Mining and finance are the big winners in the devolving economic model we endure. With the concentration of big business so great, those with control of scarce resources or scarce employment opportunities are able to lean on working classes and the tax payer to plump their profits.
Westpac’s disastrous .45% handball of interest rates shows their oligopolistic influence over their ‘clients’. If only mortgagees didn’t have to work so many hours to cover their debt to the bank (70% of which is the land, once known as the commons), they may have more time to vote with their feet.
How can owners of licensed monopolies (such as banks, land holders) have such power to extort the market?
Some useful stats for your next dinner table chat in Business profits soar in slump
IN THE middle of the worst global slump since the Great Depression, the profits of Australian business soared to record highs in 2008-09 – while wages fell to near-record lows.
In the past, profits used to fall in recessions. In the recession of the ’70s, the Bureau of Statistics estimates that they fell from 20.5 per cent of national income to 17 per cent. In the ’90s recession, they fell from 24 per cent to 22 per cent. But this one has been something different.
Corporate profits, which have been on a roll all through this decade, kept rolling serenely on through the recession, climbing from 27.4 per cent of national income to a record 27.7 per cent.
Wages took the brunt of the slowdown, falling from 54.3 per cent of the cake to 54 per cent as unemployment grew by 200,000 and hundreds of thousands of workers took cuts in paid hours to keep their jobs.
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Much of the profit growth over the decade has been in finance and mining – both of which suffered little damage in the 2008-09 slowdown. By contrast, the Bureau’s national accounts now reveal, manufacturing has been the biggest victim, with its output crashing by 6.4 per cent to a seven-year low.
