2024-07-04
A recent visit to Bangladesh by the author prompted a look at how “cost of living” is viewed in Australia and Bangladesh
By Chris Johansen, Green Issue Co-editor
Increasing cost of living is seen as the prime election issue for the Australian federal election, due after a year or so. But what is the issue? I see it as an increasing gap between a person’s financial resources (salary and/or savings) and their aspirations for lifestyle into the medium or longer term. Let’s call it the finances-aspiration gap. It is really only an issue for the middle classes and below as the rich can easily cover any price increases of daily necessities, although we still do hear some rich folk complaining about the cost of living.
Assuming little prospect of one’s financial resources increasing over the medium term, and that cost of living will continue to increase, the obvious way to deal with the issue is to lower one’s aspirations. Consistent with the age-old saying of “living within your means”. Middle class aspirations in Australia generally seem to be ownership of a separate house with latest appliances, AC, a deck, swimming pool, etc.; an SUV; annual holidays away from home, regular restaurant visits: and so on. But there is little hope of getting folk to back away from such aspirations as they are bombarded with advertising to consume ever more, and replace still functional working models with the latest model. Thus, the widening finances-aspiration gap contributes to the declining feeling of well-being.
In Australia this widening finances-aspiration gap can be attributed to spiralling accommodation costs (attributable to negative gearing, inadequate multiple property taxation, lack of rental control, etc.), a freewheeling corporate retail sector comprising mainly monopolies or duopolies, and a social services system in ongoing decline. Of course, seriously addressing any one of these issues would have immediate effects in reducing a person’s finances-aspiration gap. However, as neoliberal philosophies continue to be adhered to by both Labor and the Coalition, don’t expect this to happen to any significant extent any time soon.
Australia is a rich, well-endowed country, but still seems to be having cost of living problems. How is cost of living viewed in a relatively less endowered country like Bangladesh? Here, cost of living is not considered as a crisis but as an ongoing reality. Since the birth of Bangladesh in 1971, and probably before then when it was East Pakistan, costs of any imported goods have been relatively high and rising. The value of the currency (Bangladesh Taka [BDT]) has been in continual freefall. When I first went there in 1979 the exchange rate was USD 1 = BDT 8-10. At the time of writing it is USD 1 = BDT 117. There are also duties imposed on imports. But on the bright side, this high cost of imported items has stimulated the development of local industries producing household and other commonly used items.
Relative cost of local food items has been rising primarily due to demands of a growing population, depletion of natural resources (e.g. native fish stocks) and the onset of climate change disturbing cropping patterns and crop yields. As many foodstuffs are strongly seasonal, most people realize that prices will be lowest mid-season and rise as the season finishes. This situation differs from Australia where even seasonal fruit and vegetables are available all year round, due to being grown over a wide range of climatic zones within the continent and cold storage facilities. Over the years the Bangladesh government has tried to stabilize prices of the main foodstuffs, like rice, wheat and potatoes, through procurement programs and production incentives.
Rising costs of essentials would cause little worry for the rich in Bangladesh (there are growing numbers of USD-equivalent millionaires and billionaires in Bangladesh), because they are rich. The middle class is also rapidly expanding and their finances-aspiration gap generally narrowing. Incomes are generally rising but aspirations for financial well-being remain frugal. These can be summarized as rental of a 2+ bedroom apartment with refrigerator, TV, microwave, washing machine and perhaps an AC; a motorbike; and sending their children to a private school (preferably English medium). But salaries for middle class jobs are only one-tenth to one-twentieth of equivalent jobs in Australia. This relegates the finances-aspiration gap to a much lower plane than in Australia.
For the rest of the population (about 80%) the finances-aspiration gap is on a much lower plane still, with incomes marginal and aspirations necessarily constrained. For the ultra-poor, such as beggars, aspirations go only as far as securing enough food for the next few days. As income level increases, aspirations become a little more ambitious – e.g. a hut in a rural village with a galvanized iron roof. This 80% cohort is very vulnerable to even slight increases in food prices, even though they might be predictable according to the season. But climate change is now disrupting season predictability and therefore people’s anticipation of high and low food prices.
Returning to Australia, it needs to be pointed out that prices of some goods have declined relatively over time. Some 50 years ago purchase of clothes and footwear comprised a considerable portion of the family budget. Now they are only a relatively small cost (provided one is not a fashion freak). This is because of the use of cheap labour in countries like Bangladesh, a major supplier to the Australian market. Workers get barely a subsistence wage and are subject to dismissal dependent on orders coming in. I would favour a doubling of prices of clothing and footwear imported from Bangladesh provided that extra cost went to improving workers’ conditions, rather than enhancing the riches of the millionaires and billionaires who own the factories.
In summary, in Australia two main avenues for narrowing the finance-aspiration gap. Firstly, listen to what Great Granpa, who lived through the great depression of the 1930s and WW2, said about living within your means, especially if your means show little sign of improving any time soon. On this planet at least there are limits to growth and widespread degrowth will inevitably kick in before too long, even for the now rich. Secondly, focus on attacking those components of our neoliberal system that are obviously pushing up prices, making the rich richer and the poor poorer, like inadequate regulation of the housing and retail market.
Header photo: Vegetable market in Chittagong, June 2024, with prices rising day by day but not much profit for the vendor. Credit: Rubens
[Opinions expressed are those of the author and not official policy of Greens WA]