David Spears silly questions of Treasurer Jim Chalmers continue on the ABC’s Insiders this morning: “Why aren’t you delivering a surplus budget?”
Such is overwhelming ignorance on deficit budgets being essential if economies are to be healthy, that Chalmers appears to accept the premise, saying he has previously delivered a surplus, since made great budgetary savings and also cut taxes. He dissembles: “Where are the additional cuts to come from?“
Realities expressed by the 1996 Nobel prize winner in economics, William Vickery, to the effect that surplus budgets commonly lead to recessions, are once again ignored: We must uphold the failed neoliberal approach that has brought the world to dire economic straits.
It was a relatively small group of people who forecast the 2008 Global Financial Crisis. To those supporters of Henry George nominated by the late great Mason Gaffney, I would certainly add the name of Philip J Anderson.
Have you noticed on this occasion, however, that many people have emerged from the woodwork to forecast the upcoming economic collapse? It’s becoming obvious, even to Austrians, libertarians and some neoclassical economists who entertain the belief that the upcoming financial collapse is the result of government spending, or of “too much money chasing too few goods”.
Wrong! It’s the same old, same old collapse of land prices that has been pumped over centuries by banking, real estate and media interests.
THAT neoliberalism encourages “rent-seeking” rather than true wealth creation is a core critique shared by many prominent economists and political theorists. While neoliberalism was originally conceptualised as an ideology of free markets, deregulation, and individual liberty, critics argue its real-world implementation has frequently manifested as an extraction economy. [1, 2, 3, 4]
To understand how this dynamic works, it helps to break down the economic mechanisms at play and look at both sides of the debate.
The Critique: How Neoliberalism Fuels Rent-Seeking
In economics, wealth creation means producing a new good, service, or technology that adds value to society. Rent-seeking, by contrast, is the process of manipulating public policy or economic environments to increase one’s share of existing wealth without creating anything new.
Prominent critics, including Nobel laureate economist Joseph Stiglitz, argue that neoliberal policies have inadvertently institutionalised rent-seeking in several ways: [1]
Financialisation: Neoliberalism shifted the economic focus from manufacturing and tangible production toward finance capitalism. Success became less about building factories and more about moving capital, restructuring debt, and engineering financial instruments. [1]
The Privatisation of Public Monopolies: When state-owned utilities, transit systems, or healthcare services are privatised, they are rarely dropped into perfectly competitive markets. Instead, private entities often inherit a monopoly. They can then hike prices or lower service quality, extracting wealth from the public rather than “innovating.” [1, 2]
Regulatory Capture: Deregulation was intended to foster competition. In practice, massive corporations often use their resources to lobby for rules, subsidies, and tax loopholes that protect their market share. This effectively locks out smaller, more innovative competitors. [1, 2, 3]
The “Hustle” Mentality: For the average person, stagnant wages caused by weakened labor protections have forced a cultural shift. Instead of relying on traditional employment to build wealth, individuals are pushed to view themselves as micro-corporations—monetising their homes (Airbnb), their cars (Uber), or trying to get rich quick through speculative assets like cryptocurrency. Critics view this as a trickled-down imitation of the 1%’s extractive behavior. [1, 2, 3, 4]
The Theoretical Intent vs. The Reality
Defenders of neoliberal ideas—which trace back to theorists like Friedrich Hayek and Milton Friedman—would argue that rent-seeking is actually the opposite of pure neoliberalism. [1]
Economic Concept
The Neoliberal Ideal
The Critical Reality
The Market
A meritocratic space where the best products win, increasing total societal wealth.
A system heavily tilted toward monopolistic corporations that use capital to suppress competition.
Deregulation
Removing government red tape so entrepreneurs can easily innovate and build.
Removing consumer and environmental guardrails, allowing predatory financial practices.
Government Role
A minimal state focused strictly on protecting private property and enforcing contracts.
A state captured by elite interests, stepping in primarily to bail out institutions when they fail.
That neoliberalism is inherently a project for elite wealth extraction or a good economic theory gone wrong may be a matter of debate. However, real-world outcomes over the last few decades have undeniably made it easier to generate massive fortunes through financial engineering and monopoly control than through genuine productive innovation. [1, 2, 3]
Then how about cutting spending on the bonds’ rort?
And how about all the spending on rorting our land prices? i.e. Real estate speculation. We can either have that, or productivity, and we’ve chosen property spec.
So, China makes things for the world while we speculate? That’s going to end well!
OK, so you can’t do it, RBA, because the only weapon that you’ve been given is the tweaking of interest rates. That’s a blunt instrument!
Over to you then, Treasury, and Jim Chalmers!
No?
So, we continue with the tanking of the economy then, Jim?
