Living standards to fall
- Thread starter Redom
- Start date
its remarkable how the masses think of productivity.
Well each country will have its own season. Some will take longer than others to figure it out.
The good news is that there is still profit to be made regardless of the season, so long as a person correctly identifies the season.
spot on. I love your analogy to Civilisation.
But really what we are seeing is a long term revision to the mean.
Since when in the long term history of mankind has wealth been fairly distributed amongst the masses.
I have been stating on this forum for several years now, that the 'ownership of wealth' in the 21st century will be capital, not labour.
Its increasingly becoming a 'globalised village'. Labour will gradually sinc on global level.
The winners will be the owners of capital.
And the most funny thing, the more the left leaning part of society harp on about this, the easier/faster it becomes.
Why?
because of the middle class.
The fairer one wants society, the more important it becomes to protect the middle class by enabling genuine wealth creation of the middle class, the 'Howard Battlers'.
But as the left always think, they would prefer poor to be more poor so long as the rich were less rich.
But it doesn't work this way, those with wealth can afford to hire experts in accounting/taxation/law to create and build on their wealth.
The rest cant afford to.
Why?
because of the middle class.
The fairer one wants society, the more important it becomes to protect the middle class by enabling genuine wealth creation of the middle class, the 'Howard Battlers'.
But as the left always think, they would prefer poor to be more poor so long as the rich were less rich.
But it doesn't work this way, those with wealth can afford to hire experts in accounting/taxation/law to create and build on their wealth.
The rest cant afford to.
I think part of the 'fairness' debate gets away from some of the fundamental challenges that face developed economies (in my view anyway!).
The return on capital is growing much faster than the return on labour. I haven't checked data in across the whole OECD, but from the countries I've looked at this seems like a common theme.
I think that's what increasingly drives wealth to those with capital relative to those with labour (the rich getting richer etc.). Further I'd say this is a natural function of a successful developed economy. As a society we might take the view that some of this should be redistributed (I think we definitely should!), but I think the story is much bigger than just a particular government or political ideology
check out Italy real GDP.
New chart gone out, real GDP back to year 2000 level.
Yes it CAN happen.
New chart gone out, real GDP back to year 2000 level.
Yes it CAN happen.
Rampant globalisation will bite us in the ****. The abolition of tariffs is one thing which has contributed to the demise of local manufacturing. Offshoring is another. Now business is importing cheap labour as well. Wage growth is at its lowest level in 15 years. Yet labour here is still much more expensive that overseas (understandably). The still-high Aussie dollar makes our exports uncompetitive as well.
Sanj, I don't know which circles you move around in, but my circle involves many folks from many walks of life and income levels. Of course; my world is mostly Victoria (except for our IP in Kalgoorlie), so I can't comment too cleverly on other States.
But Vic is not a small-fry State.
Across the board; the general consensus is that overall; things are not that flash. Some areas; sure...going ok.
It's all anecdotal and not a flash graph to substantiate it in sight, sure - but if you get almost everyone saying much the same thing to you each week/month; then there must be some truth in it.
This forum is now a fishbowl; full of professional higher income earners these days. The struggling Mum and Dad investors are not here any more....they are the vast minority, so we don't get enough input from that section of society here now.
Therefore; the world of the younger, professional higher income earner will quite possibly not brush shoulders with the rank and file middle to lower end income earners - which make up the majority of the work force...they don't live in Plainsville miles from the CBD and the at lifestyle, so don't see the larger population.
Personally; I hardly ever rub shoulders with the younger higher earning profesionals these days - other than here on this forum; my world is the other end, and the business owners (some of my customers and many of my friends) who provide goods and services for/to them.
One of my mates has a company that manages 5 golf course Proshops. He has worked very long and hard his whole life to get to a very nice position.
But; he informed me over a beer the other night that his last 2 months were the worst he has ever had in his 30 odd career in the industry. Golf memberships have been trending down for several years (despite Tiger Woods's influence), and all public golf course numbers are down too.
