Values-led capitalism lasted a fortnight. Now Jim’s batting for bankers — again

So that values-led capitalism didn’t last long, did it? Copies of The Monthly containing Treasurer Jim Chalmers’ essay (“Jimbonomics: A Grundrisse“) are still in the shops, together with its arts section on the touring Bratislava Shakespeare Throat Singing Ensemble, so hurry on down.

But the commitment to capitalism working for the people? Well, that got cancelled when RBA governor Philip Lowe raised the interest rate, and Jimbo and co grunted and motioned for him to carry on. 

The fault lies not in Lowe’s actions per se — very per and very se in this case. If you’re going to try to slow an economy for which every possible lever of control has been ripped out, you don’t have much choice but to keep raising interest rates until inflation starts to slow. (My younger readers will recall the great Bruce Petty cartoon from the time of 17% interest rates, set in an old railway signals box, with Ralph Willis, then finance minister, I think, as the harried stationmaster answering a call from Paul Keating with the speech bubble: “What other lever, Paul?” Before him, all but one of the box’s levers have been snapped off. My older readers will recall the Hindenburg crashing.) 

Australia’s interest rates are not as high as comparable countries: the UK is on 4% and the US on 4.5%. But we’ll get there. What other countries don’t have to quite a widespread degree is a combination of a ludicrous housing bubble on every kind of property, a policy of encouraging people to see property as their main investment, households running on debt, and a commitment to creating ever more instruments whereby household debt can be run up.

We are the country that gave the world Afterpay, and the Atlassian dude who paid what in memory seems like $50 million for a shed with a Sydney Harbour view. Our housing finance sector wasn’t cleaned out in the way the US one was after the 2007-08 crash, so we may be a leeetle more exposed to a very sudden ka-chunk moment than many other OECD countries. 

So was this latest crunch an opportunity for Chalmers to say this was exactly what he was talking about — that the Reserve Bank has to do what it has to do, but we have to look at parallel ways to steer the economy, make more capital and affordable housing stock available, and direct superfunds to socially useful investment as an “impactful” measure?

Not to Jim’s way of thinking. He has spent the week grimly enforcing that capitalism is not “values-led” but capital-led, by capital’s holders, which are the banks. He was on RN Breakfast last week — between Warwick Hadfield’s spoken-word sports act and some music I don’t like — as part of a hell of a double-act. Chalmers was first on, grimly enforcing “the RBA makes the decisions” mantra under repeated questioning, and was followed by Anna Bligh, former Labor premier of Queensland and now head of the Australian Banking Association (ABA), telling Patricia Karvelas repeatedly that the system works well for ordinary Australians. (Bligh got much tougher questioning on Nine than the ABC. Sadly, watching the interview, that seems less to do with forensic intensity than basic sexism, directed at the only woman on the banking frontline. Sigh.)

Two days after the rate hike, Lowe went to a briefing meeting with investment bank Barrenjoey, which may well be the sort of thing that central bankers do, but looked a lot like he was reporting back to the people who really run the economy and receiving further instructions (which for the record, I do not believe he was doing. Phil will most likely have a lot of time on his hands in a few months’ time, so…).

You know, in all this, it’s the rusted-on Laborites I feel sorry for. They’ve had a tough time since the election, and to have the treasurer dangle the idea of “values capitalism” and “impactful investment”, and then fall into lockstep with the RBA and the ABA, might be a bit too much for them. Your correspondent noted, in remarking on a paragraph in Jim’s Jimbonomics essay about his home town of Logan — that its decades-long deprivation and underfunding was an exciting opportunity! — that post-Parliament he won’t be spending too much time there, and would probably move on to, you know, the ABA or something.

Having present and possible future Labor-originated bank spinners appear together is probably not a good look. For the rusteds, it’s a kick in the head from the Doc Martens that RBA assistant governor Luci Ellis used to wear during her post-punk days in Melbourne Uni student politics. Yes, I hear what you’re saying, rusteds! “This isn’t Jimbonomics! it’s Jimbochess! He plays the four-dimensional version!”

