Disturbing news this week that Australia’s “misery index” has experienced significant growth. This was even before the Reserve Bank slugged households with its 12th interest rate rise in 13 months.
Misery indexes were thought up by the 1970s economist Arthur Okun. He had the idea that a combination of rising prices and high unemployment created hardship and drove social unhappiness.
Wild.
You mash together the data about both with a proportionality based on your favourite economist, and by doing so conclude just how bummed the collective vibe’s become.
The Misery Index is also the name of a gameshow hosted by the star of The Good Place, Jameela Jamil. I mention this because in the 12 months leading up to the global financial crisis in 2007-08, the (economic) misery index in Australia rose 62%. In 2022, the index around these parts increased almost 220%, suggesting that wacky TV shows are perhaps the best fun on offer right now – if you can still afford the streaming services.
Australian households with the average $600,000 mortgage have been asked to find a spare $17,000 among the couch cushions since the RBA began its lifting-rates-a-thon last May.
There’s rising costs of other expenses, such as transport. The Australian Automobile Association calculated the average cost of running a car in this country went up $28.31 a week in the March quarter; in Brisbane and Melbourne, it went up $34. With associated automotive costs, using a car in Sydney now averages $510 a week.
Meanwhile, in regional Victoria, one food bank is shipping 40 tonnes of food every day to help struggling families.
Why are the price rises happening? International research conducted by the OECD concluded “corporate profits contributed far more to Australia’s rise in inflation through the past year than from wages and other employee costs”. There’s been similar analysis from the European Central Bank. The Reserve Bank of Australia and Treasury disagree, I guess because the OECD is led by notorious communist Mathias Cormann.
The RBA insists that the pay packets of Australian workers have magically, secretly swelled, and this is driving inflation – even though, as Australian economist Stephen Koukoulas has said, “real unit labour costs only rose 0.1% in the March quarter and 1% over the course of the year”.
And how is it possible wages are inflicting such terrible damage when the ACTU could observe major local employers are enjoying profits at Scrooge McDuck levels? The latest half-yearly statements had Ampol bathing in $440m, Coles $616m, Qantas $1.4bn … and the Commonwealth Bank taking a swim in the gold coins pool at a depth of $5.15bn.
Philip Lowe is the RBA governor. Although he has a whole bank board and a coterie of senior mandarins alongside him making rate rise decisions, he is certainly to blame for public statements that imply “workers pay to solve inflation they didn’t cause”, to quote (yet another) economist Jim Stanford.
The theory for the rises is neoliberal orthodoxy; apply economic pressure to cause unemployment, and make those who retain their jobs live in such valid terror of the burning tyre-pit hell that is Centrelink that they won’t make pay demands and therefore won’t drive “wage price” inflation.
Lowe has generously suggested that those households struggling to keep up with rising mortgages – 27.8% of whom are now at risk of mortgage stress – to just “pick up more work”. This is Schrödinger’s employment policy, where the RBA advocates for and against employment at the same time, while you place a box on your head and scream at your ballooning mortgage repayments. An earlier Lowe suggestion was that those struggling with exploding rents should magic up some flatmates or move back to a “home” that may or may not exist.
You, Australian, are responsible for your own misery. But that means you’re responsible for your own happiness, right?
So while you’re forced to cut spending, alleviate supermarket blues by performing a funky dance in the canned veg section the inevitable moment a Katy Perry song comes over the PA. Similarly, suppressing an instinct to ask for the wages you need to meet your costs can be a lot less painful if you hum your favourite 80s sitcom themes at work.
Automotive costs might force you into long and difficult walks to overcrowded, underfunded public transport, so maybe commute in a clown suit. If you’re facing record rent rises, you could consider reciting beautifully sad poems from the nearest window and lure flatmates to you with your tender pain.
History suggests there are alternatives, but demands for rent freezes and price controls are unconstitutional. Referendums to allow government economic intervention of this kind were defeated in 1948 and 1973. Faced with inflationary challenges in the 1950s, though, the Liberal government of Robert Menzies addressed the problem by raising taxes on the rich.
Sadly, the Australian people voted Scott Morrison into power in 2019 on a promise to implement the stage-three tax cuts, and then a promise by Labor to keep these cuts on the books arguably convinced enough swing voters over the electoral line.
There is no help coming for Australians from the RBA. Perhaps we should ask ourselves how much of this misery we might have power over, after all.
• Van Badham is a Guardian Australia columnist
