A class war is raging in Australia, and working people are on the losing side. Workers’ real wages (the measure of what they can actually buy with their pay packets) fell 4.5 percent last year and are down almost 7 percent in two years. The Bureau of Statistics says that’s the biggest decline on record. Meanwhile, over the last four years, the country’s richest 50 people increased their wealth by 70 percent—$88 billion—according to the latest Forbes magazine rich list.
It’s not easy to convey this concentration of wealth at the top of society. Money’s value is simpler to grasp in smaller amounts, when it exchanges for regular, tangible items or blocks of time. A few days before payday, for example, many people can look at their bank balance and be able to say something like, “I’ve got enough for a loaf of bread, a litre of milk and a few other things”. But billionaires have accumulated so much that it’s almost impossible to conceptualise.
Take Australia’s richest person, Gina Rinehart. Forbes says that she’s worth $30.6 billion. To grasp that sum in bread, you have to try to picture about 7.6 billion loaves. Who on earth can do that? Trying to think about Rinehart’s wealth in terms of wages is little help, either. Say you had a job paying $100,000 a year. To earn as much she has accumulated in less than one lifetime, you would have to work for 306,000 years. It feels impossible to fathom how long that is. (But consider this: if time ran backwards and you worked every year all the way to the birth of Jesus, you would have earned “only” $202 million, or 0.7 percent of Rinehart’s fortune. And you’d have another 304,000 years, give or take a couple of decades, still to work.)
Yet in some ways, it’s even harder to fathom why, when there is clearly such an abundance of wealth generated by our economy, so many families can’t afford to get that last loaf of bread before payday. Last year, one-third of households, some 8.6 million people, ran out of money to pay for food at some point, according to Foodbank. That was an increase of more than 1 million people on the previous year.
Foodbank’s estimate was published in October, in the charity’s annual “Hunger Report”. Since then, real wages have fallen every month, and households have drawn down savings buffers accumulated during the pandemic. That is, the financial situation has gotten and is getting worse.
Another way of trying to picture the wealth of the richest 50 people is through property: with their combined $213 billion fortune, you could buy 213,000 million-dollar properties—a small city’s worth of homes.
Yet more than 116,000 people across the country were homeless in 2018, before the real crisis emerged: capital city rents soared nearly 18 percent last year, the largest increase on record. “The average renter is now paying $3,000 a year more”, Martin Barker noted in the last issue of Red Flag. Westpac economists predict that rents will rise another 11.5 percent this year, an extra $285 per month on average. (For the record, $285 is what Australia’s second richest person, Andrew Forrest, made every 2.4 seconds over the last four years. Again, in labour terms, his personal increase in wealth, $16.3 billion in just four years, would take 163,000 years to accumulate if you were on a $100,000 wage.)
Many mortgage holders aren’t faring much better. Total interest payments on owner-occupied homes have grown by more than 60 percent—to more than $4 billion per month—in the last year, according to Reserve Bank data. And interest rate increases have not yet been fully passed on by the commercial banks. When they do, home loan payments will rise to the highest on record.
The Reserve Bank’s last Financial Stability Review estimated that almost one-quarter of all outstanding mortgage debt will be repriced this year. That is, a lot of people who signed up for low fixed-rate mortgages will watch as their interest payments more than double.
Starting from next month, but mostly in the second half of the year, life is going to get much harder for people with housing debt. The Stability Review anticipated that the spare cash flows of owner-occupier, variable-rate borrowers will drop by more than 20 percent over the next two years. Fifteen percent of those borrowers will not have enough money to cover the costs of essential goods and services. So the number of people going hungry is going to keep rising.
How, then, do we fathom that real estate developer Harry Triguboff, the third richest on the Forbes list, has accumulated wealth enough to buy, if he wanted to, more than 30,000 apartments just for himself?
Underpinning both the obscene concentration of wealth at the top, and the increasing difficulties for workers in the middle and at the bottom, is a longer term growth in inequality. The class war waged by the rich against workers since the early 1980s has resulted in the top 1 percent of the population almost doubling its share of national income; the top 10 percent has increased its share from one-quarter to one-third.
Much of this has been enabled by governments, both Labor and Liberal, corporatising and privatising public assets and making them user-pays while creating incentives for wealthier people to speculate and profit from things that workers’ need, such as social services, health care, utilities such as gas and electricity, and housing.
In fact, the property market has become a casino, only with hundreds of billions of dollars in government support for speculators. Among the richest 20 percent of households, more than one-quarter have borrowed to invest in property. The investment frenzy has contributed to house prices growing faster than working-class wages for three decades; the amount of debt relative to incomes has tripled, and Australian households are among the most indebted in the world, according to Organisation for Economic Cooperation and Development figures.
But government policy only strengthens the everyday, “normal” robbery. Everything around us—the houses, roads, white goods, cars, food and clothing and so on—is created by working people. All economic value is created by human labour. When one person, or a group of people, owns more wealth than they could have obtained through their own labour, it is because they have taken that wealth from others. That’s what the billionaires and multimillionaires have done: created fortunes for themselves by gaining control of the assets built by other people.
Billionaires and multimillionaires don’t make things; they put others to work. And they keep wages as low as possible. First, so that as much of the value created as possible goes to business profits. Second, so that workers have to keep coming back to work, to produce more profits, out of fear that they will lose their homes or go hungry.
It’s a pretty simple formula: steal and grab and exploit as much as possible, day after day. That’s how the rich get richer while everyone else struggles. That’s the class war.
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