Leaders of the North Atlantic Treaty Organization, Western imperialism’s key military alliance, describe recently announced increases in European arms spending as a collective effort to “safeguard our freedom and democracy”. Some commentators have been even more emphatic in advocating stepped-up European armament. Writing in the <a href="https://www.ft.com/content/e0bd86f9-fd4a-4802-8199-44daaa97d13a">Financial Times</a> earlier this year, Bronwen Maddox, director of the London-based think tank Chatham House, called military spending “the essential public benefit above all”, placing it above expenditures on hospitals, pensions, education and other social services.
While such “public good” narratives dominate official chatter, another motive lies behind the rhetoric: consolidating Europe as the 21st century’s third global power alongside the United States and China. Three developments illustrate the scale and nature of the economic and military shift now under way.
First is the sharp increase in arms spending over the last decade. In 2024, European NATO members collectively spent nearly US$500 billion on “defence”—a 72 percent increase since 2014, adjusted for inflation. Over the past decade, military budgets more than tripled in Poland, Hungary, Latvia and Lithuania, and more than doubled in twelve other European NATO members. Germany, Europe’s largest economy, nearly doubled its military spending in real terms.
Second is the ReArm Europe Plan (as though Europe is currently disarmed), announced by the European Council in March. ReArm authorises European Union member states to increase borrowing to boost military spending by €800 billion over the next five years. It marks a significant policy shift, overriding the debt and deficit limits set by the 2012 European Fiscal Compact—a treaty requiring governments to keep deficits below 3 percent of GDP—and directing the European Investment Bank to prioritise lending to arms manufacturers.
Third is <a href="https://www.nato.int/cps/en/natohq/official_texts_236705.htm">the Hague Declaration</a> coming out of last month’s NATO summit, which goes further again. NATO is the closest thing Europe has to a unified continental military command. On average, its members spend just over 2 percent of GDP on defence. While the March ReArm Europe Plan allowed for extra spending of up to 1.5 percent of GDP, the NATO summit in June committed members to allocating 5 percent of GDP annually to the military, including security-related infrastructure. It also requires annual progress reports demonstrating “a credible, incremental path” towards this goal.
The aim is to increase Europe’s economic and military power through substantial investments in military-industrial capacity and weapons production. As Andrius Kubilius, European commissioner for defence and space, stated in a media release accompanying the announcement, “This is not just about military strength—it is about our readiness, strategic autonomy, and the future of Europe as a global player”.
US President Donald Trump has repeatedly called for increased European military spending. In 2018, he suggested that it should rise to 4 percent of GDP. At the time, <a href="https://www.reuters.com/article/world/trump-tells-nato-leaders-to-increase-defense-spend-to-4-percent-idUSKBN1K12BW/">according to Reuters reporters in Brussels</a>, NATO allies “shrugged off the demand”.
However, the astonishing surge of China’s industrial, technological and military capacities has left US strategists increasingly rattled about Washington’s declining relative power in the western Pacific. European leaders now appear to have recognised an opportunity as the US threatens to reduce its military commitments on the continent. In May, German Chancellor Friedrich Merz declared his ambition for the Bundeswehr to become the “strongest conventional army in Europe”. French President Emmanuel Macron, a long-time advocate of “strategic autonomy”—that is, less reliance on the US military—affirmed that the EU must become “a space power once again”.
New York Times correspondents <a href="https://www.nytimes.com/2025/07/18/world/europe/macron-starmer-merz-trump-eu.html">Michael Shear and Jim Tankersley now report</a> that Britain, France and Germany, “are building parallel diplomatic and defense institutions for a future without the United States as the primary guarantor of economic and military security” in the region. The three countries, which have long been the dominant imperialist states in Western Europe, look to be entering an era of military coordination that is perhaps unprecedented.
The claims that current tensions signal a historic rift between the US and Europe is not particularly convincing, however. Those old enough to remember transatlantic discord over the Iraq invasion in 2002-03, which in part was a US attack on European interests, might recall a State Department spokesperson ridiculing Belgium, France, Germany and Luxembourg as “chocolate makers” after they held “a little bitty summit” to moot plans for an alternative military command to NATO. Or the time US Defense Secretary Donald Rumsfeld dismissed Paris and Berlin as irrelevant “old Europe” has-beens. There was even a directive to congressional cafes to rename “French fries” and “French toast” to “Freedom fries” and “Freedom toast”. (Childish, petty politics predate Trump.)
Today, the European powers will likely uphold and reinforce the broader Western imperial bloc by augmenting their own capacities and allowing Washington to refocus its energies. “The ‘triangle alliance’, as Britain, France and Germany are sometimes now called, are already partners through NATO and the Group of 7—forums that include the United States”, Shear and Tankersley note. “Officials for the three European countries are careful to say that the institutions they are building are meant to supplement those alliances, not replace them.”
Of course, there are no guarantees in this shifting geopolitical landscape. And the leaders of imperialist states rarely say publicly what they are thinking and saying privately. So time will tell how things pan out. 
Yet some outcomes seem certain—most notably, who will ultimately bear the cost of this military build-up. The exemption of military spending from the European Fiscal Compact is particularly significant. Along with the deficit limit, the agreement requires EU members to maintain public debt below 60 percent of GDP. Though only loosely enforced, the compact has long been cited to justify cuts to working-class payments, pensions and public services.
Fiscal restraint, long demanded of governments, has now been relaxed—but exclusively for funds directed to arms manufacturers and related contractors. For everyone else, ever more “restraint” is on the cards. Maddox quoted an unnamed senior European minister speaking at the Munich Security Conference in February: “For 30 years, we have been taking money out of defence budgets and putting it into health and welfare. Now, we will have to reverse that”. 
In a <a href="https://www.ft.com/content/37053b2b-ccda-4ce3-a25d-f1d0f82e7989">Financial Times column</a> the following month, Janan Ganesh, a prominent British conservative commentator, asserted that, compared to rearmament, “all other priorities are secondary” and argued for Europe to become “a more militarised, less welfarist continent”. He added, “[T]he welfare state as we have known it must retreat somewhat: not enough that we will no longer call it by that name, but enough to hurt”.
With European military outlays expected to more than double in the next decade, some governments are relying on increased borrowing or creative accounting to meet their targets. However, borrowing will be only a stopgap if the 5 percent mark is to be met. Many governments hold debt-to-GDP ratios <a href="https://ec.europa.eu/eurostat/web/products-euro-indicators/w/2-22042025-bp">well above the average</a> (80 percent), and well above the level demanded by the Fiscal Compact. Greece (154 percent), Italy (135 percent), France (113 percent), Belgium (105 percent) and the UK (95 percent, albeit no longer part of the union) have already come under pressure to reduce spending to pay creditors. So even with fiscal rules being relaxed, the spectre of significant cuts to living standards looms.
Berlin has one of the more “balanced” budgets and therefore more fiscal room than most governments. It is embarking on a €400 billion borrowing binge to increase military spending from €95 billion in 2025 to €162 billion in 2029. Yet this month, the government announced that it will cut unemployment entitlements by between one and two billion euros, alongside reductions in rent support payments. “It should be called basic security and no longer citizens’ money”, <a href="https://www.iamexpat.de/expat-info/germany-news/german-government-announces-unemployment-benefit-cuts">Chancellor Merz told Markus Preiss</a>, a presenter on one of the country’s public broadcasters, last week. 
In France, Prime Minister François Bayrou has announced sweeping spending cuts—including public sector lay-offs, eliminating public holidays and freezing tax brackets and welfare payments next year—to reduce the budget by nearly €44 billion. He described the country’s debt as a “mortal danger” that threatens to “crush” France. Yet he insists that military spending is “sacrosanct”. Last Sunday, President Macron announced a €6.5 billion increase to the defence budget.
While a few countries may have little interest in meeting a 5 percent military spending target—Spain has flatly refused to entertain the idea—the major European powers are moving decisively toward rearming and retooling their economies for geopolitical competition. If they succeed, the continent will increasingly come to resemble the United States: a society in which the military-industrial complex becomes economically overweight and increasingly politically influential.
That makes European rearmament a global problem. So too the attacks on European welfare. If some of the wealthiest countries in the world begin treating social welfare as secondary—to be sacrificed in favour of militarisation—it could signal a global shift. Workers worldwide have often pointed to Europe as evidence that governments have the resources to provide for citizens. If the message coming from European capitals is that this can no longer be the case, ruling classes everywhere will point to the new European model as the future, and paint social welfare as the legacy of a bygone era. Workers and the poor will face the prospect not only of being left to fend for themselves in an increasingly dog-eat-dog world, but of being enlisted to kill each other in a 21st-century-style imperialist Hunger Games.

