Is Platform Capitalism Killing Liberal Democracy?

To paraphrase John Philpot Curran (1750-1817): The price of liberty is eternal vigilance; which if broken, the consequence is eternal servitude.

Liberal democracies are relatively new, only forming in the last 250 – 300 years. Prior to the formation of Western democracies, with British Parliament (1707), United States of America independence (1776), and the French Third Republic (1870), around the world, we lived in systems that were, for the most, undemocratic. There have been many alternatives to liberal democracy and the (near) free market the West has prospered from, Feudalism, Socialism, and Authoritarianism to name a few. 

But there exist threats from within liberal democracies. Over the last four decades the West has changed (McCulley 2020), wealth is once again concentrated in the hands of a few. In 2018, the world’s billionaires increased their wealth by $900bn or $2.5bn a day, whereas the poorest half of the world’s population, 3.8 billion people, became poorer – their wealth decreasing by 11% (Oxfam 2019).

Capitalism itself is undemocratic, McCulley (2020), describes capitalism’s ‘dark underbelly’, unravelling democracy from within, the two in perpetual fight. The democratic system worked so well to educate the population, and elevated so many out of peasantry and servitude. Unlike democracy’s one-person one-vote system, capitalism has a cumulative voting system, where the more dollars someone has, the more votes they get (McCulley 2005). 

Srnicek (2016), suggested this growing inequality of wealth is a function of Platform Capitalism – a new phase of capitalism, affecting all aspects of our lives and the foundations of democracy. The rise of Platform Capitalism, which Srnicek (2016) describes as online platforms, exemplified by Facebook, Apple, Amazon, Netflix, Google and Spotify (FAANGS), is perhaps one of the greatest homegrown threats to democracy. 

Platform Capitalists are in essence uncompetitive, having more in common with monopolistic behaviour than Walrusian (Walrus (1874–1877) 2003) free markets and perfect competition (Modigliani and Miller 1958; Edward 2020; McCulley 2005). Platform Capitalists demonstrate authoritarian management by segmenting and outsourcing labour (Edward 2020). If left unchecked, Platform Capitalists will further undermine civil liberties and personal freedoms, putting increased pressure on democracy.

The last four decades have seen a pivot to power of capital over labour, immensely widening inequality (McCulley 2020). The world’s richest 26 individuals now possess the wealth of the poorest half of humanity (Oxfam 2019).  Platform Capitalism is accelerating inequality. Under Platform Capitalism there is a fragmentation of labour, divided into core and peripheral workers (Thelen 2019 cited in Edward 2020). Core workers are paid well with excellent benefits, while peripheral workers are hired as freelancers so management can avoid contractual obligations and pay wages on a piece-meal basis to minimise cost of labour (Edward 2020). While the share of profits labour receives is diminished, company founders have become some of the world’s richest and most powerful people, often through monopolistic tools such as dual class shares (DCS) (Edward 2020).

Cant (2020, cited in Edward 2020) describes Platform Capitalism’s management style as authoritarian, where apps issue customer demands as commands. By design, there is information asymmetry between the workers and management (Ibid). Peripheral workers are deskilled, as objectives are neatly divided into observable, monitorable tasks (Edward 2020).

Workers’ ability to take part in determining their rights and pay is diminished, with no room for negotiation within Platform apps (Gandini 2019 cited in Edward 2020; Edward 2020). The authoritarian nature of Platform Capitalism is not limited to interaction with workers – DCS allow founders to have authoritarian rule over the entire company (eg. Edward 2020; Wagner and Dwyer 2019).  The prevalence of Platform Capitalist’s use of DCS means founders may own less shares, but have more votes, running their companies with little interference from other shareholders (Edward 2020; Wagner and Dwyer 2019). 

Analysis of law shows that technology will not on its own lead to freedom and equal societies (Brancaccio 2019).  Even if marginal cost becomes zero, because of “appropriation” and “enclosure” of collective knowledge by Platform Capitalists who, similar to colonialists, appropriated data produced by humanity, claiming ownership by enclosing it within their platforms (Brancaccio 2019). Platform Capital has essentially appropriated “the common” to extract wealth, and the only way to rectify this inequality is regulation through societies law on what can be private property and what is common property (Brancaccio 2019).  Increased regulation of Platforms is the only way to curb unfavourable aspects and decrease market power. Perhaps best through government legislation breaking up the largest Platforms. 

Reference

Botsman, Rachel. 2017. Who Can You Trust? : How Technology Brought Us Together : and Why It Might Drive Us Apart. London: Portfolio Penguin.

Brancaccio, Francesco. 2019. “Appropriation, Common Property, the Inappropriable: Notes on the Law of the Common in Platform Capitalism.” The South Atlantic Quarterly (Duke University Press). 118 (4): 857-876.

Edward, Webster. 2020. “The Uberisation of work: the challenge of regulating platform capitalism. A commentary.” International Review of Applied Economics. 34 (4): 512-521.

McCulley, Paul. 2005. “History Lessons for 21st Century Investment Managers.” Financial Analysts Journal. 61 (2): 19-24.

McCulley, Paul, interview by Joe Weisenthal and Tracey Alloway. 2020. “Paul McCulley: We are “Unambiguously” On the Verge Of A Profound Change In the Economy.” Odd Lots. Bloomberg Markets, (3 September).

Modigliani, Franco, and Merton H. Miller. 1958. “The Cost of Capital, Corporation Finance and the Theory of Investment.” The American Economic Review. (AmericanEconomic Association). 48 (3): 261-297. 

Oxfam. 2019. “Public Good or Private Wealth, summary report, English.” Accessed September 23, 2020. https://oxfam.app.box.com/s/f9meuz1jrd9e1xrkrq59e37tpoppqup0/file/38557940196.

Srnicek, Nick. 2016. Platform Capitalism. Cambridge: Polity Press.