Why?
One of my biggest tyre suppliers (they are also retailers and workshop) told me the last half of 2013-14 Fin year is their worst 6 months since they began in business...
People are spending less on tyres, less on car repairs, less on golf...Why is that?
Now; as I said; all anecdotal, but these are two totally unrelated industries which are experiencing a similar trend.
It cannot be poohoo'd, or "bzzzzt; incorrect'd".
Marc, this has nothing to do with anecdotes, social circles or opinions. It is an inescapable FACT that what I said is true, real earnings have indeed increased over the last decade. Opinion has nothing to do with it when talking about something with clearly identified metrics and measurements, in this case I'm going off actual figures from the ABS.
These figures are more important than what you and I personally believe.
Now, over the last year or so real earnings have indeed dropped but looking at it over the last 10 years it is undeniably higher. Once again, this is based on clear ABS stats. Unless you have proof these stats are inaccurate there is no reason why your anecdotes or anyone else's should be believed over them.
These figures are more important than what you and I personally believe.
Now, over the last year or so real earnings have indeed dropped but looking at it over the last 10 years it is undeniably higher. Once again, this is based on clear ABS stats. Unless you have proof these stats are inaccurate there is no reason why your anecdotes or anyone else's should be believed over them.
You still haven't come up with an answer to my question of Why?
Why is the population not paying golf anymore?
Why are they not buying tyres, and why are they running them down to the steel belts (that is FACT) and risking life and limb? And when they do buy; they choose the cheap-arzed option over higher quality and safety?
Just give me your opinion, at least.
Have a guess.
Don't just blow me off with some BS about how "Stats Rule!, and you guys know Jack".
So, when tradies, golf pros with a swag of facilities, tyre wholesalers and workshops, other retailers, average folks in the street earning an average wage, pensioners and the like...say they are doing it tough we should just not believe them?
To blindly base your view on only a stat - or to not question them - and exclude any other feedback or info would be unwise.
We (my circle) hear all the news reports about how wonderful things are too - all based on reports from Gubbmint stats and official figures, of course; news reports don't go by anecdotes as a rule; they quote the experts. Hell; every morning the CBA economists give us the glowing reports on the news.
They are quoting stats too.
Yet everyone I speak to roll their eyes, groan and/or have a chuckle about all that...."Oh yeah; things are really great...what drugs are they on?" and so forth.
Yeah; bzzztt; incorrect they are.
I guess we'll just have to agree to disagree.
Of course; here in the fishbowl; everyone's wages have gone through the roof and life is grand, swimming in disposable "skyrocketing-above-living-cost-increases" wages income.
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We are talking about different things then. I'm talking about spending power, job opportunities, available work, spending trends etc...not simply a higher dollar amount per head earned.
You can still earn more, but have the same or even less to spend if costs increase.
Things like PPoR rates, health insurances, fuel, cost of staple items, uitilities such as gas and electricity, phone and so on - these things impact the average person a lot more than yer fishbowl dude.
Plus; those who possibly have earnt more, may be earning so much more than the wider population, that it drags the averages up.
Not everyone's wages have moved, and some have not moved at all, while others in a very high income bracket might have gone up enormously.
It is not uncommon for CEO's, Bee's of Dee's, Execs, Pollies and so forth and so on - to take massive rises while yer average worker sees nothing.
I could - as a wage earning employee of my own company - pay myself a 50% pay rise next year; just because I can - and this would go into your Stat as higher earnings. Doesn't mean everyone else's has gone up though..
You talk of earnings; are you talking about the whole economy as a whole - including all industries etc?
Or just wages?
This is why I do not ever put all my faith in a stat.
Stats can - and often are - skewed and the whole picture not illustrated.
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http://www.macrobusiness.com.au/2014/05/wages-growth-lowest-on-record-2/
There was a solid 10 years of ever-increasing wage growth, definitely falling away now but.
