Thursday, November 24, 2022

An engineered recession is class warfare

The Reserve Bank has just come out and admitted that they are engineering a recession to protect the rich:

The Reserve Bank is deliberately engineering a recession to reign back inflation after being slow to raise interest rates, Reserve Bank governor Adrian Orr admitted to a select committee on Thursday.

But he forecast the 1% decline in the economy that the central bank is forecasting could be “job rich” and said the country was relatively well-positioned internationally.

The Reserve Bank raised the official cash rate by 75 basis points to 4.25% on Wednesday and surprised economists by forecasting the rate would peak at 5.5% next year while also predicting a further rise in inflation and a year-long recession beginning in April.

The bank forecast that official unemployment would climb to 5.7% in 2025, from 3.3% currently.

And all of this to keep wages low and prevent the wealth of the rich being eroded at a slightly faster rate. What else should we call it but class warfare?

Recessions have consequences. The IMF goes into some of them here. People lose their jobs and livelihoods, children lose their futures. In addition to the bankruptcies and suicides, there's a general reduced life expectancy for the victims, and poorer educational outcomes (and so reduced lifetime outcomes) for their children. This is what Adrian Orr has chosen. This is what he is inflicting on us. Every business failure, every bankruptcy, every suicide will be his fault. And we should hold him accountable for it.

But we also need to hold accountable the politicians who have enabled him to commit this awful crime, while washing their hands of the consequences in the name of "reserve bank independence". Because there are other ways to reduce demand in the economy, which don't involve throwing people onto the bonfire to satisfy the greed of the rich. We could for example tax away the excess corporate profits which are driving inflation. Or raise income taxes on the rich to soak up excess demand. Or tax wealth directly. Instead, our political class - and both major parties are guilty here - have chosen for the last thirty years to make ordinary people pay the price. Like I said, its class warfare, by the rich and their politicians (who are also rich) against the rest of us. And we should not accept it.