Wagner, Kurt, and Paula Dwyer. 2019. At Facebook’s Shareholder Meeting, a Challenge to Zuckerberg’s Power is Already Doomed. 28 May. Accessed September 24, 2020. https://www.bloomberg.com/news/articles/2019-05-28/at-facebook-s-shareholdermeeting-a-challenge-to-zuckerberg-s-power-is-already-doomed.

Walrus, Leon. (1874–1877) 2003. Elements of pure economics, or, The theory of social wealth. (Éléments d’économie politique pure). Translated by William Jaffé. Reprint. Routledge. London.

Alternative Money: The Wooden Dollar.

“Sometimes, money. Just. Stops” said Warren Buffet, billionaire investor, in May at the Berkshire Hathaway Annual Shareholders meeting.   The phrase “money stopping” refers to ceasing of trading of money for goods and services between people.  Effectively the flow of money dries up, much like water in a drought.  This is what happens in recessions and depressions of the economy.   Money.  Just.  Stops.  

This year, nations around the world have been plunged into recession due to the pandemic — but recessions hit some cities and regions harder than others (Day and Jenner 2020).  In countries like Australia and the United States, small towns can be most affected (Lawrence 1982).  I should know, I grew up in a small country town in Australia during the 1990s recession. 

With many people out of work, residents stop spending — putting pressure on local businesses to close (Fishback, Haines, and Kantor 2007 cited in Fishback 2012).  Local businesses are crucial for employment in a small town, especially if the town is relatively isolated (Lawrence 1982).  Consumer spending is a vital part of our economy, typically making up about 55% of the total economy in Australia and 60% in the United States (CEIC Data 2020).  If consumers don’t spend — businesses close — end of story. 

During the Great Depression the federal and state governments in Australia and the US offered relief funds (Fishback 2012), but relief can be difficult for some local governments to access.  What if there was something we could do to prevent “money stopping”?  In the onset of a recession or depression — could a town just print its own money?

During the Great Depression of the 1930s, one town in the United States came up with a novel solution to this problem.  That town was Tenino, Washington: estimated population 1865 (United States Census Bureau 2020).  Small towns like Tenino cannot issue federal currency, that is they can’t issue United States Dollars  —  but there is nothing legally stopping them from issuing their own local currency — and so, in 1931 the “Wooden Dollar” was born. 

Photo: One printed Tenino “wooden” W$25 dollars exchangeable for $25 US (City of Tenino).

Tenino is a relatively isolated town in between Portland and Seattle.  According to the Mayor Wayne Fournier (interviewed on Bloomberg’s Odd Lots 2020) when the 2020 pandemic hit, for about 3 months, people, cars, and traffic disappeared from the local streets.  Shops in town closed their doors, and there was almost no economic activity in the town other than the local supermarket.

Ingeniously, the Mayor decided to bring back the wooden dollar to inject a flow of money into to the town.  Wooden dollars (W$) were circulated by the local government, who gave W$300 to each negatively affected town resident.  Wooden dollars can only be used as currency in participating local businesses, so the benefit of the extra cash stays in the town.  If the local government had just given US $300 to citizens, much of it might have been spent online, and not helped the local economy.  Restrictions on the Tenino dollar mean it can’t be used to pay for alcohol, gambling, cannabis, or lottery tickets. 

The residents of Tenino have taken up the wooden dollar enthusiastically, some Tenino businesses offer twice as many goods for Tenino dollars as they would for US dollars (Fournier 2020).  The mayor believes there may be a future for Tenino dollars in the town post COVID-19 (Fournier 2020).  The city of Tenino is liable for the wooden dollars it prints; however, it will not pay more than US $1 for a wooden dollar (Fournier 2020).    A peg on the exchange rate of the Tenino dollar for US dollars limits the liability and risk on the local authority.

Photo: One printed Tenino “wooden” W$25 dollars exchangeable for $25 US (City of Tenino).

The wooden dollars were printed using the original printing machine from the 1890s, used to print the first wooden dollars in the 1930s (Fournier 2020).  The press had been housed at a local museum for almost a century (Fournier 2020). 

Since the Great depression various forms of wooden dollar have been used around the world both in good times such as the ‘Ithaca Hour’ in New York (Meckley 2015, Rietz 2019), and in times of crisis, such as Argentina in 2001 – 2002 (Colacelli and Blackburn 2009).  My hometown of Maleny created its own local currency called ‘Bunyas’ in 1987.  Community Exchange System (2020) stated there are a total of 38 local exchange groups operating in Australia.  Exchange trading systems are particularly useful for people who are unemployed, underemployed, self-employed, or retired (Sunshine Coast LETS n.d.). 

Australian politician Peter Baldwin, Keating Government Social Security minister, encouraged the use of exchange systems like ‘wooden’ dollars because they allow unemployed people to borrow to make purchases or to start their own businesses (Wilson 2015).  In Argentina alternative currency use was found to increase monthly income by over 15% (Colacelli and Blackburn 2009).  Just like conventional income, taxes apply to income earned through exchange systems (Australian Taxation Office 2020).  As Milton Friedman says, there is no such thing as a free lunch.

References

Australian Taxation Office. 2020. “Bartering and trade exchanges”. Accessed 8 September 2020. https://www.ato.gov.au/Business/GST/In-detail/Rules-for-specific-transactions/Barter-and-trade-exchanges/

CEIC Data. 2020. Australia Private Consumption: % of GDP 1959 – 2020 | Quarterly | % | CEIC Data . Accessed November 17, 2020. https://www.ceicdata.com/en/indicator/australia/private-consumption–of-nominal-gdp.

–  . 2020. United States Private Consumption: % of GDP 1947 – 2020 | Quarterly | % | CEIC Data . Accessed November 17, 2020. https://www.ceicdata.com/en/indicator/united-states/private-consumption–of-nominal-gdp.

