Australia and the West have experienced, hand over fist, improvements in GDP and living standards since we moved our manufacturing and resource extraction overseas*.
Even as the working class got sold out**, living standards improved across the board. The rich got richer and so did the middle class - with most Australians joining the middle class, during and, since the post-war era.
We were getting a good deal on our imports, taking more from poorer countries (Global South) than we gave in return, but that has been coming to an end.
The Global North (the First World) has monopolised trade with the Global South, by Capital and demand but also coercion and regime change, which ensured a good deal. But with the rise of the BRIX and China’s Belt and Road initiative, the Global South has more opportunity for equal exchange of goods and services.
While the IMF used third world debt to influence policy change, allowing Western Capital to buy up and exploit industry, Chinese banks are forgiving debts and negotiating mutually beneficial agreements (to the benefit of China).
While Western Capital built limited infrastructure to extract a specific resource, China is investing in not just general infrastructure but education and the creation of a local workforce.
The Global South are trading with each other. They have more options, trade is more competitive - we get less of a deal.
Where previously Australia could afford to give Corporations absurd profits and still have money for the people, this will be less and less possible. Australia needs to re-embrace the policies of the post-war era, which ensured a dignified life, and roll back the last 50 years of neoliberal policy built for an age which no longer exists.
* Not just in the neoliberal era, but all the way back to the start of colonial expansion.
** With manufacturing moving overseas and the denationalisation by various Liberal -and some Labor- governments.
*** consent manufacturing became harder to enforce
[1] https://www.nature.com/articles/s41467-024-49687-y
[2] https://ourworldindata.org/trade-and-globalization
[4] https://www.worldscientific.com/doi/10.1142/S2377740023500173
CC SA NC
Wages benefit workers. Inflation is affected by everyone’s wealth. When the rich make record profits, inflation rises and our wages fall in value. When wages are increased, inflation rises and rich people’s hoards fall in value. The key to successful economic policy is to raise wages faster than rich people’s hoards can grow, thus making wage growth the primary driver of inflation. When hoard growth is the primary driver of inflation, we get our current situation.
Just to tag on to your point higher wages help to GDP and the economy as well by increasing consumption. If the top 1% are getting more money they tend to invest it in lower growth investments (safe investments and high end goods) decreasing the amount of money cycling through the economy. Where as lower incomes spend the increase wages on more goods and services from other people which puts the money back in to movement and increases the number of time the money cycles through the economy.
And cause inflation.
Japan, of course, doesn’t exist.