Bruce Springsteen and the rising price of electricity

Energy prices are not mentioned in the RBA’s decision to keep interest rates unchanged in April or in the decision to raise them by a modest quarter of a percentage point in May. But they are in the June 7 by-election decision to raise interest rates by another half a percentage point to 0.85 per cent – a decision taken fourteen days after the AER report was published under the new Labor government on May 26 . “Higher electricity and gas prices and the recent rise in petrol prices mean inflation is likely to be higher in the near term than expected a month ago,” RBA Governor Philip Lowe said.

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The big debate we need to have from now on is how do we expand the role of government while preserving the independence of the RBA. It may come as a surprise to defenders of free markets, but both the good and the bad of capitalism point the way to a new form of intervention.

An increasing proportion of the jobs created in response to consumer needs and wants are in areas in which governments are directly involved, either as service providers or through taxpayer subsidies to private operators – namely health, elderly care, childcare and Disability Care. These new jobs have come at the expense of the old workers’ economies of manufacturing, construction, agriculture, and mining.

By the late 1980s, when the Hawke-Keating model of deregulation was being put in place, the working-class economy accounted for almost 30 percent of all jobs. Today, that figure is just under 20 percent. The brain and caring economy – healthcare and social services, jobs and education – increased its share from 20 percent to almost 33 percent over the same period.

Government has a bigger role to play in managing the inflation shock than it may realize. While it’s true that the shock began with Russia’s invasion of Ukraine and the supply-side issues surrounding the pandemic, there’s something else any politician would recognize from the feedback they receive from voters. Small businesses are being outpaced by commercial landlords and suppliers. Young tenants are screwed by mother-and-father landlords. Higher interest rates cannot address this part of the inflation equation.

Albanese and Chalmers should be ready for this particular task. Together they hold the lever of moral conviction. They should publicly side with the victims – even at the risk of angering the landlord class. The more difficult challenge is the longer-term project of securing the care sector with a more stable tax base and boosting brain economy with a better educated supply of native labor to complement the overseas migration program.

Which brings us to Bruce Springsteen. He was embroiled in a dispute with his fan base over concert ticket prices after deciding to adopt monopoly agency Ticketmaster’s so-called dynamic pricing system, in which prices rise in line with online demand. This pricing system is familiar to anyone who has attempted to book a flight or hotel room; it’s tripwire for gouging.

An unrepentant Springsteen explained that he wanted to try something different after charging below market prices for 49 years. “The ticket dealer or someone else will take that money,” he said Rolling Stone magazine last November. “I’m like, ‘Hey, why shouldn’t the money go to the guys who’re going to sweat three hours a night for it?’ …I know it was unpopular with some fans. But if there are any complaints on the way out, you can get your money back.”

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The 73-year-old near-billionaire got his answer this week, as one of the most well-known fan magazines in the Springsteen ecosystem, back alleysHe went out of business and left the boss this farewell shot: “These are concerts that we can hardly afford; which many of our readers cannot afford; and that as a result, a large part of our readership has lost interest.”

As a longtime Springsteen fan and subscriber, I have to confess back alleys for more than 40 years that I didn’t expect the boss to deliver the defining quote for our gouging era: “Hey, why shouldn’t the money go.” [me and my] People.”

He’s not the same as the old boss whose greatest work in the 1970s and 80s was about the victims of stagflation and Reaganomics.

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