Colacelli, Mariana, and David J.H. Blackburn. 2009. “Secondary currency:Anempiricalanalysis.” Journal of Monetary Economics 56 (3): 295-308.

Day, Iris, and Keaton Jenner. 2020. Labour Market Persistence from Recessions. September 17. Accessed November 17, 2020. https://www.rba.gov.au/publications/bulletin/2020/sep/labour-market-persistence-from-recessions.html.

Fishback, Price V. 2012. “Relief During the Great Depression in Australia and America.” Australian Economic History Review 52 (3): 221 – 249.

Fournier, Wayne, interview by Joe Weisenthal and Tracey Alloway. 2020. “Meet The Mayor Who Printed His Own Currency To Fight The Virus.” Odd Lots. Bloomberg Markets, (20 July).

Lawrence, Geoffrey. 1982. “Rural unemployment in Australia: orthodox and radical perspectives.” Journal of Australian Political Economy 11 : 59-72.

Meckley, Faith. 2015. “New local currency offers Ithaca another alternative” The Ithacan, April 15, 2015. Accessed 18 November 2020. https://theithacan.org/news/new-local-currency-offers-ithaca-another-alternative-currency/.

Rietz, Justin. 2019. “Secondary currency acceptance: Experimental evidence with a dual currency search model.” Journal of Economic Behavior and Organization 166: 403–431.

Sunshine Coast LETS. What is LETS. Accessed September 8, 2020. https://sunshinecoastlets.weebly.com/what-is-lets.html.

United States Census Bureau. 2020. “City and Town Population Totals: 2010-2019, Incorporated Places: 2010 to 2019.” United States Census Bureau. May 7. Accessed November 17, 2020. https://www.census.gov/data/tables/time-series/demo/popest/2010s-total-cities-and-towns.html.

Wilson, David. 2015. “A cashless economy? Where’s the catch? .” The Sydney Morning Herald, July 30, 2015. Accessed 3 September 2020. https://www.smh.com.au/money/saving/a-cashless-economy-wheres-the-catch-20150730-gingrc.html.

An uncomfortable topic: Class and inequality in Australia

Diversity and inclusion is a class issue – even in Australia

My thoughts after reading the article ‘Diversity and inclusion is a class issue – even in Australia’.

I think class and inequality in Australia is a really important issue.  When I was in my senior years of high school my family fell on hard times and became socially and economically disadvantaged.  I grew up on a small farm in rural Queensland, and although we were not rich, I never really felt poor, because our family was well established and we had so much space and always had enough food.  When my parents separated, my father became a sole parent.  We stayed on the farm for a few years, but as my parents interactions took a turn for the worse, and started to involve lawyers and property settlements, the dispute over finances meant he felt we needed to move away from the farm.

First my father took my sister and I to the Netherlands, which is where he was born.  We lived there for around 8 -9 months, we were meant to go for 12 months, but by the time we reached the end 8 months it had become apparent that we were hemorrhaging money and would not be able to sustain ourselves any longer.  My father took a job in a factory, but he quit shortly after because he didn’t feel secure, and thought they might not pay him, he also thought the OH&S there was terrible and he might die of a lung disease if he stayed due to the fibres in the air.  My father thought we could not return to the farm, and the only person he though might be able to help us was his sister who lived in Sydney.  We arrived at my aunts house shortly after and stayed with her for a few months while dad tried to find a suitable apartment in Sydney.

Many of the apartments in our price range had mold on the walls or only one bedroom, or were in unsafe neighborhoods, so it took him some time to find a place for us. We always struggled with having enough money in Sydney.  Buying enough food to eat was a difficulty.  My father did as well as he could putting healthy food on the table, but there was a definite lack of things like fresh juice, and a variety of fruit.  There were little to no sweets, like biscuits or ice cream.  No frills at all.  I remember not having enough money to buy things like new underwear or even a bra. I remember wearing singlets because I couldn’t afford to buy a bra and being 16 and worrying they might be see-through.  I remember getting really upset one day about it and yelling so loud to my father about it that my neighbor heard.  The next day, my neighbor Cynthia, a woman with a beautiful heart, gave my sister and me a bag of her daughters old clothes — I was eternally grateful for her kindness.  I felt so guilty for yelling …  I felt undeserving.  I knew that I should not have been so angry over something so out of our control.  I was a teenager, I was anxious … stressed.  Overwhelmed.   I never let myself yell angrily about not having enough again.  If I felt angry, I would allow that feeling, but I would reflect on it, and not let it negatively impact others if I possibly could.

By this time I had missed over 2 years of formal education.  I enrolled in the local state high school, and they kindly turned a blind eye to my lack of school report cards and paperwork.  We literally had nothing.  We packed a suitcase of clothing each when we moved to The Netherlands, thinking it was a lengthy vacation and not a permanent move.  No one had thought we might need report cards.  I hadn’t been attending school for much of the 2 years mainly due to bullying in Queensland, and then later in The Netherlands my father not being able to afford school fees.

Photo: A photo I took at the sandcastle competition at the famous pier at Scheveningen, The Hague, The Netherlands (c. 2001).

I was admitted to The University of Sydney on a social equity scheme called the Broadway Scheme.  Despite The University’s elite reputation, The University of Sydney was founded upon the principle of being an equitable institution for all, where people could be offered a place based on academic merit and not their parents bank account.  At that time about 5% of students were quietly admitted via the Broadway Scheme.  It was a great opportunity of which I am thankful.  The only downfall of it was that once I was in I was very much on my own. There was no network for students in the scheme or extra support.  I  had to manage to buy things like expensive text books (there were no ‘free’ PDFs or virtual bookshelf hire options online back then), pay mandatory student union and sports fees , which were very expensive (at that time about AU$700 a year at Sydney Uni), find access to a computer in the library to access my course content (I didn’t have the internet at home).

