, which after tax (of €17,350) left the average person with €11,600 in his or her pocket. Since then, however, whilst prosperity has declined by €1,840 per person, tax has increased (by €1,970), leaving the individual with only €7,790, a 33% fall since 2007.

“In no other country has this rapidity of deterioration been matched, though discretionary prosperity has fallen by 28% in the Netherlands, by 24% in Britain, by 23% in Australia and by 18% in Italy. If this interpretation makes sense of the popularity of the gilets jaunes (and makes absolutely no sense of the French authorities’ responses), it also suggests that the Hague, London and perhaps Canberra ought to be preparing themselves for the appearance of yellow waistcoats on their streets.”

In France it was the imposition of a carbon tax on diesel that proved the catalyst for revolt.  Although not obvious through an income lens, declining prosperity was a key issue.  The cost of living in French cities is now so high that low-paid workers have no choice but to live in poorer rural districts and to commute into the cities for work – meaning that fuel accounts for a growing share of their non-discretionary spending.  Adding a tax to the cost means that work no longer pays for the poorest commuters, while diminishing the prosperity of all.  The bigger sticking point, however, is that while the cost of tackling the climate emergency is loaded onto the shoulders of the poor, the French elite – embodied in Macron making pronouncements from a gold-plated room in a palace – continues to behave as if belching greenhouse gases into the atmosphere and shovelling waste into the oceans is of no concern.

In Australia, it is high electricity prices – which politicians have claimed is the result of the switch to non-renewable renewable energy-harvesting technologies – rather than fuel taxes that have led to a political backlash.  And while the energy transition is but one of a range of problems  with the Australian energy system that are driving up prices; the perception that they will lead to even higher bills – i.e. even lower prosperity – is sufficient to make them a politically toxic issue.  Of course, it would be wrong to suggest that the energy transition was the sole cause of the Australian Labor Party’s surprise defeat.  Nevertheless, at a time when discretionary income is falling, it is a brave politician who goes into an election on a platform that is widely expected to result in even higher costs than are currently being endured by those least able to pay them.  As Adrian Pabst at the New Statesman observes:

“There are some stark lessons for the ALP and other social-democratic parties in Western countries. The first and most important is that the centre-left cannot win without cultivating working class support. Rather than staking its platform on workers and their jobs, Labor instead defended a position on climate change that appeals largely to middle-class voters.”

In the years before the 2008 crash, ordinary people might have acquiesced in the additional cost of climate policies so long as the debt-based binge allowed their incomes to grow accordingly.  In the post-crash world, however, the neoliberal approach of asking the poor to pick up the tab for policies that salve affluent class sensibilities (but in practice do little to address global warming) is a non-starter.

What is very likely to emerge – and will very likely prove to be a vote-winner – in the coming years will be some variant of a Green New Deal in which governments use the state’s power to print currency out of thin air to fund a massive deployment of non-renewable renewable energy-harvesting technologies.  Since “someone else” will be paying, ordinary people are less likely to reject this than they are currently rejecting further additions to already eye-watering energy bills and taxes.  Moreover, since there will be the added promise of new, high-paying jobs and a return to the heady days of the pre-2008 economy, it is likely to be popular.  Just don’t inquire too closely as to whether it has any chance of working.

The true cause of the 2008 crash was the uninvited intrusion of the real world – in the shape of peak conventional oil production – into the financial Ponzi scheme where the economists and politicians live.  As the world switched to unconventional sources, prices spiked far above what the global economy could bear.  As the increased cost of energy filtered through in the shape of generalised price increases – because everything is either made from or transported using oil – central banks did the very worst thing they could do – they followed the advice found in every mainstream economics textbook… they raised interest rates.  The result, coming on top of already rising prices, was that households and firms that had been able to manage their debts in 2005 could no longer meet the repayments in 2007.  Firms began to go bust while households posted their keys back to the mortgage companies.  And then the mountain of derivatives based on the belief that the economy would grow at two percent per year forever came tumbling down; leaving the entire global banking system insolvent and requiring government bailouts.

While the price of oil has fallen in the years since, the cost of recovering oil – and recovering everything else that requires oil – has continued to increase.  The result – largely hidden from economists and politicians wedded to official statistics – is that the energy needed to power the wider economy has been falling.  That is, the price of oil has not fallen because the oil is cheaper, but because we – in the non-energy sectors of the economy – are demanding less of it.  In consequence, the developed economies have switched from creating high-paid/high-skilled/hi-tech forms of employment to low-paid/low-skilled/labour-intensive substitutes that require far lower energy inputs but generate far less value in return; a recipe for declining prosperity for the foreseeable future.

As noted elsewhere, Green New Deals will fail due to shortages of affordable – in energy and monetary terms – materials and because the resulting explosion of consumption – before national currencies inflate themselves to irrelevance – will condemn planet earth to the very environmental catastrophe that the Green New Deal is meant to prevent:

“Far from being a means of sustaining a global economy built upon fossil fuels, a green new deal that creates new jobs and stimulates economic growth amounts to little more than a final blow-out binge before our once-and-done global economy comes crashing down around our ears.  The only means – assuming any is possible at this late stage – of mitigating the environmental catastrophe that is gathering pace around us is to engage in a managed process of de-growth (which may include some deployment of non-renewable renewable energy-harvesting technologies) to create far smaller, localised and less consumptive economies than we have had for many decades.  By necessity, the process would also require a shrinking of the human population to a level in accordance both with what is sustainable and with the standard of living we consider acceptable – i.e., the more consumptive our lifestyles, the lower our life expectancy/birth rate will have to be.”

To avoid revolution and anarchy, managed de-growth has to start at the top.  Asking French workers to pay more than they can afford to get to work while allowing the French middle class to continue polluting as if we had several spare planets to live on is no longer credible.  Nor can anyone hope to win an Australian election by asking mining communities in Queensland to commit economic suicide so that the wealthy residents of affluent Sydney and Melbourne suburbs can maintain their environmentally toxic lifestyles. Even if all of these sacrifices are needed to address environmental collapse, it is currently political suicide to say so.

The reality is that after nearly four decades of neoliberalism across the developed world, our societies are too unequal to tackle climate change.  Instead, we are most likely going to be treated to the worst of all worlds – one final debt-based “green” binge that consumes what remains of the planet’s recoverable energy and mineral reserves; followed by the realisation of a climate emergency that by then we will lack the means to mitigate.

As you made it to the end…

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