Ben Hillier

Europe’s imperial power play

The ALP and the Coalition have spent roughly equal time governing Australia in the last four decades. Several elections in that period have been politically meaningful. Yet, looking at society’s wealthiest people and the companies they run, election outcomes have been largely irrelevant to their fortunes.
No matter how you measure it—the income share of the wealthiest 10 percent of the population, the share of national income going to company profits, billionaire wealth as a share of the total economy—the fat cats have gotten fatter decade after decade, regardless of which party was in power.
In 1984, just after the Hawke Labor government took office, the wealthiest 10 percent of the population took home about one-quarter of all domestic income. Corporate revenues were about 21 percent of the annual gross domestic product (the total value of all the goods and services produced in Australia), and the wealth of the richest 200 Australians was 3.5 percent of GDP. 
<figure><img src="https://newcms.redflag.org.au/files/public/np6GS-the-rich-have-gotten-richer-for-50-years.png" alt="" /></figure>
Reviewing Business Review Weekly estimates of ruling class accumulated wealth after almost a decade of federal Labor government in 1992, Matthew Eaton and Frank Stilwell wrote in the Journal of Australian Political Economy:
“Overall, the BRW data provides a striking picture of the private wealth amassed by corporate cowboys, paper entrepreneurs, wealthy families and the ‘captains of industry’ in the last decade ... [I]t shows the powerful tendency towards increased wealth concentration.”
That was just the start of it. By 2004, after twelve years of the ALP and eight years of the Coalition (give or take), the wealthiest 10 percent were taking home about one-third of all domestic income—a 30 percent increase in their share. The wealth of the richest 200 Australians was 8.4 percent of GDP—more than double their share in 1984.
After another twelve years of the Coalition and eight of the ALP (give or take), the wealth of the richest 200 Australians in 2024 was 27.3 percent of gross domestic product—more than triple the 2004 figure and eight times more than in 1984. Corporate revenues climbed perpetually as well. If you take 1975 as the starting point, they have gone from 15 percent of GDP to 27 percent—an 80 percent increase.<figure><img src="https://newcms.redflag.org.au/files/public/Billionaire-pigs-at-the-trough.png" alt="" /></figure>
According to the <a href="https://www.afr.com/rich-list/australia-s-10-richest-people-revealed-20240521-p5jfe4">Australian Financial Review</a>
(which took over publishing the rich list in 2017), the fortunes of the Rich 200 grew by more than 10 percent to $624.9 billion in the last twelve months of Labor in office. Even when accounting for inflation, the growth in the wealth of these people in just one year is more than the wealth the top 200 families of the early 1980s had accumulated in their entire lives.
To put the $624.9 billion figure in a different light: <a href="https://www.abs.gov.au/statistics/labour/earnings-and-working-conditions/monthly-employee-earnings-indicator/latest-release">the total wages earned by all 14.5 million people in the labour force across Australia</a> in the last six months is less than what the top 200 are worth.
It’s not just the super-wealthy and big corporations raking it in under the two-party system of Labor-Liberal governments. The upper-middle classes have also thrived.<figure><img src="https://newcms.redflag.org.au/files/public/australia-s-property-casino.png" alt="" /></figure>
In the 21st century, residential property speculation has become one of the most reliable paths to riches among the wealthy layers below the billionaire class (although some billionaires, such as Harry Triguboff, Australia’s second richest person last year, have certainly built property empires as well).
Both the ALP and the Liberal Party have turned housing into a casino in which investors, on average, never lose. Real property prices have more than doubled since 2000. The biggest beneficiaries? The wealthiest 20 percent of the country, who “earned” three-quarters of the gains in investment property values between 2002 and 2022.<figure><img src="https://newcms.redflag.org.au/files/public/nutso-property-boom-mainly-benefits-the-wealthy.png" alt="" /></figure>
So while the smashing defeat of Peter Dutton’s right-wing Coalition is a tremendous political victory, the ultra-wealthy who have increasingly accumulated the country’s wealth will not lose much sleep over the election result.
They know that, whoever is in office, the big winners will continue to be those with the biggest bank accounts.

The biggest winner of the federal election? Capitalists

As Wall Street plummeted, shedding more than US$6 trillion in the days after Donald Trump’s 2 April “reciprocal” tariff announcements, the president posted on social media: “ONLY THE WEAK WILL FAIL!”
But equity markets refused to settle from their wild paroxysms. The treasury market, which underwrites the US government and the global financial system, also showed signs of stress. 
Yesterday, Trump relented, blaming investors who were “getting a little bit yippy; a little bit afraid”. At least for now, an all-out global trade war has been averted. Trump took on the world and the financial markets and came off second best. But this will not be the end of the matter. “Nothing’s over”, he insisted. 
Internationally, Trump’s crash-or-crash-through strategy is to extract as many concessions as possible for US capitalism. Poor country, rich country, ally or adversary—all states have been put on notice. Commerce Secretary Howard Lutnick, <a href="https://www.cbsnews.com/news/transcript-commerce-secretary-howard-lutnick-on-face-the-nation-with-margaret-brennan-april-6-2025/">speaking on the CBS News program </a><a href="https://www.cbsnews.com/news/transcript-commerce-secretary-howard-lutnick-on-face-the-nation-with-margaret-brennan-april-6-2025/"></a><a href="https://www.cbsnews.com/news/transcript-commerce-secretary-howard-lutnick-on-face-the-nation-with-margaret-brennan-april-6-2025/">Face the Nation</a><a href="https://www.cbsnews.com/news/transcript-commerce-secretary-howard-lutnick-on-face-the-nation-with-margaret-brennan-april-6-2025/"></a> on 6 April, outlined what the administration believes to be the stakes:
“You’ve got to realise this is a national security issue. I mean, we don't make medicine in this country any more. We don't make ships. We don't have enough steel and aluminium to fight a battle, right? All our semiconductors are made overseas ... [T]he point is, you need to reset the power of the United States of America and reset it against all our allies and our enemies alike.”
“Why would he treat even our allies like this?”, ask so many US commentators. Maybe it’s because, as <a href="https://nymag.com/article/tom-wolfe-ultimate-power-seeing-em-jump.html">Tom Wolfe noted long ago</a>, the ultimate power is just seeing them jump. 
The primary target, though, remains China, which faces a 125 percent tariff until further notice. Since the collapse of the Soviet Union in 1989-91, US administrations have had one overarching national security priority: to prevent a peer-competitor state from emerging. They failed. 
China has developed the most extensive and efficient industrial economy the world has ever seen. It extended its global trade network despite the first Trump administration’s and the subsequent Biden administration’s attempts to undermine it. It has rapidly modernised its military, become a leader in high-tech engineering and AI applications and transformed into a state with global reach and interests—a diplomatic powerhouse.
Trump believes he has the remedy. Yet this week’s gyrations are not simply a matter of geopolitics and trade.
Domestically, the tariffs are an attack on the working class—raising prices and taxing consumption to give the government the budgetary space to proceed with corporate tax cuts. While blaming foreign countries for purportedly destroying the US economy and the lives of millions of workers, Trump is gutting the Department of Labor and attacking agencies that protect workers’ rights. 
He is attempting to purge <a href="https://www.reuters.com/world/us/trump-asks-us-supreme-court-let-him-remove-democratic-members-labor-boards-now-2025-04-09/">National Labor Relations Board</a> members viewed as sympathetic to unions. (The NLRB enforces labour laws protecting the right to join a union and organise in the workplace.) Last month, the president issued an executive order to <a href="https://chcoc.gov/content/guidance-executive-order-exclusions-federal-labor-management-programs">end collective bargaining rights</a> for up to 1 million federal workers.
All this is part of a broader wave of “deregulation” designed to empower US capitalists and weaken the working class’s capacity to defend itself—a prerequisite for both corporate profitability at home and force projection abroad.
Indeed, Trump is waging war on anyone perceived to be an obstacle to his reactionary, ultranationalist agenda. From student anti-war activists to liberal law firms, from national security staff deemed disloyal to the president to universities and schools teaching the real history of America, from anti-discrimination laws to the union movement—Trump is taking a wrecking ball to US civil society and purging the state of all opposition to his program.
Some of this is purely ideological—like the anti-science irrationalism at the heart of the administration. Yet the international and domestic agendas dovetail with the far-right promise of national renewal: the veneration of hierarchy, be it the US at the top of the world, men as patriarchs in the family or bosses as rulers in the workplace; the valorisation of military service, both as individual submission to the state and as a contribution to the projection of national power; the perverse attacks on “communism” in the federal government and the school system, which identify the enemy abroad and depict a culturally corrupting fifth column within; the war on perceived weakness, understood as anything short of hyper-masculine blue-collar value creator at home or soldier of fortune at the front.
“Imperialism ... introduce[s] everywhere the striving for domination, not for freedom”, Russian revolutionary leader Vladimir Lenin wrote more than 100 years ago. “Whatever the political system, the result of these tendencies is everywhere reaction and an extreme intensification of hostilities.”
Well, we are seeing the intensification of hostilities. The last week was a staring competition between the world’s major powers. Trump may have blinked, but any temporary easing of international tensions might result only in him refocusing on the domestic war and shoring up support for the next confrontation.