I remember asking my chemistry lecturer if he could put the lectures on a disc for me.  He was a great lecturer, but an old and grumpy guy, and kind of put out by my request — but he did it for me.  I got a disc of files.  He said something along the lines of ‘I am only doing this once —  so don’t loose it’.  Because I didn’t have the internet at home, I was often behind on things like online pre-lab quizzes if I couldn’t get to the library to do them, so I let a lot of marks just slide because it was hard to stay back late after 5 pm to go to the library after class.  Some nights I would stay at the library until 10 pm, but I felt safer studying at home.  In the first year it was okay because I was still living with my father.  But after he moved back to Queensland, I felt abandoned.  I was really on my own, surviving on Youth Allowance as a full time engineering student.  The coursework was intense, long contact hours, and I did about 5 hours a night homework.  I was exhausted and didn’t feel I could also work.  I struggled to eat enough.  I had a flat mate but money was definitely a lot tighter.  Probably a factor in this is that the cost of living had increased, but Youth Allowance hadn’t.  I previously wrote a post on how difficult it is to survive on Youth Allowance as a full-time student.  Post available here: Affordable accommodation for disadvantaged university students?.  Back then I was always hungry, it was hard to afford enough food to eat.  I was used to being hungry.  It was not until I was more financially secure that I realised … all those years … that gnawing ache in my stomach — was hunger.

I wasn’t close with my aunt, who by that stage had re-married, and I didn’t feel I could go to her for help.  I knew my parents didn’t have the money to help me out — so I just persevered and struggled on.  When I turned 18, I had inherited a small amount of money, about $2000, from my great aunt.  I had saved it for university expenses, and I used up almost all that money on purchasing my course materials, and the fees I had to pay to the union and the sports centre.  I remember feeling so upset about the university sport fees, because even after paying about $250 – $300 a year to them I wasn’t allowed to use the gym or anything like that … it really was fee for no service.  I felt robbed of the small amount of money that I had.

Photo: My friend Vicky (left) and me (right) when we were first year Engineering students at The University of Sydney (c. 2004).

I remember I realised at one point I needed to work if I was going to survive.  I once had a job interview in Bondi, but on the day I couldn’t go to the interview because I literally couldn’t afford the bus ticket.  I had no money at all.  On the day of the interview, I had taken the train to Bondi Junction, I got off the train and went to catch the bus to Bondi Beach to the shop where the interview was. I saw I had no money in my wallet.  I went to the ATM and did not have enough money to make the minimum withdrawal of $20.  I remember trying to make a phone call from a payphone to let them know I couldn’t attend, but I didn’t have 50 cents.  By that time I was 30 minutes late for the interview.  I gave up and went home in tears.

I think a lot of people don’t even think of something like being able to afford enough food, to make a phone call, buy a bus ticket, or access the internet at home.  Australia has just shifted so much in the last 20 years and left so many people behind.

So much of finding a job in Australia is about not only having the skills and knowledge — but knowing the right people and networking.  What many people of privilege or even moderate wealth don’t realise, is that it is also about having the economic and social resources available to find a job and attend a job interview.  People from disadvantaged backgrounds and circumstances just face so many more hurdles than the average person.  I feel it should be taken into account not only when getting into university with great schemes like Broadway, but also through support networks at university, and later in dignified support actually getting into work that is specialised for economically or socially disadvantaged students, perhaps run through partnerships between universities and TAFE careers centres and employers, or a dedicated government lead organisation partnered with employers, rather through Centrelink JobActive providers, which many of these students do not have access to on the Youth Allowance payment, and is not in my opinion set up for these students unique needs.

To Create Gender Equality in STEM Workplaces Must Change.

Source: ScienceMag.org. Data from the Third European Report on Science and Technology, 2003,http://www.dife.de/~mristow/2003EU_3rd_report.pdf

What can the disciplines of science, engineering and technology do to increase their female workforce and stop the well documented drop-off of women from the workforce over time?  In the fields of science and technology (STEM) the phenomenon of the so called Gender Scissors or “Jaws- of-Death” or “Scissors-of-Death” is widespread.  The Jaws-of-Death phenomenon is a measurement of male and female participation rates in the disciplines of science and engineering throughout their careers, measured by age.  Due to encouragement of young female students to study STEM subjects in high-school and increased enrollment of female students in STEM courses at university, the gender gap has closed significantly over recent years and almost closed completely in some sciences at this early career stage.  However looking into the future lives of female and male scientists and engineers, female participation rates drop off significantly in comparison to male participation rates.  The Jaws-of-Death graph blatantly shows the loss of women from the field of science and engineering as they age.  In scientific academia there is a marked difference between female and male participation rates, in the EU, only 33% of researchers are female and only 21% of top level academic roles were filled by women in 2015 (1).  In science and engineering the number of women in in top level positions is even scarcer at 13% in 2013 (1).

There are a number of reasons this may occur, but the most startlingly obvious reason is that these professions are not easy for women to stay and to excel.  There are a number of factors in these professions that affect women’s participation rates.  Much the way business is done in these professions means that the odds are stacked against women right from the start and opposing factors only increase against women as they age and try to progress in their careers.

This should not be seen as the fault of women but as a fault in the system. By loosing such large numbers of women from STEM or keeping women subjugated to lower positions due to the ingrained workings of a poor system, the system in place is in effect causing a “brain-drain”, a loss of potential, and a loss of economic benefit that would have been gained if those women were able to stay in STEM related work or to advance their careers.

So what are the major obstacles in the system that women have to overcome?  There are much documented and studied obstacles such as unconscious bias and the gender pay gap, but there are also more physical boundaries such as the availability of maternity leave and flexibility for employees in the workforce.  Business holds a lot of the cards when it comes to negotiating workers hours, and the fields of science and engineering have very low unionisation rates. Low unionisation means women will often be left to negotiate their contracts one on one with an employer, and they will be expected to offer similar hours of labour as male employees if they want to receive coveted roles or permanent positions.  Because of a desire by many women for flexibility, they are often forced by lack of choice and lack cooperation by employers into precarious part time contract and casual work.