My parents are small business owners in Sydney and they say the same, "it's dead'". Similarly they have customers who are small businesses owners who say the same. Their suppliers Rep's say the same, apparently they even question how long they'll be held onto given how little business they write.
My work has suspended their Apprenticeship Intake (was 150/year) subject to a review. However they have been doing a lot of redundancies too (more to come) so even if they restart it, it's expected to be scaled back.
Always hard to know whats just specific changes to your industry and what's the greater economy.
It also makes sense that people will have different anecdotal experiences. Take for example the general unemployment rate is 6.4%, youth unemployment is 14.1% (15-24).
http://www.abc.net.au/news/2014-08-07/unemployment-surges-to-12-year-high-at-64-pc/5654926
There was a solid 10 years of ever-increasing wage growth, definitely falling away now but.
My parents are small business owners in Sydney and they say the same, "it's dead'". Similarly they have customers who are small businesses owners who say the same. Their suppliers Rep's say the same, apparently they even question how long they'll be held onto given how little business they write.
My work has suspended their Apprenticeship Intake (was 150/year) subject to a review. However they have been doing a lot of redundancies too (more to come) so even if they restart it, it's expected to be scaled back.
Always hard to know whats just specific changes to your industry and what's the greater economy.
It also makes sense that people will have different anecdotal experiences. Take for example the general unemployment rate is 6.4%, youth unemployment is 14.1% (15-24).
http://www.abc.net.au/news/2014-08-07/unemployment-surges-to-12-year-high-at-64-pc/5654926
This is undoubtedly correct but, as always, statistics don't always tell the full story.
Like unemployment - even if you only work one hour per week you are not included in the statistics.
Income figures are skewed by the rise in some very high income industries such as the FIFO mining workforce (vastly increased from 10 years ago) plus the huge multi-million salaries of some CEOs.
And earnings are only one side of the story. Income has increased but so have living expenses.
For many people wage rises have been minimal and have been outstripped by large rises in the cost of basic essentials such as power, water and the cost of housing.
Marg
Marc, the fact that I have repeatedly mentioned REAL wage increases and even put in plain English that it is after inflation is taken into account doesn't seem to have sunk in. Again, this is after inflation, ie those costs you just mentioned, have been taken I to account. Once again I'm afraid your opinion is factually incorrect.
This has zero to do with my fishbowl, I'm not inserting my opinion anywhere.
This has zero to do with my fishbowl, I'm not inserting my opinion anywhere.
@ Bayview: what you said is probably right. That's why choosing where to buy becomes so much more important.
And hasn't recent price growth reflected that? The price drivers have all come from the inner east, outer east, south east, inner city. The north and especially the west have struggled which reflects what you're saying.
Generally, I have no doubt we'd see a peak in the next 24 months and in 2016 people will be talking about those people who overpaid a year earlier. But come 2020, when the city has grown by another half a million people minimum if not more, we'll probably look back and wonder why those $1.5m houses in Parkville and South Yarra seemed so cheap.
But point taken, growth will stagnate for a while and dip backwards like 2012, like every cycle. In the meantime, I'm eyeing some much more interesting opportunities offshore that's much more low risk, much more metropolitan than Sydney combined with Melbourne and Brisbane, and potentially returning 20%+.
And hasn't recent price growth reflected that? The price drivers have all come from the inner east, outer east, south east, inner city. The north and especially the west have struggled which reflects what you're saying.
Generally, I have no doubt we'd see a peak in the next 24 months and in 2016 people will be talking about those people who overpaid a year earlier. But come 2020, when the city has grown by another half a million people minimum if not more, we'll probably look back and wonder why those $1.5m houses in Parkville and South Yarra seemed so cheap.
