[Australian Treasurer Jim Chalmers plans for us to] embrace an Australian form of socialism which Chalmers calls “value based capitalism” and says it will be “uniquely Australian”.
Markets will be horrified but, at least initially, it will be popular with many Australians.
Inflation here we come:
An important step will be to “renovate” the Reserve Bank. … Chalmers, in his article, refers to his electorate of Logan, which is an outer suburb of Brisbane that includes many lower income people who undertook considerable borrowings to build new houses on the basis of continued low interest rates.
A government priority is higher wages. It is clearly possible that the agenda of the “renovated” Reserve Bank to reduce inflation to 2 per cent via higher interest rates may be modified. …
Stagnation here we come:
Those that don’t fit the government model will find it much harder to gain capital. Then comes “impact” investing looking at a social purpose economy in areas like aged care, education and disability but broadening to other areas of government policy. …
The government doesn’t want new gas projects and so ignores the immense onshore gas reserves in Victoria, makes it hard for the NSW Narrabri deposit and frightened off investment in Queensland’s Surat basin.
The government policy is to put a price cap on energy, undertake subsidisation and convert potential export sales into local supply. This formula may be applied to other mineral areas. South American countries pursuing socialism usually get into trouble because markets trash their currency. …
Allocating capital according to politics rather than market returns pretty much guarantees stagnation. The groups getting the capital become powerful and then have the resources to bend the political system to keep the capital flowing to them and not any potential competitors. Result: less competition and less innovation.
Despite his stated intentions, Chalmers is re-introducing the system of an economy run by well-connected mates, for well-connected mates. “Socialism with Australian characteristics,” but really the same as every other socialist regime.
But Australia might get away with it for a few decades, like Saudi Arabia:
Traditionalists in the business community will immediately conclude that the whole thing will blow up in the ALP’s face and the coalition will be back in power in no time.
But that assumption may be wrong because it ignores the amazing situation off 2023 Australia. Our exports of minerals and many areas of agriculture are booming, and the boom looks like continuing.
Australia may have years of prosperity ahead, providing the government with a trade revenue base to undertake its new model.
There are not many countries in a similar situation to Australia. Perhaps the nearest is Saudi Arabia, where there is high revenue and a very socialistic state with strong government investment policies.
Superfunds, unions, and government contracts provide the muscle:
Saudi sometimes uses force to implement its policies but, thanks to Paul Keating, the Australian government has a different, but nevertheless powerful tool, to influence capital markets.
Workers around the land are putting vast sums into industry superannuation funds, and these funds are controlled by unions and compliant employer organisations. They are already moving in behind the government agenda and its values.
Accordingly, those companies that don’t adhere to the government environmental guidelines will find it difficult to raise both loan and equity capital. …
Government contracts are an important part of the revenue of a great many Australian enterprises. Companies that don’t adhere to a socialistic government line fear they will soon find they will not get those contracts.
Already business organisations are taking stands on issues where they normally would not become involved. They understand that and need to be on side with the government is far more important in an administration that follows a socialistic agenda rather than one which is based on the market economy. …
Labor in control everywhere:
With the Greens, the government effectively controls the Senate and, if the NSW opinion polls are right, the ALP will soon control every mainland state and territory. No government in our history has such unfettered power to institute change.
The new left now controls the media, bureaucracy, academia, and all elected governments in Australia.
Australia has quietly become a one-party state, as those at the top all merge into one party. This will become obvious eventually as disputes develop between those at the top and large segments of “everybody else.” The ones at the top will become too greedy and take too much, without competition to tame them.