The professions of scientist and engineer were male dominated occupations for centuries.  The fields have consequently developed into occupations where it is standard for employers to expect very long hours of work and high output.  Hours of work far past your standard 40 hour week. Many scientists and engineers work weekends as well as week days, and might work away from home for months on end.  As a consequence of this high benchmark for permanent positions, people who want flexibility have much lower bargaining power and much less chance of finding secure work.

There are a number of problems for women trying to work inside this construct. For starters, flexibility is very important for many women, and not just women who have or want to have children.  Many women require adequate recreation time to perform well, and don’t want to work more than 40 hours a week.  Women who are planning a family or have children want to be able to balance their family and work life without risking their career.  It is well known that many women feel they are forced out of STEM professions after having children.  In general, only women with a lot of additional support from their partners, family or already in well paid positions find it possible to stay in STEM after having children, and even then they often talk of it being a struggle.  When you talk to mothers who have been successful in science and technology, they have usually had very supportive husbands, partners or parents who were able to help a lot with children or have been able to afford nannies.  Women who don’t have support, which far out number those with sufficient support are the ones who drop out, and they are dropping out in huge numbers.

If the structure of work could be changed it would benefit not only women, but men who also suffer from being away from home and family for long periods.  For example, the field of academic science is highly competitive.  Scientific teams work long hours and are in metaphorical vicious and eternal competition with their scientific rivals to produce quality novel research and to produce it first.  Academic scientists compete with each other for accolades, for grants, for jobs and for recognition by their peers.  This has built an environment of extreme individual competitiveness where scientists often feel they cannot risk taking time off for fear of falling behind.  God knows, some team in the US or China might make the discovery first!  God forbid they might publish first!  Young academic scientists want to be the lead author, to gain the recognition they feel they deserve, to be Joe Blogs, et al. and not be one of the seemingly unrecognised and forgotten “et al.”, just a footnote at the end of a paper, a name no-one will ever remember.

Other reasons for leaving work in STEM are also commonly sighted, such as nepotism and “jobs for the boys” at higher management levels.  These problems could be addressed by stricter hiring criteria based on merit rather than favouritism, friendship networks or poor interview based character assessments.

I suggest that if the field of academic science could be completely restructured and more value put on people as a whole rather than on an individuals output, not only would women be able to stay in STEM, but the increased workforce and increased diversity would surely improve science.  This would mean a greater emphasis on a teams output rather than on individuals trying to outshine each other.  Increased availability of job share and flexibility so that two or three scientists could perform the work that one scientist working a 60 or 70 hour week currently performs.  A greater emphasis on sharing knowledge and working together as a group rather than on gaining individual recognition.

To achieve this a number of elements in science need to change, from the way scientists are hired to the flexibility afforded to scientists in the workforce, and the way that academic journals publish scientific papers and grants are distributed.  There needs to be is a greater focus on quality teams rather than bright stars. If everyone is chasing their Nobel Prize or equivalent, a situation of survival of the fittest arises and many bodies will be pushed aside.

How fitting that academic science has become a prime example of Darwinism.  But it doesn’t have to be this way. We can change. I read a sign recently that said in my loose translation from Dutch “Expecting change, without doing anything yourself is like waiting for a boat at a train station”.  We can make STEM work more accessible to women (and men) but change needs to occur and people and organisations have to be willing to make change.

We can’t expect women to stay in work in a deeply flawed system. And we can’t expect the system to change on it’s own.  We have to see the problems and be willing step up and fix the system so that it better serves us and helps us to build the kind of society that we want live in.  A society where women can be successful scientists and engineers and don’t have to overcome massive hurdles.  A society where the decision whether or not to have children will not massively impact or end your future career.  Having children or simply being male has never stopped men from being scientists or engineers and parental status or gender shouldn’t stop women either — and if it does, we have to change that.

1. SHE Figures 2015, URL: http://www.genderportal.eu/sites/default/files/resource_pool/she_figures_2015-final.pdf date accessed 25/6/2018.

Housing affordability in metropolitan Australia

Why are houses today too expensive to buy for the average person and especially young people in our major cities? Are elements such as negative gearing and overseas investors that are often blamed for the rising prices in the media and by politicians the cause of the inflated prices? Or is there something else that has caused the inflation? The short answer is yes. Yes there is. And quite simply it’s supply.

Demand and supply are two elements of the market that are directly linked. If demand is high and supply is low, prices will be higher. If supply is high and demand is low, prices will be lower. The problem in cities like Sydney is that there is a short supply of housing in areas where people actually want to live. Homes that are of a good size (2-3 bedrooms a good size if you are planning a family), in nice neighborhoods, close to schools, medical centres and hospitals, close to public amenities like parks and swimming pools, close to public transport and within a short commute from places of work, which for a city like Sydney is the CBD.

Over past decades new homes have been predominantly built on the outer fringes of the city, which has stretched our cities of Sydney and Melbourne to massive sprawling suburbia. As you head out into this sprawling suburbia land sizes of individual blocks of land get larger, houses get on average larger and are more spread out. The suburbs get larger, amenities are more spread out, hospitals are further away, work is much much further away, everyone requires a car just to do things like go to the shops or take the kids to school, because everything needed for life is so spread out.

This in turn means that the next set of new houses built is pushed even further again from the city centre. The toll of this on people buying their first home, is that they are forced to have a much lower standard of living than those closer to the CBD because they have to spend a lot more time commuting to the city to work in the morning and home again each evening.

