Neoliberalism causes cost-of-living crisis

May 1, 2025

Both the major parties (and even the Greens) embrace economic neoliberalism. This sees the federal government acting like a household, with household-like budget constraints. And on this view, budgets should therefore be balanced, or even in surplus.

This, however, causes private debt to increase, which in turn causes the cost-of-living crisis, such as we have now. We need instead to change focus and to balance the economy, not the budget, with carefully targeted deficits, even deficits in perpetuity, if necessary.

Despite neoliberal scaremongering, it is a fact that our currency-issuing federal government is not like a household. It can never “go broke” and can always pay any debt denominated in Australian dollars.

Two final points to consider: A government deficit results in a non-government surplus; and a government surplus results in a non-government deficit.