Yes, by now it’s clear to everyone that Lowe has been put in the frame for all the pain that large-mortgage-holders will be feeling at the moment. We hope it’s clear to him. It’s looking extremely likely, as far as his RBA future goes, that, well, the joey is barren. After the RBA has been skinned and made into souvenir pencil cases at the impending review, the likely next move is the government will announce a series of measures to find impactful investment and targeted capital, to, well, um…

You can see its problem. Through Jimbo Thought, the Albanese government has made it clear that it will not be interfering with the operation of capital, simply finding new “values-originated” sources of it to fill in the gaps where rapacious carpetbaggers (i.e. capital) do not want to go. But the imminent problem is not underinvestment and underemployment in people’s lives. It’s that they paid a million bucks for a concrete McMansion with no garden, mildew from the aircon, and a two-hour commute to work, in a suburb whose town centre is the Dan Murphy car park, and now they can’t afford to pay for even this, at the same time as its value is falling. 

For the Reserve Bank, the wreck of such people’s lives and hopes can be written off as the inevitable collateral damage of readjustment. For the Albanese government, it is a bit more of a political problem. These are the people, in 20 or so outer suburban seats around the country, whose votes Labor must keep a fair slice of, to retain or grow what is, in absolute terms, a pitiful two-seat majority. These are the voters Labor signed up, and reaffirmed they would honour the stage three tax cuts for (even if it barely directly benefits from them). These are the voters Labor hopes will believe it when it says it’s the RBA’s fault. 

But to do that, Labor has to play the “capital is capital” card. Less than a month after launching Jimbo Thought about a revolution in capitalism, the government is creeping into all meeja to say there’s nothing it can do about it, and its former leaders are going all out to defend the banks. What a great look for transformative Labor.

This represents another chance for the Coalition to get back in the game, and probably its best one to date. Hence Peter Dutton’s sudden pivot from culture wars to the exact opposite: a gruesome, toad-eating performance of apologising at the dispatch box, for walking out on Kevin Rudd’s Stolen Generations apology 15 years ago. The unctuous abasement of the act was the point, of course. As Peta, Rowan, Rita and the rest of the Sky As Dark AF crew go into conniptions about how only a Coalition devoted to restoring the Savoyard monarchy can win back Mill Park, Dutton is clearing the decks for the Aston byelection. 

With a woman candidate and a strong household economic agenda, it will be an experiment to see how much it can regain of the 10% margin it once enjoyed in that seat (now sitting at 2.8%). That depends on whether it is willing to essay a bit of economic populism and talk about more than budget cutting. If it does, and if the swing back is significant, Labor will need to make sure its jowlier MHRs take a walk and a vegetable occasionally, and avoid byelections.

The teals will also have to develop a more visible line on monetary and fiscal policy. Nothing like the prospect of losing the crappy, truly ludicrously overpriced flat you bought in Malvern to concentrate the mind of someone who voted to save the planet. And to wonder what your much better off MHR thinks about it. 

Still, for extra points, the Aston Liberal committee might screw things up by preselecting the only bloke standing for the seat, and you just know it’ll probably do it. But it will be a brief respite for Labor. As Ross Gittins has noted, the whole idea that monetary policy should be the means by which the economy is heated or cooled is a product of 1980s neoliberal cultism, and the current desire of politicians to avoid responsibility. Labor is desperate to maintain its non-interventionist image, at the very time that more specific and targeted state intervention is required. 

So Labor might have to do something sooner than it wants to. It’s one thing to be a responsible, prudent, McKellite, blah blah Labor government. It’s quite another to decide that that is best done by being the front line for the defence of the finance sector.

So much for “values-led” capitalism. Shareholder value-led capitalism is back like it never went away. The joey is barren, Jim. The joey won’t jump. (Votre bebe kangorou ne sauterez pas.) What other tricks you got in your pouch?