People living on the city outskirts will spend several hours a day either in their car or on the train or bus in long commutes.  People living on the fringes often rely on cars to drive everywhere and therefore spend a lot more on petrol for their cars, as well as the other costs involved in car ownership, compared with people in the inner city who often don’t need a car and thus save money on not running a car. Former Liberal Party Australian Treasurer Joe Hockey infamously said in a radio interview in 2014 “The poorest people either don’t have cars or actually don’t drive very far in many cases” (1). In fact it’s the opposite, most “poor people” do drive cars and the costs of running a car helps to keep them poor. “Poor people” who live on the city outskirts tend to drive much further than those who live in the centre, who tend to be wealthier (2).

Houses are generally larger and temperatures in the west of the city are hotter than by the coast because they don’t receive the cool sea breezes, so electricity costs are higher as homes require air conditioning to remain pleasant to live in.

Long commutes are a waste of peoples time, and seriously cuts into peoples recreation time. Time that could be spent with family or friends. High electricity bills and costs of running a car that is used everyday cuts into peoples ability to save money or spend on items to make their life more pleasant.

The short supply of housing in the inner city has pushed house prices up so high they have become unobtainable for people that did not already own a home in Sydney. In the suburb I live in, Marrickville in Sydney’s Inner West about 6 km from the CBD, the median price for a 2 bedroom house is now $1.23 Million (3). The median price means the price in the middle, it’s a bit like the average but a better indication of the middle price people are paying for homes.

In comparison the median price for a 2 bedroom house in Campbelltown, a suburb on the outskirts of Sydney’s western suburbs, is $476 thousand (4). People who live in Campbelltown and work in the city centre will commute for at least 2 hours a day.

So why is a 2 bedroom house where I live so much higher than that of a 2 bedroom house in Campbelltown? The simple answer is demand. There is high demand for houses in suburbs like Marrickville because they are convenient place to live, we have schools, public transport (trains, buses and close connection to light rail), medical care (like GPs, specialists rooms, dentists, radiography services), grocery shops and a shopping centre all within walking distance from homes. There are top hospitals and universities like RPA and The University of Sydney and University of Technology Sydney only 4-5 km away. For people with disabilities there is more access and choice when it comes to disability services. Suburbs closer to the city tend to have more people around and so there is often a greater sense of being in a community than out in the outer suburbs where you can often feel isolated in your street or home. There are cultural and community events in the inner city like weekend markets and theatre, all of which make life more enjoyable in the inner city. Another reason for higher demand in the inner compared to the outer suburbs is that crime rates tend to be lower in the suburbs closer to the city, obviously with a few exceptions.

In my opinion, more focus needs to be on increasing the supply of homes in the CBD and inner suburbs of cities (within 10 km of the CBD), because this is where people want to live based on price data. Yes, people who are already lucky enough to live in the inner suburbs will argue “But there aren’t enough schools! There aren’t enough hospitals! Over-development! I don’t want high rise apartments over looking my house!” . Government has tried to to increase supply and there has been massive backlash in these communities about any new development. This viewpoint to me seems very selfish and short sighted.

My question to those people resisting development and resenting newcomers is, why do you think that you deserve to live in a convenient area, but other people do not? Is it fair that just because you were there first, future generations are forced to live at a poorer standard of living and have to live in an area which is not good for a productive economy because of the high costs on it’s residents, because you were here first? I don’t think that is either fair or good for the economy or society. It ultimately increases inequality in society.

Census data helps governments to determine the number of hospitals and schools built in an area. If more people move to an area, government will see in the Census that the area requires more infrastructure. If zoning laws are changed to allow more housing to be built in the inner suburbs, government can also plan to deliver more hospitals, schools and public transport, for example the new Sydney Metro line going up along the Bankstown line (one of the two main train lines through the Inner West of Sydney) coincides with the opening up of zoning for high rise residential apartments along the Bankstown line corridor.

In the past, and even in the present the most creative and productive areas of cities are not the outer fringes but the more highly developed inner city. If we want to make productive cities we need to make them more livable, which includes increasing the sustainability of our cities by reducing the number of petrol cars on the road, and increasing the happiness of residents by decreasing commuting times and the cost of living.

Reference

1. URL: http://jbh.ministers.treasury.gov.au/transcript/075-2014/ date accessed 12 June 2018.

2. URL: http://www.abc.net.au/news/2014-08-15/joe-hockey-poor-people-cars-claim-misleading/5671168 date accessed 12 June 2018.

3. URL: https://www.domain.com.au/suburb-profile/marrickville-nsw-2204 date accessed 12 June 2018.

4. URL: https://www.domain.com.au/suburb-profile/campbelltown-nsw-2560 date accessed 12 June 2018.

The Looming Sydney Housing Crisis

What is it that people say? It’s a recession until you loose your job, then it’s a depression. I feel it’s a bit like that with the Sydney housing market. It’s not a crisis, it’s a bubble, until your bubble pops and you are pushed out of the property and rental market because you’ve been out priced.

One of the problems with the Sydney housing market is that it’s been treated by many as an easy no brainer investment class. I’m talking about people who buy houses as an investment to sell at a profit rather than to live in them. It doesn’t really matter whether they are local baby boomer investors or overseas investors, the end result is that because there has been so much speculation in the market for so long, we in Sydney (and Melbourne) have seen an artificial elevation in house prices that is not linked to wage growth. This has ultimately out priced many younger people from the market, and basically anyone who wasn’t on the property ladder to begin with.

Now there is a phrase I have a real problem with “the property ladder”, which implies a buying and selling of properties to upgrade ones housing, presumably for comfort, but more recently (say the last decade at least) for sheer profit.

The thing about houses is they don’t generate any income until they are rented out or sold, and if you have a very big loan you won’t really see the revenue until you sell. People have seen housing as an easy get rich quick scheme, they don’t tend to loose value because people always need somewhere to live, and the more people started investing, the more new investors were drawn in. Until recently property investors (that sounds a bit ominous “investors”, but here I mean anyone who was not buying a property for themselves to live in long term) could buy in parts of Sydney and sell a year later making a 20% profit. It’s a bit reminiscent of other bubbles in the past, most recently the Bitcoin bubble which worked on the same easy money principle.

