January 13th 2001

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Articles from this issue:



Part A: Globalism - the theory and the reality

Corporate capitalism: the product of government intervention

Part B: A history of economic rationalism in Australia

Part C: How Globalism undermines the family

Part D: The cultural revolution and the new economy

Part E: A policy agenda for Australia's future prosperity

Some remarks on the new economic disorder

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Part C: How Globalism undermines the family

by News Weekly

News Weekly, January 13, 2001
To attract workers to that part of the Chernobyl nuclear power station that operated until the end of 2000, the government paid workers 10 times the very low wage paid to an average Ukrainian worker. The town built some distance from the power plant is full of children. It has the highest birth rate of any part of the old Soviet empire. Why? Because these families have been given the economic freedom to marry and provide for the families they would like to have. In this most unlikely setting, an unintended social experiment has shown that when given a proper economic foundation, families thrive.

The story of the Chernobyl workers is a cameo story of how the Western world developed after the Great Depression and World War II. International regulation of financial markets and government policies that favoured decent wages, affordable housing, small business and family farms created a prosperous middle class. Growing families meant a growing young population of consumers. Putting the family first proved to be the best stimulant to economic growth.

Just as the cultural revolution of the 1960s and 1970s attacked the moral and cultural foundation of the family, the economic rationalism of the past 20 years has been prepared to sacrifice the economic base of many families for the sake of maximising short-term corporate profits. Deregulation and privatisation have caused a polarisation of wealth. Those in the top income brackets have done well. But there has been a dramatic effect on the economic circumstances of many workers and families.

The Australian middle class is shrinking. In the 15 years to 1996-97, the number of middle income earners shrank from 45 to 37 percent (Advance Australia Where? Study by the National Centre for Social and Economic Modelling, Australian Series, June 17-24, 2000). This means that almost 550,000 people moved out of the middle class bracket. More went up the scale than down, and the standard of living of some on very low income improved. But many went into the growing class of battlers on low incomes. About 32% of families are now dependent on welfare as their primary source of income.

Unemployment is one reason for a declining middle class. As the accompanying graph shows, since the mid 1920s unemployment has risen sharply with each recession. Although it has declined with each recovery, it has stayed at higher levels than in previous upswings.

While officially unemployment stood at 637,000 (6.6 percent) in December 2000, another 470,000 are in part-time work looking for more work. According to Dr Peter Brain at the National Institute for Economic and Industry Research, the true rate of unemployment remained above 10% for much of the 1990s. Growing numbers of families have either two jobs or no jobs in the family. The traditional single income family is in steady decline.

Unemployment and low incomes have so affected young men that, over a lifetime, the average male entering the workforce now will, by age 34, have earned $91,000 less in real terms than his predecessors starting work in 1979, according to Dr Bob Gregory of the Research School of Social Sciences at the Australian National University. That income loss represents half the payment on a home. That is why, if he can afford to marry, his wife is forced into paid work.

How low incomes inhibit young people forming families and can destroy family life has been dramatically shown by Bob Birrell and Virginia Rapson at the Centre for Population and Urban Research, at Monash University, in the seminal paper "A Not So Perfect Match: the Growing Male/Female Divide, 1986-96".

Using census and social security data, Birrell and Rapson show that 20% of males in their prime income earning and family formation years are on total incomes (wages plus welfare) of less than $15,600 annually.

Further, almost one-third of 25-44 year old men are not in full-time work and are on incomes less than $21,000 annually.

Table 6 demonstrates that men who have suffered low incomes in their prime income and family formation years have a much lower chance of being married than men on higher incomes. They are more than twice as likely to divorce.

Without an adequate income, couples cannot afford families or, if they do marry, they have greater difficulty holding their family together.

What is happening to women? Not surprisingly, many are still having children and raising them alone. The number of female sole parent families rose from 270,000 in 1986 to 413,000 in 1996. The incomes of these women are low. About 75% are living on less than $26,000 per annum. In comparison, only 20% of married/de facto relationship women live below this low income.

Of the 440,000 female sole parent families in 1996 about 129,000 fathers paid no maintenance because of their low income, and 46% of fathers who were liable for maintenance had incomes less than $16,000 per annum.

Numerous studies show the links between unemployment and low wage, insecure work, on the one hand, and depression, drug abuse and crime on the other. Real social breakdown is the result of such an inhumane economic system.

Our political leaders are now saying that sterner measures are needed to get people from welfare to work. The notion of "mutual responsibility" is being used to argue that people on welfare should be doing voluntary work or being retrained for new jobs.

While good programs are needed to get the demoralised, unskilled, long-term unemployed into jobs, the "mutual responsibility" argument is a smoke screen that clouds the real issue.

The real issue is that at any one time, for each job or offer there are 10-11 people looking for full-time work. Where are the jobs these unemployed are going to take when 20 years of deregulation and privatisation has decimated manufacturing and farming, and created only part-time and casual jobs en masse in the service sector?

There is a serious moral evil in an economic system that tolerates the economic and social destruction taking place in Australia and elsewhere. Globalism and economic rationalism represent a fundamental change in values among our political, bureaucratic and corporate leaders

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