The logic of Trump’s reactionary agenda

The National Defence Strategic Review, released in 2023 by the federal government, notes “only a remote possibility of any power contemplating an invasion” of Australia. This is the federal government’s official position, formulated by, among others, Army Major General Richard Vagg and Air Chief Marshal Angus Houston, a former head of the armed forces. 
It is astounding, then, that the Greens have launched <a href="https://greens.org.au/news/media-release/4-billion-sovereign-defence-capacity">a policy to develop Australia’s military-industrial base</a>, which would allocate $4 billion to “sovereign manufacturing capabilities” of drones and missiles, purportedly to “defend” Australia. When not even the military can outline a plausible scenario in which a foreign invasion threatens this continent, why are the Greens suddenly positioning themselves as defenders of the realm against an undefined enemy? 
Australian governments have a history of lying and fearmongering about national security threats. But they usually at least provide scenarios or statements capable of being critically evaluated, such as, “Saddam Hussein has weapons of mass destruction”. The Greens don’t offer even this level of phantom to critique.
Last year’s National Defence Strategy, which outlines the Defence Department’s evaluation of “security risks”, didn’t even mention the possibility of an invasion of Australia. But it did discuss the need for a military “more capable of the impactful projection” of power and for “a sovereign defence industrial base” to manufacture weapons and drones, among other things, to aid this “force projection” (otherwise known as invasion and interference operations in the Pacific and Southeast Asia). 
The Greens’ brains trust says its proposed military-industrial base reinvigoration will be used “for strictly defensive purposes only”—presumably unlike the similar-sounding military-industrial base the war hawks at Defence have proposed. Are the Greens really so naïve as to think that increased domestic military production capacity will not be used for force projection—the bread and butter of Australian statecraft since Federation? What will their next policy announcement be? A program to rebuild Australia’s derelict pubs “for purposes strictly related to sobriety”?
“We see this as the first step ... we don’t pretend this is the beginning and the end of the significant reorganisation required for Australia’s defence force”, Greens spokesperson David Shoebridge <a href="https://greens.org.au/news/media-release/4-billion-sovereign-defence-capacity">told ABC defence correspondent Andrew Greene</a> on the weekend. Greene noted that the party has never before released “a formally costed policy to fund new military programs”.
Responding to the announcement, Euan Graham, a director at the hawkish and pro-US Australian Strategic Policy Institute, told Sky News that the Greens’ “willingness to talk about increased defence spending and production” is a sign of “positive change” in the party.
Of course, it would be unfair to describe the Greens as a bunch of warmongers. The new policy, announced last Saturday, also calls to “decouple” the Australian armed forces from the US military and comes as the party <a href="https://greens.org.au/news/media-release/end-aukus">urges the federal government to withdraw from the AUKUS pact</a>, a military and technology-sharing partnership with the United States and the United Kingdom through which Australia will obtain a suite of nuclear submarines. 
The Greens propose funding social programs from the savings gained by scrapping the pact—some $70 billion over ten years. Further, the party’s policies would likely reduce Australia’s military spending by perhaps half a trillion dollars over several decades. 
Scrapping AUKUS is a supportable policy. But it is not particularly progressive, nor all that controversial. Even former foreign minister Bob Carr, and former PMs Paul Keating and Malcolm Turnbull have rubbished the pact. Indeed, sections of the old Labor right were the first to criticise it. Yet the key issue in all this is not the precise locations from which Australia’s military sources its weaponry or the price it pays to obtain its hardware. 
The Greens’ shift comes as we enter <a href="https://redflagnewsletter.substack.com/p/note-5-europes-military-spending" target="_blank" rel="noreferrer noopener">a period of global rearmament</a> in which two superpowers, China and the United States, are preparing for a confrontation. President Trump demands greater military spending by European members of the Western imperialist alliance and is shifting the US posture towards a range of states. 
In many cases, this has given militarism a new colour. Countries that fear losing Washington’s backing bow to Trump’s demands while selling the rearmament programs as some newfound independence. <a href="https://redflagnewsletter.substack.com/p/note-6-adam-tooze-and-the-liberal" target="_blank" rel="noreferrer noopener">It’s progressive liberalism’s imperial revenge</a>: build the military to resist the far-right ogres in the White House and in the Kremlin. 
The Greens have tapped into this sentiment to sell their own policy shift. In this context, they are floating with the tide when every left-wing organisation ought to be swimming against the current. 
First, they float along with the liberal conceit that decoupling rearmament programs from “Donald Trump’s military” (as the Greens press release refers to US imperialism) is progressive or “independent”—as though the Australian ruling class is qualitatively different from others around the world. 
Second, they float along with the China panic by proposing a significant boost to “defensive” military-industrial capacity when, in reality, Australia’s military force posture and structure are being aggressively reconfigured for a confrontation with China. 
The Greens say they oppose military operations that “threaten our neighbours”. But the AUKUS pact, the renewed Quadrilateral Security Dialogue involving Australia, India, Japan and the United States, and Australia joining NATO as an “Indo-Pacific partner” are manifestations, rather than causes, of the underlying dynamic toward war in the western Pacific. While objectionable, these mini pacts are not the main thing. Nor is Donald Trump, the widespread distaste for whom the Greens are leveraging to build support for their military policy. 
Australia’s steadfast political alliance with the United States is far more important than its technical and logistical incorporation into US military planning. The alliance is foundational to Australia’s foreign affairs, not simply its defence policy. As such, the Greens’ talk about developing an “independent foreign policy” is risible when the party proposes little more than haggling around military procurement. So is the talk about “not threatening our neighbours”, which is a fantasy when Australia is a strategic base for and an unbending ally of US imperialism. <a href="https://greens.org.au/magazine/closepinegap-13-years-later">Former Senator Scott Ludlam understood this</a>. It’s not clear that David Shoebridge does—what’s his position on closing Pine Gap?
Without a commitment to breaking the US alliance in all its forms, expelling all US military forces from Australia, and dismantling all US intelligence-gathering installations, “peace”, “non-alignment”, “neighbourly respect” or other feel-good phrases are nothing but foreign policy bromides. Yet the Greens’ position is not to tear up the ANZUS treaty, considered the foundational document of the alliance, but to “renegotiate Australia’s position” within it.
Yet even a commitment to breaking the US alliance is not enough. Given the global dynamic, left-wing parties cannot settle for “detachment”. We have to fight against all manifestations of military aggression, whether they emanate from the new far-right aligned with Donald Trump or from the liberal alternatives. This is particularly true in imperialist countries such as Australia, which has joined criminal invasions or interfered in the domestic affairs of several countries in the region and beyond.
All this is too much for the Greens. Being tolerated as a “reasonable” party capable of forming government means accepting a range of capitalist non-negotiables, such as the state’s need for a competent military. “Self-defence” is the immediate argument to legitimise the new defence policy. But the party is probably also signalling that it should be considered a potential partner in the event of a hung parliament in the upcoming election.
To resist the new militarism and to prevent more war, we have to call bullshit on the rhetoric of “self-defence” used by governments to justify rocketing arms spending. And we have to build an international alliance of working-class and oppressed people—not an alliance of states and their rulers. On this front, the Greens’ new defence policy points in the wrong direction.