The problem with the housing bubble, is that it’s not just currency like in the case of Bitcoin, it’s houses, that is homes that people live in. If prices get too high many people are spending too much of their income on loan repayments or rising rent prices. This becomes a delicate balance and if something happens, like you loose your job or prices go up again or let’s say interest rates rise, some people are ultimately going to be pushed off the edge, when their bubble pops (e.g. they can’t make their mortgage repayments and default on their loan). This  can even be the first step towards homelessness. If you are a young person paying high rent with low wage growth and probably low wages due to the casualisation of the workforce that is happening in Australia, you can’t even save enough money to become an investor or home buyer to get yourself out of paying high rents.

The problem is, houses only really generate income when they are sold, and because people have seen the housing market as an easy way to make money there has been a massive wave of speculation. The housing market isn’t as complicated as the stock market, prices have tended to go up without the investor having to do much research or anything much once they have invested. Sure this has made some people rich, but the purpose of housing, something I think people in Australia and some other parts of the world have forgotten, is that houses should be viewed primarily as places for people to live in, not an income generating stream or investment class.

Investing in housing only pushes house prices up and doesn’t have any real benefit. Because really, if you own a place that is overvalued, there will eventually be a price adjustment (read price fall). You don’t really have a million dollars if you own a house valued at million dollars. You own a house and if you sell you will only receive what the market says it’s worth. You only have a million dollars if you sell that house for a million dollars and put that money in the bank.

People should be investing in local businesses and companies as those forms of investment do generate income and they can cause growth in the economy in areas that actually have some benefit to Australia like growth in jobs and wages. Australia has had so many great new technology companies leave because they couldn’t find investors here. The ones that spring first to my mind are the new energy solar power companies that went to China or the US when they couldn’t find investors here. There are your jobs of the future and they’ve all gone overseas and will never benefit Australia.

Australia having a trillion dollars in private home loan debt is not benefiting anyone except the banks that are selling the majority of the loans (1), who will see even more profits roll in when interest rates eventually rise, and they will eventually rise . It wasn’t that long ago real interest rates were around 6% and in the 1980’s they came close to 8% (2). I’m talking about real interest rates too here, not what the banks charged as the interest rate on their home loans which reached staggering levels close to 17% in the 1980’s. Anyone with a large home loan should be very concerned about what interest rate they are paying. If interest rates were raised a few percent higher without wage growth in Australia, many borrowers would default on their loans.

Being tied to high home loan repayments and rents also limits what households can spend as consumers, because all their income is going into housing. This also does nothing to stimulate wage growth and other parts of the economy.

To exacerbate the problem there has been very poor housing affordability policy by all levels government which has played a part in rising house prices and household debt.

The Housing Bubble and Homelessness

We are already seeing the effect of this bubble in the increase in homelessness in Sydney. Don’t think there is a connection between homelessness and rising house and rental prices? Think again. When the Government doesn’t provide enough crisis housing or long term housing for people on low incomes, and the unemployment policy is that if you leave an area with more jobs (like Sydney) for an area with less jobs (like a country town with a cheaper cost of living) you could be cut off unemployment benefits.

So picture the scenario,  you loose your job or you get sick and can’t work for a long period, then because of the drop in income you can’t pay your rent or mortgage and you loose that place. You can’t afford rent on a new place in your area because you haven’t found work again and there is not enough crisis accommodation for all who require it, so you have to find somewhere to go. You probably can’t leave Sydney and move somewhere cheaper because you will be cut off any unemployment benefits by the Government. If you can’t find a place you can afford in the city and unless you have someone who can support you you might eventually end up homeless. you might couch surf for a while, but one day you might run out of people to stay with or you might have some kids, and your friends don’t have room for all of you, so you are living in your car, until you can’t afford your car anymore.

This is a reality, and it is partially caused by housing speculation. There are however many other contributing factors to homelessness. Low wage growth, poor housing policy by Government, poor (or should I say stagnant and un-evolving) unemployment benefit policy and poor mental health and domestic violence policies by Government have all contributed to homelessness in Australia.

 

Affordable accommodation for disadvantaged university students?

There are many things I want to address about the Australia Governments 2016-2017 budget. Alongside only postponing fee deregulation for another year the government has released a paper entitled “Driving Innovation, Fairness and Excellence in Australian Higher Education” to inform stakeholders and hope to influence the terms of the changes to higher education in the future.

Although the paper addresses some of the major problems faced in terms of fairness in higher education, for example equity for students from lower socioeconomic (SES) backgrounds and regional and rural backgrounds, and Aboriginal and Torres-Straight Islanders, it doesn’t do much to suggest an actual plan to see more of these groups attending higher education, particularly universities.

The paper outlines briefly a plan to improve infrastructure at regional universities to boost the number of students at those universities, while it states that institutions in the city already have enough infrastructure. While it would be great to improve regional higher education providers facilities to support students, I would strongly argue that institutions in major cities have enough key infrastructure to support these students. For example, one of the most important aspects that prevents these students attending universities is affordable accommodation close to campus.  Affordable accommodation on campus or nearby affordable accommodation for students from SES, rural & regional and  Aboriginal and Torres-Straight Islander backgrounds is utterly key to ensuring that they can attend tertiary education institutions. There is an inadequate number of subsidised accommodation for students from these backgrounds at many universities in Australia.