But point taken, growth will stagnate for a while and dip backwards like 2012, like every cycle. In the meantime, I'm eyeing some much more interesting opportunities offshore that's much more low risk, much more metropolitan than Sydney combined with Melbourne and Brisbane, and potentially returning 20%+.
yes real earnings have increased, but a decade is such a small time frame in the whole scheme of things.
To what does that proportion to political parties?
To what does that proportion to the link between productivity and wages?
To what does that proportion to union bargaining power?
To what does that proportion to the increase to the fact that Australia has low government debt levels?
There are so many variables and so many sub-equations.
Refer to the graph on the previous page - real wages have increased since the early 1990's (after having fallen a bit in the 1980's, somewhat ironically mostly as a result of Bob Hawke's Prices and Incomes Accord).
It's quite a strong link I think you will find.
Well after 7 and a bit years of almost no microeconomic reform under Malcolm Fraser, Bob Hawke and Paul Keating came to power in March 1983 and pursued a rather aggressive reform agenda.
The floating of the dollar
The Accord (Accord Mk VII included Enterprise Bargaining provisions)
Tariff cuts
Financial deregulation
Privatisations, etc
Howard and Costello bought in their own agenda in 1996.
But it all starts with the ALP in 1983 imo.
Look at it this way - no government can force increased productivity upon the Australian economy (not in our system of democracy anyway, I just couldn't see the voting public wearing it) - but they can create a set of conditions in which increased productivity can occur - and that is what happened under Hawke/Keating and Howard/Costello.
It's well known that unions have been a declining force in Australia for many years.
But as I said, even when their mate RLJH was in The Lodge - real wages fell (so arguably when they were at their most powerful in recent years - real wages fell).
Imo that is a bit of an economic red herring.
It could be argued that it buys the government choices (more flexibility with regards to economic policy) - but I see low government debt more as a by-product of a productive economy, not a precursor to it.
Sure, you can over complicate these things though.
But, for the most part, it comes down to the following quote, which is the opening line from the summary of a RBA research paper -
"In the medium to long run, the growth of real income depends largely on productivity growth."
Source: Patrick D'Arcy and Linus Gustafsson, "Australia's Productivity Performance and Real Incomes", RBA Bulletin, June 2012.
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It has sunken in; and I asked you to explain "Why?" most folks living their life will not agree with you...
And you still have not come up with one opinion or even seem to acknowledge that folks are hurting out there.
Do you ever get to go out and mix it with the Mr. Joe Thongs and hear what their lives are about and how they are traveling?
Or speak to various Business owners and ask how they are traveling? And not just little Mum and Dad joints like mine either.
This is my perspective. The real perspective. This is what I see, and what I hear.
There's not much value in saying that real wage increases when the bottom line is folks are not improving their spending power at the coal face.
That is where a referral to Stats falls down. It is the same mistake that economists and Pollies usually make and forget to see what is actually happening to folks around the Country.
There are so may factors other than just a couple of examples such as the golf industry and the automotive industry...
Unemployment is rising. Another factor. But the Stats say it is only a little bit. The reality is many folks have lost jobs and are now in less hours/casual or had their existing hours cut etc. The Stat doesn't cover that.
Just today one of our customers told me his daughter's BF was recently out of his sparky apprenticeship (on of the lucky ones who can actually get an apprenticeship it seems).
He is having a lot of trouble finding work right now apparently. Another factor.
Ask how many builders and trade firms are hiring more workers. Maybe a few right now because the cheap finance has caused a bit of excitement, but most of the blokes I talk to are travelling far and wide chasing work.
The stats you use don't cover these things in a practical day to day life for the majority.
Why is all this so, if real wages have increased?
Maybe they are spending this extra dough; but only on things like restaurants (as China pointed out a few weeks ago; they're all full at his corner of the world apparently), or maybe on new cars with low/no interest finance.
That was out of control when I was in the USA - folks spending 105% of their income, and car sales through the roof due to no interest finance...right before the GFC.
Still waiting for your opinion....
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