A criticism of the Greens’ defence policy

Living standards in Australia have been pushed down more than in any comparable country over the last three years, the economy has been in a per capita recession for two years, and households are among the most indebted in the world. 
Working-class households have it worse than the most quoted statistics suggest and have been left with little breathing space after decades of increasing net wealth transfers from employees to bosses.
The findings—drawn from Red Flag’s analysis of data from the Organisation for Economic Co-operation and Development, the Australian Bureau of Statistics and the Reserve Bank—paint a diabolical picture. The following charts tell the story. 
<div id="datawrapper-vis-yqbv2"><figure><img src="https://datawrapper.dwcdn.net/yqbv2/full.png" alt="" /></figure></div>
<a href="https://datawrapper.dwcdn.net/"></a>
<a href="https://www.datawrapper.de/_/yqbv2/?v=4" target="_blank" rel="noreferrer noopener">Click here for an interactive version of the chart</a>. 
According to OECD data, wages have failed dismally to rise fast enough to compensate for consumer price rises, mortgage rate increases and a higher working-class tax burden. Real household disposable incomes are more than 10 percent lower than in 2021.
While that year’s high came from significant government subsidies and historically low interest rates during the worst phase of the global pandemic, incomes today are lower than before Covid-19 swept the world. In fact, they are not much higher than they were ten years ago. 
“The impact on our living standards has been far greater than anywhere else. There is no argument that the fall is bigger than anything we have seen since 1959 [when the living standards’ index was started]”, economist Chris Richardson told the Australian
newspaper last month.
“Real disposable income” measures the money left after inflation, taxes and mortgage payments are subtracted from wages. Household incomes across the rest of the OECD—sometimes called the club of rich countries—have, on average, increased solidly over the last two years. In the US, incomes are about 25 percent higher than in 2014.
For Australian workers, it’s been a lost decade.
<div id="datawrapper-vis-ttv3o"><figure><img src="https://datawrapper.dwcdn.net/ttv3o/full.png" alt="" /></figure></div>
<a href="https://www.datawrapper.de/_/ttv3o/?v=3" target="_blank" rel="noreferrer noopener">Click here for an interactive version of the chart</a>.
The decline in incomes has not been uniform. Households with more savings than debts have been able to increase spending because of higher interest rates. But households with high levels of debt and those with little savings have copped the worst of rising prices and rates. 
Economists, politicians and the media (Red Flag included) usually highlight the gap between wage growth and the consumer price index. However, the Bureau of Statistics has other measures of price inflation, the “cost of living indexes”, which measure the effects of rising prices and interest rates on different sections of the population.
Its employee living cost index has been running far higher than CPI inflation for more than two years, which helps to explain why household incomes have been destroyed so rapidly. While general inflation peaked at 7.8 percent in 2022, workers’ living costs climbed 9.6 percent per annum at their peak in 2023. 
They increased by almost 2 percentage points above CPI inflation over the last year (to the start of October); they were 3.6 percentage points higher over the previous year.
<div id="datawrapper-vis-tALAr"><figure><img src="https://datawrapper.dwcdn.net/tALAr/full.png" alt="" /></figure></div>
<a href="https://www.datawrapper.de/_/tALAr/?v=4" target="_blank" rel="noreferrer noopener">Click here for an interactive version of the chart</a>.
The Australian economy has continued to expand, albeit slowly, primarily because of government spending and high immigration. However, economic growth has been slower than population growth, meaning that output and income per person have been declining.
<a href="https://datawrapper.dwcdn.net/"></a>
In fact, growth has gone backwards in eight of the last nine quarters, the most prolonged per capita recession in decades. “Over the past 44 years, when GDP has remained flat over the year, unemployment rises on average around 1.1 percentage points”, <a href="https://www.theguardian.com/business/grogonomics/2024/dec/05/australia-gdp-figures-economy-september-quarter-abs">Guardian
columnist Greg Jericho points out today</a>.
The unemployment rate is currently 4.1 percent, up from 3.5 percent two years ago. It has been lower in just two of the past 50 years: 2008 and 1974. Which makes it all the more astounding that living standards have gone backwards so much. If people start losing their jobs in greater numbers, the economic pain will only be magnified.
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<a href="https://www.datawrapper.de/_/ME4AS/?v=3" target="_blank" rel="noreferrer noopener">Click here for an interactive version of the chart</a>.
The more immediate issues noted above should be framed within two longer-term trends. First is the incredible build-up of household debt over several decades. 
The ratio of household debt to annual income is 128 percent higher than 30 years ago. This primarily reflects out-of-this-world increases in property prices, which have climbed much faster than wages over the same period.
Australian households are among the most indebted in the world. But only one-third of households, primarily working class and middle class, are paying a mortgage. They bear most of the debt burden.
In contrast to the US, the UK and the Euro area, where debt levels have declined in the last decade, Australian working households have taken on increasing liabilities to secure a place to live. And with the interest rate on most housing loans changing in line with the Reserve Bank’s “cash rate” (its benchmark interest rate for lending between financial institutions), small movements on such large debts translate into significant changes in mortgage holders’ monthly interest payments.
No wonder the living cost index has climbed much faster than inflation.
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A second long-term trend is the declining share of national income going to the working class. According to ABS figures, the share going to workers is 16 percent lower than 50 years ago; the bosses’ share is 65 percent higher.
The shifts have been expressed primarily in rising income and wealth inequality. For example, a recent Australia Institute research report, <a href="https://australiainstitute.org.au/wp-content/uploads/2024/08/P1689-Wealth-and-inequality-Updated.pdf">Wealth and inequality in Australia</a>, estimated that the richest 20 percent of Australians own more than 63 percent of the wealth, while the poorest 20 percent own just 0.4 percent.
Wealth inequality measures not just the accumulation of riches in fewer hands but the relative decline of working-class economic resources, which resulted in the lack of a significant financial “buffer” for hard times like recent years. 
Recovery?
While real incomes might finally be starting to rise for some groups, many working-class households could struggle to make up lost ground this side of 2030. It is still unclear when the Reserve Bank will begin cutting interest rates and where they will land once the cutting is complete. 
It’s unclear how high unemployment will go, or when the per capita recession will end. Certainly, the huge debts will not be paid down anytime soon (they grew again in the last quarter). And to cap it off, wage growth is now slowing, which means any gains in real wages and incomes will be smaller.
It’s also not clear whether Australia will continue to avoid an absolute economic contraction, as it has, for the most part, for more than 30 years, unlike pretty much every other economy in the world. If that luck runs out, many people will end up pining for the current hard times, which might look like better times by comparison.