While expensive student accommodation does continue to be built, for example UrbanNest, which offers share twin share rooms from $340/week or even the Sydney University Village, with the lowest available room rate of $294/week per person (for a single room in a 4-5 bedroom apartment).  These prices for accommodation are far outside the reach of students from disadvantaged backgrounds who receive approximately $433.20/fortnight or $216.60/week in living away from home Youth Allowance payments. Youth Allowance, which is meant to cover the cost of accommodation, food and bills for students living away from home, who are between the ages of 18 to 24 years old. If you live in a major city like Sydney, you would be very lucky indeed to find accommodation close to the University of New South Wales (UNSW) or University of Sydney (USYD) in the form of a room in a share house for less than $200/week, leaving you with $16.60 for food and bills. There is still also a small amount of rent assistance for people on low incomes, about $50 a fortnight. This still leaves little to live off, unless you can find a part-time job along side your already full time study load (and that’s not that easy in the current climate). Changes to Sunday penalty rates will also affect students on lower incomes who are working part time and casual jobs in hospitality. Many disadvantaged students cant even afford basics needed to their university studies, like broadband internet at home, expensive text books, up-to date laptops (most students will be able to find a way to purchase a secondhand computer or laptop to complete assignments on, within a price range of $200 – $300).

Full time students studying STEM courses, are usually on campus 4 full week days a week, which only leaves 3 days a week for them to earn enough money to cover the cost of living in the inner city, which realistically requires about $450/week minimum in a city like Sydney, more if you are living somewhere like UrbanNest. The breakdown would be something like $250 for rent, $100 for bills and public transport, and $100 for food and necessities. If a student finds cheaper accommodation, it is probably further away, which pushes up their public transport costs. If you don’t have access to cheaper supermarkets and food co-ops, the cost of food increases.

If the government and universities REALLY want to improve the percentage of students from SES, rural & regional and  Aboriginal and Torres-Straight Islander backgrounds at universities, real affordable accommodation needs to be offered, not “affordable” accommodation, which requires the student has parents wealthy enough, or a flexible well paid part-time job to support them, which often in the case of these students, just is not the case.

 

Seven things I hate about Sydney

Here are the seven things I hate about Sydney, Australia. I have lived in this city for 15 years and in many ways I love this city, but there are some things that make absolutely no sense in this city’s infrastructure and housing areas.

1. The lack of effective public transport, there could be much better public transport routes built, if money was invested in light rail* as opposed to building more highways. We used to have light rail out to Parramatta, but what did we do? Rip it all out to make room for cars on the highway, the most stupid idea ever. I have been telling this to anyone would listen over the past decade.

*Recently in the past 2 years there have been positive moves in this area, with the building of new light rail in the Eastern Suburbs and Inner West, however in my opinion there hasn’t been enough emphasis on this kind of infrastructure and roads are still a major part of infrastructure policy.

2. Linked to this is the amount of cars on our roads, seeing cars with one commuter within in the mornings in every single car clogging up the roads across Sydney is not uncommon. Yet people in this city need cars, because of the lack of public transport to many areas, the unwillingness by many to use public transport, and finally the sprawl of the suburbs being so large that it’s impractical to use bicycles.

3. The lack of high density living, not only in areas within 8 km of the city, but the fact that the suburbs sprawl on forever due to land sizes being too large. Most of the time the land has been wasted and goes unused. The mistakes that were made with housing in this city are staggering and just drive me mad. There are too many parking spaces that waste perfectly good land that could be used for housing. There are far too many single story homes on large blocks even in the inner city (i.e. the Inner West, Lower North Shore), if homes are higher their footprint can be smaller and you can fit more people into the area (think of the Western European cities).

4. The way speculation has driven up the housing market in the past ~15 years especially, at ridiculous amounts, if your house price is increasing by $100,000 a year [2-4], there is a serious problem with the market, only everyone was too blinded by greed to see it until it was too late. For example, in the year from January-December 2000, house prices in Sydney rose by 5.9 % [1], the next year in 2001, house prices skyrocketed 17.2 % [2]. In 2002, house prices in Sydney rose 22.2% [3]. There were a few years of weak growth and falls due to the financial crisis, however the market has picked up, going forward to 2013-15, house prices rose approximately  7 – 11 % each year [4]. Even now, many people refuse to admit or do not realize how inflated housing prices have become, and that this will cause massive social issues in the future if the demand is not met. There are fears of increasing supply (over 100,000 new homes are required in Sydney [5]), because a fast increase in supply could cause a market crash. Although a crash in prices might seem good for new home buyers, it would devastate current homeowners, especially those with large mortgages (and Australians currently have a staggeringly high level of person debt), and those who have invested in housing for their retirement plans. It’s difficult to see an easy way out of this conundrum, with out the implementation of very different social housing policies.

5. The lack of affordable rentals especially for young people who don’t yet have the salary to buy their own place, such as university students. Rental accommodation around the major universities is ridiculously out of price range for the average student. Basically unless you have a full time job, a well-paid part time job, or wealthy parents your rental options are very limited.

6. More and more people are becoming homeless in our city partially because of poor housing affordability.

7. The lack of safe cycling routes, i.e. more widespread dedicated cycling lanes would make it safe for more people in the inner city to commute by bike. Increasing cycling over the use of automobiles would decrease traffic congestion, not to mention reduce carbon emissions.

[1] 6416.0 – House Price Indexes: Eight Capital Cities. Australian Bureau of Statistics. URL: http://www.abs.gov.au/AUSSTATS/abs@.nsf/DetailsPage/6416.0Dec%202000?OpenDocument

[2] 6416.0 – House Price Indexes: Eight Capital Cities. Australian Bureau of Statistics. URL: http://www.abs.gov.au/AUSSTATS/abs@.nsf/DetailsPage/6416.0Dec%202001?OpenDocument

[3] 6416.0 – House Price Indexes: Eight Capital Cities. Australian Bureau of Statistics. URL: http://www.abs.gov.au/AUSSTATS/abs@.nsf/DetailsPage/6416.0Dec%202002?OpenDocument

[4]  Australian Bureau of Statistics. URL: http://www.abs.gov.au/AUSSTATS/abs@.nsf/DetailsPage/6416.0Dec%202015?OpenDocument

[5] http://www.smh.com.au/business/nsw-housing-shortage-at-unprecedented-level-20160325-gnr37f.html