6,000 Words but Silent on Falling Real Wages: What Chalmers Got Wrong on ‘Values-Based Capitalism’ and Fixing Our Econom

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misbahulalam
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6,000 Words but Silent on Falling Real Wages: What Chalmers Got Wrong on ‘Values-Based Capitalism’ and Fixing Our Econom

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Federal Treasurer Jim Chalmers’ recent essay in The Monthly, “Capitalism after the crises”, tells us a lot about economic predicament faced by the Albanese government and governments around the world. Arguably, the reaction to the essay tells us even more. The essay reflects two unpalatable facts. The first is that the model of capitalism that became dominant in the late 20th century – variously referred to as “neoliberalism”, “the Washington Consensus”, or in Australia as “economic rationalism” – has failed to meet the challenges of the 21st century, beginning with the global financial crisis of 2008. The second is that no one, including our federal government, has a clear idea of what to do about it.

Rather than spelling out the economic failures in detail, Chalmers spends a fair bit of his essay talking about the “polycrisis”: the overlapping onset of climate disaster, symbolised by the bushfires of 2019 and early 2020, with the COVID pandemic, energy shocks and the assault on global democracy. However we decide to deal with these problems, Chalmers correctly observes Country Email List that most of us don’t want to go back to pre-crisis “normal”. No mention of falling real wages For the average Australian, the most tangible manifestation of the failure of neoliberalism has been the stagnation of real wages. In 2021, then Opposition Leader Anthony Albanese pointed out real wages had “flatlined” in the eight years of Coalition government.

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Chalmers mentions that the current government inherited “stagnant” real wages, but does not develop this point; indeed, “wages” are mentioned only four times in the essay. There’s no mention at all of the falling buying power of wages. The reason, it may be assumed, is that real wages are now falling under Labor and are expected to keep falling until 2024 at the earliest. The failure of wages to keep pace with inflation will more than wipe out the minimal gains in buying power achieved under the Coalition government, and also reverse some of those achieved under the previous Labor government. This failure isn’t confined to Australia. It is as bad or worse in the UK and the US. The problem isn’t whether or not to recognise that wage stagnation is a problem. The problem is what to do about it.
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