Five charts showing the destruction of workers’ living standards

Malcolm X once said that the most astute capitalists and imperialists know that to get people to run towards a fox, you have to show them a wolf. 
Kamala Harris laid a few traps to draw out the wolf in Donald Trump during the US presidential election debate in Philadelphia on Tuesday night (US time). He duly obliged, rambling about “illegal aliens” eating American cats and dogs, about everyone loving what he’s done on abortion and about how Viktor Orban, the far-right ruler of Hungary, really respects him.
More notable, however, was Harris herself parading as the wolf. She repeated a promise to maintain the US military as “the most lethal fighting force in the world”, described Trump as weak on foreign policy and scolded him for being insufficiently deferential to members of the armed forces.
Malcolm X understood that the president of the United States is but the figurehead of a violent system that rules much of the world. So lord knows what he would have made of the Democratic National Convention’s Nebraska delegation donning T-shirts with his likeness as they pledged allegiance to Harris last month. 
In this debate, however—and in the entire period since Hillary Clinton ran similar attack lines in 2016—he probably would have recognised that the fox and the wolf are one in the Democratic Party.
Harris proudly touted Republican former Vice President Dick Cheney’s recent endorsement of her campaign. The architect of the invasion of Iraq ought to have been dragged to The Hague and locked in a box for the term of his natural life. Instead, along with “the late great” John McCain, another warmonger, Cheney’s name was uttered as though the ground on which he walked is now hallowed.
The last person to generate liberal excitement on the scale of Harris was Barack Obama, whose gift to the ruling class in 2008 was his ability to provide US imperialism with a mask of reason with which to cover its eight years of catastrophe under George W. Bush and Cheney. Obama’s speeches—delivered in a measured, reverie-inducing baritone—attracted crowds not seen since in US electoral contests.
“A good performer, with an ear for how to make white liberals like him”, Adolph Reed caustically remarked at the time. Obama overwhelmed first Hillary Clinton, and then Republican candidate McCain, before delivering eight years of image rehabilitation for the empire.
Harris promises much more than this. The Democrats under Joe Biden are in imperial expansion mode: building alliances, not just mending them; preparing for confrontation, not coexistence, with China. 
Yet Trump is so odious that the enthralled Democratic base seems to view these as minor details. With a prosecutor’s training, Harris can’t deliver Obama’s oratory. That didn’t prevent the Democratic campaign from smashing fundraising records in August. Young women, in particular, appear to be preparing to storm heaven, or at least ballot booths, for Harris. 
Voter registration surged in the week after she became the presumptive nominee in July. According to data analytics firm TargetSmart, new registrations were up more than 175 percent among young Black women, 150 percent among young Latinas and more than 80 percent among young women in general compared with the same period in 2020. One analyst described the numbers as “astonishing” and without precedent in the last 30 years. 
In the debate’s wash-up, the liberal media is triumphant—a stark contrast to the mood after Biden’s performance in July. Yet Harris’s polling is underperforming Hillary Clinton’s at the same stage of her 2016 campaign against Trump. The partisan polarisation has put a high floor and low ceiling on each candidate’s potential vote in November.
At any rate, the most unfortunate political outcome of 2024 may well be that a new generation of young people runs headlong into the arms of the Democratic fox-wolf just a few cycles after the disappointments and disaster of Obama, and just as the Palestine solidarity movement portended a break from liberal imperialism’s status quo.

The fox and the wolf in the presidential debate

“Hope is making a comeback!” The words are Michelle Obama’s, from night two of the Democratic National Convention in Chicago. At least among US liberals, it seems undeniable. Guardian
columnist Emma Brockes, watching from New York, <a href="https://www.theguardian.com/commentisfree/article/2024/aug/21/democratic-national-convention-kamala-harris-joe-biden">wrote of being taken</a> by “giddiness” and “hysteria”. The convention, she wrote, “unleashed a psychic energy”. “It was emotional! Friends on the east coast stayed up late watching, and cried. I cried!”
It would be easy to dismiss this as the usual fawning of a member of the media class captivated and ultimately overwhelmed by the spell of political power. Yet it is indicative of a broader phenomenon. The Harris effect reaches well beyond the circles inhabited by Guardian columnists; the new presidential nominee has generated an excitement among sections of the Democratic voter base not seen since Vermont Senator Bernie Sanders was contesting the primaries, but with a breadth of support not seen since Barack Obama ran in 2008. 
Various indicators tell the story—polling, volunteer numbers, donations and crowd sizes.
The Washington Post this week noted an <a href="https://www.washingtonpost.com/politics/2024/08/19/harris-poll-surge-is-driven-heavily-by-women-younger-voters/">18-percentage-point shift towards Democrats</a> among people aged under 40 after the party dumped Biden for Harris. An <a href="https://www.monmouth.edu/polling-institute/documents/monmouthpoll_us_081424.pdf/">August 8-12 Monmouth University poll</a> found that Democratic enthusiasm about the election jumped from 46 percent in June, before Biden dropped out, to 85 percent after Harris became the presumptive nominee. Enthusiasm among independents increased from 34 percent to 53 percent. The poll also found that 92 percent of Democratic voters are enthusiastic about Harris being their nominee. Pew Research likewise found that <a href="https://www.pewresearch.org/politics/2024/08/14/harris-energizes-democrats-in-transformed-presidential-race/">nine in ten Democrats say they are happy</a> that Harris is the candidate.
Contrast this with the last two Democratic presidential candidates. <a href="https://www.pewresearch.org/politics/2016/07/07/2016-campaign-strong-interest-widespread-dissatisfaction/">Pew polling in 2016</a> found that only 43 percent of Democratic voters were satisfied with Hillary Clinton being the party’s candidate. In 2020, <a href="https://www.pewresearch.org/politics/2020/08/13/perceptions-of-trump-and-biden/">just 42 percent</a> were happy with the choice of Biden.
Another proxy for gauging “positive enthusiasm” is the proportion of a candidate’s supporters who are voting “for” the candidate as opposed to “against” the other candidate. In 2016, Pew found that less than half of Clinton’s supporters viewed their vote as being “for” her—50 percent said they were voting “against” Trump. In 2020, 56 percent of Biden’s supporters said their main reason for backing him was that he wasn’t Trump. <a href="https://www.foxnews.com/official-polls/fox-news-poll-new-matchup-same-result-trump-bests-harris-one-point">Fox News polling</a> in May found that about half of this year’s Biden supporters were primarily voting “against” Trump. 
By contrast, nearly two-thirds of Harris supporters polled by Fox described their vote as being “for” her, with around one-third voting “against” Trump. That puts Harris somewhere in between the paradigmatic lesser evil candidates (Clinton and Biden) and the more popular Obama, only one-quarter of whose 2008 supporters said their vote was more a vote “against” Republican nominee John McCain.
In terms of volunteers, Harris has also seemingly outperformed. Five days after Biden withdrew from the race, her campaign reported that more than 170,000 people signed up to volunteer. There are signs that the surge has continued: reports of 5,000 sign-ups in Nevada in the first week of August, more than 1,000 sign-ups in Detroit on the second weekend of the month, <a href="https://www.cbsnews.com/philadelphia/news/harris-trump-campaign-volunteers-philadelphia/">more than 43,000</a> in Pennsylvania in the last month, and 15,000 in Florida in the three weeks to 15 August, according to two sources. Presumably, there will be an update on national figures at the end of the month or in early September.
Harris’s numbers aren’t as impressive as those of Bernie Sanders’ last campaign, however. In one week, he signed up <a href="https://www.commondreams.org/news/2019/02/25/bernie-sanders-says-1000000-people-have-signed-campaign-volunteers">1 million volunteers</a> after announcing his presidential bid in early 2019—a year before voting began in the primaries. (By contrast, Hillary Clinton’s 2015-16 primary campaign reported <a href="https://www.politico.com/story/2015/12/hillary-clinton-campaign-2016-numbers-217271">89,000 volunteers</a> a month before the first ballots were cast in Iowa.)
While volunteer enthusiasm indicates something, it’s important not to read too much into the numbers. The major parties’ political machines will consistently deliver for the confirmed nominees, no matter who they are. For example, despite Democrats’ misgivings about his candidacy, Biden, <a href="https://join.mobilize.us/blog/2020-election-recap">according to one report</a>, mobilised at least 2.7 million people between April and November in the 2020 campaign.
Nevertheless, from a standing start, the mobilisation for Harris indicates a swell of enthusiasm. Coming out of the national convention, her campaign will likely shift into yet another gear as the entire apparatus of the Democratic machine is turned full tilt to November.
Donations, like volunteers, have also flooded in. <a href="https://www.nytimes.com/interactive/2024/08/22/us/elections/kamala-harris-donors.html">According to a New York Times analysis</a> of Federal Election Commission data, more than 1.5 million new donors gave a collective US$183 million to the Harris campaign in the last 11 days of July. “Just 10 percent of Mr. Biden’s donors in July were under 45 years old, compared with 28 percent of Ms. Harris’s donors”, the Times noted. According to the Harris campaign, two-thirds of the donations came from first-time donors and 94 percent were for $200 or less. 
This month, the Murdoch-owned Wall Street Journal, which can hardly be accused of liberal bias, <a href="https://www.wsj.com/politics/elections/kamala-harris-fundraising-donors-election-2024-724da4f6">related anecdotes</a> capturing the mood of Democrats nationwide. They are only sketches, but are suggestive of a broader shift:
“Heather Ahern Huish was so elated when she read online that President Biden was endorsing Kamala Harris for the White House that the English teacher in rural Maine did something she hadn’t done in years. She made a political contribution, clicking on a Harris Facebook ad and donating $100—about the same amount she spends on groceries each week. ‘I was just so swept up in the moment’, said Ahern Huish, who is 56 and lives with her husband. ‘There was, like, zero hesitation.’ ...
“More than 6,000 people have handed over a $10 donation for an abstract ‘Kamala’ quilting pattern made by a couple in Illinois. The haul from a ‘White Dudes for Harris’ call left its organizers dumbstruck. ‘If you had asked me if I would be someone who raised $4.5 million for a presidential campaign before this, I would have told you, “There is no chance in hell”,’ said one of them ...
“In late July, political strategist-turned-businesswoman Jotaka Eaddy set up one of the regular Zoom calls she hosts for Black women in business, called Win With Black Women. Usually the calls attracted a few hundred people. But this time, Eaddy’s Sunday gathering became a vehicle for Harris fans looking for a way to show their support: More than 44,000 people joined the event with tens of thousands others listening in, according to Eaddy. She raised $1.6 million in roughly two hours.”
Finally, Harris’s crowds indicate a campaign galvanising the Democratic base. <a href="https://ash.harvard.edu/articles/the-real-numbers-tracking-crowd-sizes-at-presidential-rallies/">Harvard Kennedy School’s Crowd Counting Consortium</a>, which tracks public mobilisations across the United States, estimates that the vice president, before this week’s convention, averaged 13,400 attendees at her campaign rallies (of which there had been only six, however)—more than double Donald Trump’s 2024 average of 5,600 attendees. 
By contrast, lesser evil candidates are renowned floppers when it comes to pulling a crowd. Biden’s average this year was 1,300 people. In her time, Clinton wasn’t much better.
“The pictures have told the story over the past six months. Republican Donald Trump is filling convention centres, airport hangars and parks. Clinton, on the other hand, is filling community centres and small colleges, but just barely”, <a href="https://www.aljazeera.com/features/2016/11/5/why-donald-trump-draws-crowds-hillary-clinton-doesnt">noted a 2016 Al Jazeera report</a>. Clinton did pull some larger audiences, but reports indicate that they generally, or only, materialised when she double-billed with celebrities or more popular figures—such as an election-eve rally of 40,000, which was also a concert featuring Jon Bon Jovi and Bruce Springsteen, with a guest appearance by Barack Obama.
It’s too early, however, to make meaningful crowd comparisons between Harris and the last two Democrats to have generated significant enthusiasm. Obama <a href="https://www.politico.com/story/2008/10/big-crowds-for-obamas-red-state-tour-014965">at least twice drew more than 100,000</a> in his first presidential race and drew many “smaller” attendances of 20-40,000. Bernie Sanders’ biggest rallies were in the order of 30,000. But it’s difficult to ascertain the average crowd size for either of those candidates—they both held hundreds of rallies, displaying an endurance that Harris need not match, seeing as there are only a couple of months until polling day. 
At any rate, objective indicators point to a groundswell within the Democratic base; it is overwhelmingly pro-Harris rather than simply anti-Trump. Whether it will last is another question—but there’s no point in making predictions about the outcome of the November poll. As Sanders showed, motivating and captivating a base is not the same as carrying a majority. As well, US politics can turn on a dime. It was just six weeks ago, for example, that Republican candidate Donald Trump survived an assassination attempt. In its aftermath, a chorus of commentators predicted with certainty that the billionaire now had a lock on the election. That the shooting is now almost forgotten is illustrative of how quickly the media cycle and the political narrative can turn. 
It should also be noted that Hillary Clinton, at the same point in the 2016 race, held a larger average polling lead that Harris currently enjoys—<a href="https://projects.fivethirtyeight.com/2016-election-forecast/national-polls/">6 percentage points</a> compared to <a href="https://projects.fivethirtyeight.com/polls/president-general/2024/national/">less than 4 percentage points</a> (though this could bounce after the convention). Clinton’s lead blew out to almost 7 percent just three weeks from election day after an Access Hollywood tape, recorded a decade earlier, exposed Trump bragging about sexually assaulting women. One NBC News/Wall Street Journal
poll put the former secretary of state ahead by 14 points soon after. At the time, even Republican leaders described Trump as unelectable and were <a href="https://www.washingtonpost.com/news/the-fix/wp/2016/10/07/the-gops-brutal-responses-to-the-new-trump-video-broken-down/">calling on him to withdraw from the race</a>. Yet he still threaded a victory through the Electoral College.
Most progressives will view the Harris surge—and with it, a shift in the national polling—as a positive development. After all, who wants Trump to be again installed in the White House, from where he would resume his attacks on women, trans people, the environment, immigrants, workers and unions? Who wants fascist activists to be emboldened by Trump emerging victorious in November after a campaign of far-right invective and promises to deport millions, crush the left and further enrich billionaires? No-one with a left-wing bone in their body views a potential Trump second term with anything other than horror.
Yet there is something profoundly disturbing about a vice president up to her eyeballs in the Palestinian genocide managing to inspire legions of progressives. There is something unsettling about a Democratic National Convention that <a href="https://www.aljazeera.com/news/2024/8/22/they-want-to-erase-us-how-dnc-rejected-demand-for-palestinian-speaker">refused even to allow a Palestinian speaker</a> to address delegates about the horror of Gaza, funded by a Democratic government. There is something bizarre about <a href="https://redflag.org.au/article/what-makes-the-democrats-different-from-but-the-same-as-the-republicans">a party run by billionaires</a> parading itself as the hope of the American working class. And there is something just flat-out dishonest about the party of the CIA talking about international “security”.
The Sanders campaign, whatever its limitations, injected the language of class and socialism into the US national debate. It got millions of people talking about how socialism, however broadly defined, sounds like a good thing. At the Democratic National Convention this week, party representatives got everyone talking about how prosecutors are heroes for middle America. 
“I’ll tell you what …”, Joe Biden started on the first night. The applause erupted before he could even begin waffling; before he could elaborate on what the “what” was. It went on. The delegates cheered in unison at whatever demented babble emanated from the stage, like a parody of the Hunger Games opening ceremony scene, when the gathered audience deliriously cheered contestants about to maul each other for the citizens’ amusement. 
Just an hour before Harris’s closing address, the enthusiasm was for a Michigan sheriff thundering about how police funding has increased in his county, and that’s why you should vote for Kamala. Then came former Defense Secretary Leon Panetta talking about how Harris would keep the US military the strongest in the world. Under her, he said, the US would remain interventionist. That is, it would continue invading countries and overthrowing governments that the State Department declares enemies of US imperialism.
For all the danger of Trump, here’s the Democratic rub: this is a party that can get away with anything precisely because its base will allow it. As long as the party comes with a scent of hopium and is decorated with a liberal dose of diversity, there is no left-wing challenge that it cannot overcome. That’s partly why it is the governing party of choice for big business in the US—an insurgent Democratic Party generating enthusiasm is the greatest safeguard to the establishment’s status quo. 
In the past twelve months, in the face of the horrors of Palestine, a new student movement began to emerge, the likes of which had not been seen in generations. A mass anti-war movement developed across the country, bringing together anti-Zionist Jews and Muslims, activists with generations of organising experience and young people moved to resist oppression and injustice for the first time. There was, arguably, even an emerging rupture in the ideological core of US liberalism as young people broke to the left.
These green shoots of an entirely different way of doing politics—one that put humanity first and was led by people on the ground rather than pro-imperialists in comfortable offices—have been poisoned by the DDT of the DNC. 
Outside the convention, a resilient minority continued to raise their voices for Palestine. But a combination of intimidation and co-option—along with an understandably sapped momentum after ten months of resistance to genocide—have taken their toll. In a city of nearly 10 million people, just 5-7,000 could be mobilised. Democratic-run Chicago might have mobilised more police than that.
Inside the convention, the renewed energy of the party of war was palpable. Republicans were warmly welcomed, but Palestinians were personas non grata. “Stray dis­sent­ers have had Palestinian flags taken away; a hijab-wear­ing pro­tester was drowned out by chants of ‘We love Joe’ and hit with a Biden plac­ard after inter­rupt­ing the pres­id­ent’s speech”, <a href="https://ft.pressreader.com/article/281891598603982">observed Eduard Luce in the Financial Times</a>. 
Imagine a Black woman being treated like that at a Republican convention. Now you know what the Democrats are capable of. They can do this and still hypnotise Guardian columnists.
Like the first Obama campaign, the momentum of Harris portends a domestic rehabilitation of US liberalism and the Democratic Party’s credentials, which will only help them sell the next war. That’s just as frightening as the prospect of another four years of Trump.

The end of the lesser evil election?

Australia’s run-for-the-rich economy is hammering young people.
Living standards for those aged 15 to 34 went backwards between 2004 and 2022, according to a <a href="https://www.burnouteconomics.com/p/the-profoundly-sick-australian-household">new analysis of Bureau of Statistics figures</a> by economist Tarric Brooker. That’s despite national wealth per person increasing nearly threefold in the same period.
As if that weren’t shocking enough, the situation has dramatically worsened in the last two years, real consumption spending collapsing by nearly 13 percent among 25 to 29-year-olds. 
“Given the size of the decline, it’s entirely possible that this is the largest sustained drop in real consumer spending for this vital demographic since the Great Depression”, <a href="https://www.burnouteconomics.com/p/burnout-economics-and-aussie-household">Brooker noted last month</a>. 
Consumption is also down by more than 7 percent among 30 to 34-year-olds, 6 percent among 35 to 39-year-olds, and 2.7 percent among 18 to 24-year-olds.
<a href="https://www.commbank.com.au/content/dam/caas/newsroom/dynamic-media/2024/CommBank%20iQ%20report_23%20May%202024.pdf">According to the Commonwealth Bank</a>, spending on essentials such as groceries and utilities has fallen significantly in real terms.
For several years, there have been warnings that, for the first time in living memory, a new generation could end up financially worse off than their parents. That prediction has now come to fruition. 
Real wages are down around 7 percent in four years. The federal Treasury says they won’t fully recover until sometime in the 2030s—and that’s certainly not guaranteed. While that affects all workers, renters—who are disproportionately young people—have been hardest hit because landlords have jacked up rents far faster than the rate of inflation. 
Capital city asking rents for units have climbed by around 50 percent, and asking rents for houses have jumped even more. 
Also, if they can afford a house in the first place, younger people are more likely to have larger mortgages because they have spent less time paying off their debts and have had to buy at the latest stratospheric prices. The increases in interest rates mean that they are also disproportionately hit in the current economy. 
Indeed, the Bureau of Statistics’ <a href="https://www.abs.gov.au/statistics/economy/price-indexes-and-inflation/selected-living-cost-indexes-australia/latest-release">selected living costs indexes</a>—which, unlike the regular inflation measure, show the effects of rising interest rates—show that the cost of living has been much higher for working-class households than reported in the press over the last two years.
We are seeing a significant transfer of wealth from renters to landlords and from mortgaged homeowners to banks.
As an example, the Commonwealth Bank last week reported another $10 billion yearly profit. It’s doing so well that Mathew Hodge of investment adviser Morningstar said that the bank’s “excess capital” (its reserve of money) is growing so fast that it now “faces the high-quality problem of what to do with it”.
You read that right—analysts say the bank has more money than it knows what to do with.
Other asset holders are also riding a wave of prosperity. In fact, they are being treated to, in the words of the Financial Review’s Chanticleer column, “a deluge of dividends”—“the capital returns incentivised by Australia’s tax” system.
A bank with too much money. An investor class drowning in dividends. And young people enduring a Depression era-like collapse in living standards. 
Welcome to the Australian economy in 2024.

Young people are getting smashed—and not in the fun way

Having narrowly survived attempted assassination and now formally anointed as the Republican presidential candidate, Donald Trump’s takeover of the Grand Old Party in the United States is complete. The far right is cemented at the apex of one of the world’s most powerful and influential political organisations and is on the cusp of power in the globe’s largest imperialist state.
<a href="prod-static.gop.com/media/RNC2024-Platform.pdf">The Republican election platform</a>, for the first time written as a purely Trumpian document, promises, among other things, to use federal laws “to keep foreign Christian-hating communists, Marxists, and socialists out of America”; carry out “the largest deportation operation in American history”, including “millions” of undocumented migrants; and defund schools that teach what it calls “left-wing propaganda”.
Trump’s choice of J.D. Vance as vice-presidential running mate underlines the inability of the party’s old establishment to influence this season’s electoral ticket. Former Trump strategist Steve Bannon describes Vance as “St. Paul to Trump’s Jesus—the zealous convert who spreads the gospel of Trumpism further than Trump himself ever could”, <a href="https://www.politico.com/news/magazine/2024/03/15/mr-maga-goes-to-washington-00147054">according to Politico contributor Ian Ward’s paraphrasing</a>.
The booing and jeering of longstanding Republican Senate leader Mitch McConnell at the party’s national convention, even as he pledged his state’s delegates to Trump, is another indication of the far right’s supremacy in the party (if not numerically in terms of registered voters, certainly as the most organised faction in the apparatus). So too the mixed reception for “never Trump” establishment candidate Nikki Haley, who was blown out of the water in the primaries but came to pledge support in a pathetic display of fealty.
There is a very real prospect of a hellishly far-right Republican administration taking office in January. But while the November election appears Trump’s to lose, the contest is unlikely to be a landslide—at least in terms of the popular vote. Nothing like the 1980 or 1984 elections, for example. In those polls, Ronald Reagan, who oversaw the last significant Republican political realignment, won by 10 and 18 percent, respectively. (Although that was partly a function of <a href="https://www.electproject.org/national-1789-present">very high rates of abstention</a>.)
According to survey aggregates, <a href="https://projects.fivethirtyeight.com/polls/favorability/donald-trump/">most Americans</a> have an unfavourable view of Trump. An NBC News poll last year found that just <a href="https://www.nbcnews.com/meet-the-press/meetthepressblog/maga-movement-widely-unpopular-new-poll-finds-rcna81200">one-quarter of adults</a> approve of his Make America Great Again (MAGA) movement. Against the Republican far right and its array of opportunistic hangers-on, the Democrats could run a fossilised stegosaurus turd and still expect a better turnout than Walter Mondale managed in ‘84. 
Yet the Democrats are in disarray, and the maths of the Electoral College looks increasingly challenging. President Joe Biden’s ineptitude and arrogance have significantly undermined his presidential authority and his standing even within Democratic ranks. <a href="https://apnews.com/article/biden-trump-poll-drop-out-debate-democrats-59eebaca6989985c2bfbf4f72bdfa112">The latest AP-NORC Center for Public Affairs Research survey</a> found that two-thirds of Democrats want Biden to drop out of the presidential race. But most telling is that his base—the party establishment—has turned. It’s hard to see him running for re-election.
One curiosity of all this is that the turmoil of official politics seems at odds with the mood of the US ruling class. When Trump launched his first campaign in 2015, there was strategic confusion, paralysis and malaise in establishment circles over how to contain China, which was widely predicted to overtake the US economically and challenge geopolitically. The prognosis almost everywhere was that the United States was a declining global power and that China’s rise was inexorable.
In recent years, however, US imperialism has been revived through a combination of <a href="https://tempestmag.org/2021/05/imperialist-keynesianism/">industrial policy</a> and international diplomacy. The reinvigoration has been achieved while also satisfying the rapacious greed of US capitalists: company profit margins are at highs <a href="https://finance.yahoo.com/news/corporate-profits-are-booming-biden-wants-that-to-be-a-campaign-issue-080049714.html">not seen since the years immediately following World War Two</a>, and a <a href="https://tradingeconomics.com/united-states/stock-market#:~:text=Historically%2C%20the%20United%20States%20Stock,on%20July%2017%20of%202024.">Wall Street bull run</a> has delivered tremendous gains for fund managers and investors. As a result, much of last decade’s establishment disquiet and disarray have abated.
For the first time this century, <a href="https://www.bloomberg.com/news/newsletters/2024-01-26/global-economy-latest-us-and-china-battle-for-top-economy">America is economically outmuscling China</a>, which teeters on the edge of debt deflation and faces an increasingly hostile trade environment. Beijing is discovering that state capitalism, like “regular” capitalism, eventually succumbs to crisis. Some economic indicators, such as youth unemployment, have turned so sour that the government has stopped publishing figures. Others, such as the solvency of an array of regional governments, are probably unknown to all but local officials. Talk of “China’s century” has evaporated, along with the country’s foreign capital inflows. All this could be temporary, but the current situation is starkly transformed from the panic gripping the US government during the Obama presidency.
Further, in the wake of Russia’s invasion of Ukraine, the United States has re-entered European politics with all the swagger of Eminem re-entering the Billboard charts. (“<a href="https://www.youtube.com/watch?v=22tVWwmTie8">Guess who’s back?</a>“) Washington’s reconstruction of a new sort of international bloc politics for the 21st century in the Asia-Pacific is also affirming in the eyes of many—be they allied, neutral or adversary states—that the US is again becoming, in the words of former Secretary of State Madeleine Albright, “the indispensable nation”. This is a far cry from the situation during George W. Bush’s presidency, when the “coalition of the willing” had to be constructed via chequebook diplomacy.
The US does face many challenges, of course. The government’s operations are funded by incessantly increasing the national debt, and economic growth is driven by massive but ultimately diminishing fiscal support. Wall Street could suffer yet another collapse, bond traders could turn against the government, as they did against British PM Liz Truss in 2022, or commercial real estate losses could provoke another financial panic. Israel could stuff Washington’s plans for a more settled Middle East and further distract from its Asian focus.
But the point is that the Biden presidency has generally been a time of imperial advance. A significant reorientation, begun under the first Trump presidency, has continued. There is no longer a sense of crisis within the ruling establishment—no longer a feeling that there is no plan to maintain US global domination and to advance the interests of the US capitalist class.
Many Democrats have wondered why the country isn’t rewarding them in the polls for delivering such outcomes. They clearly believe it’s the messenger, Biden, and not the message or their overall approach to governing. Time will tell if they can turn it around with a new leader without proposing anything much to reverse the decades-long stagnation in working-class living standards. The real question is whether a party of the status quo can triumph when the status quo appears so intolerable for so many.
Either way, right now, the fundamental dynamic is the far right again being ascendant. 
Trump’s first term was characterised chiefly by policy paralysis rather than fascism’s march through the institutions. The billionaire was surrounded by establishment appointments and significantly constrained by Congress, the federal bureaucracy, and his own isolation.
If he is re-elected, there will again be limits on what Trump can carry out. He could end up at war with a range of states and sections of the judiciary. But he will not be as constrained a second time. The Supreme Court is more favourable to him now. And thousands of officials and public servants will be replaced with MAGA loyalists ready to fight for, rather than moderate or obstruct, the president’s program.
But it’s not only what a Trump administration does. Outside of government, Trump’s base has become more organised. The confidence and encouragement it would receive from the far right taking over the executive branch could unleash a wave of grassroots activism by people who have spent years building their networks.
Unlike what many US progressives seem to think, most of this will not take the form of brownshirt wannabes trying to emulate the Third Reich. While there may well be odious border mobilisations and vigilante attacks on migrants, much of the fascist campaigning will be in school districts, libraries and public offices. It will be led Christian mothers, not jackbooted young white men carrying torches through the streets.
In fact, Trumpism now looks more dangerous precisely because it often defies the crude stereotypes of progressives whose only political framework seems to be that provided by racial, ethnic or gender identities. Yes, there is a core element of white supremacy in the US far right. But the Trump movement’s glue is a more powerful adhesive than racial resentment: God, family, nation, order. In the US, this program transcends white supremacy, even if it cannot seem to live without it. It is a program around which the far right is trying, with some success, to rally a multiracial, anti-leftist coalition rather than one constitutionally averse to racial diversity.
Undergirding the nationalist political and cultural messaging is an ambitious economic nationalist program for a more potent US empire: rebuilding the military-industrial base, expanding energy production and reorienting supply chains away from China in anticipation of war. 
In his speech to the national conference, J.D. Vance favourably quoted Reagan on keeping government out of people’s lives. But the new Republicanism marks the return of strong-state nationalism: very little in the program can be achieved without huge intrusions into the economy and society. One suspects that this is very much part of the appeal, given the ravages that free markets have wrought across the country.
If the right retakes power, the question is how the streets react. As it stands, Trumpism appears normalised, if widely unpopular. For all the talk about political polarisation in the United States, there is little organised expression of it outside of the far right—indicating perhaps that “polarisation” might flatter a disintegrated left and a progressive movement with no claws. Maybe that will change. If it doesn’t, politics will be all downhill.

US far right prepares for power under Trump

What does <a href="https://www.opensecrets.org/2024-presidential-race">three-quarters of a billion dollars</a> in presidential campaign fundraising buy? Two old men who struggle to construct coherent sentences. 
In the debate between the Republican from America’s wealthiest 1 percent and the Democrat from the top 2 percent, one clear loser emerged: everyone who tuned in. 
“Are the two candidates going to shake hands tonight?”, ABC News anchor David Muir asked prior to the commencement of proceedings. “That is one of the big questions”, his colleague responded.
A huge question. Right up there with discussions about the nature of human consciousness and the origin of the universe.
“What really matters is the moments”, Democratic strategist Joshua Karp told the Washington Post
in anticipation of the debate, “and I think that’s what I’ll be watching for the most”.
Cherishing moments—that’s usually how one talks about approaching the final weeks of life. Yet in this instance, it was almost prophetic: for the first half of the debate, Biden’s seemed to be a mind <a href="https://www.youtube.com/watch?v=ej4gFT21VOM">already halfway to the great beyond</a>.
There were plenty of moments to ponder. But that’s just the nature of time, in which instants form an infinite sequence until the universe collapses on itself and all being is annihilated. Many viewers may have wished for this when the elderly candidates began <a href="https://www.youtube.com/watch?v=Re2kZfoyo7g">arguing over who would win at golf</a>. 
On and on the moments came and went. But the time spent viewing was time that will never be recovered. Everyone who did watch is quite likely stupider for having done so. 
Yet the biggest loser will be those who tuned out long before now: the millions of US workers keeping the economy afloat for the 1 and 2 percenters like Biden and Trump, yet struggling to make ends meet—and who will continue struggling no matter which party wins the White House in November.
“When asked what drives the economy, many Americans have a simple, single answer that comes to mind immediately: ‘greed’”, <a href="https://www.nytimes.com/2024/02/21/opinion/economy-research-greed-profit.html">a group of researchers</a> from the American Academy of Arts and Sciences wrote recently. “They believe the rich and powerful have designed the economy to benefit themselves and have left others with too little or with nothing at all.”
This belief corresponds with reality. <a href="https://www.stlouisfed.org/institute-for-economic-equity/the-state-of-us-wealth-inequality">The Federal Reserve Bank of St. Louis estimates</a> that the top 10 percent of US households hold more than two-thirds of total household wealth. The bottom 50 percent hold just 2.5 percent.
Household debt is $17.7 trillion, according to the Federal Reserve Bank of New York’s latest <a href="https://www.newyorkfed.org/microeconomics/hhdc">household debt and credit report</a>. In the first three months of the year, almost 9 percent of credit card balances and 8 percent of car loans “transitioned into delinquency”, it says.
The Census Bureau’s May <a href="https://www.census.gov/data/tables/2024/demo/hhp/cycle05.html">Household Pulse Survey</a> observes that almost one-third of adults—81 million people—find it “very difficult” or “somewhat difficult” to pay their usual household expenses. Unsurprisingly, the trouble is concentrated at the lower end of the income ladder: more than 50 percent of adults living in households with incomes below $50,000 struggle with bills.
More than 9 percent of adults—24 million people—often or sometimes don’t have enough food to eat. Unsurprisingly, the wealthiest people—those with household incomes above $200,000—barely registered problems putting food on the table. But the proportion rises to 28 percent in households earning less than $25,000, 18 percent in those earning between $25,000 and $34,999, and 14 percent in those earning between $35,000 and $50,000.
This isn’t a blip. The US, the richest country in the world by many measures, has for decades led the way among “advanced” economies for its higher poverty rate, lower life expectancy, higher level of wealth inequality and lower minimum wage.
And for years, most Americans—about seven out of ten—have said that the economy is rigged and <a href="https://www.pewresearch.org/short-reads/2020/01/09/70-of-americans-say-u-s-economic-system-unfairly-favors-the-powerful/">favours the powerful</a>. “I just feel like the underdog can’t get ahead, and it’s all about greed and profit”, one Kentucky resident told the American Academy researchers.
Yet workers are offered only establishment parties and establishment politicians—or a billionaire fraudster pretending to be the great outsider and champion of the disenfranchised. And they get a media that thinks the biggest political question is whether the shysters running the show are civil enough to shake hands as they clamour for high office.
“We’re a failing nation”, Trump declared during the debate. He’s not wrong.

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