Australia has a precious window to avoid the worst of the social malaise and democratic decline seen in Britain and the United States. After decades of slicing, dicing and privatising the tools of our social democracy, this moment calls for rebuilding the economic and social conditions of a reimagined welfare state.

In the historically protectionist and more volatile environment that US President Donald Trump has ushered in, voters have entrusted Prime Minister Anthony Albanese to protect our social democracy. In the years since its 2022 election victory, facing rising global inflation, Labor has implemented a modest cost-of-living agenda. It has reduced the cost of medicines, energy and petrol, and made some repairs to Australia’s limping redistributive welfare state – the most recent instalment being reform to negative gearing and capital gains taxation. This was important, following the expansion of bulk-billing in Medicare, funding for schools and TAFE, affordable housing supply, and a much-needed uplift of the Gillard–Rudd workplace relations framework.

The government’s pro-social program is aimed at rebuilding trust in government and confidence in the “fair go”. But it is still operating within the confines of a broken post-Prices and Incomes Accord framework premised on the notion that unleashing the “animal spirits” of competition and privatising large swathes of the economy while decentralising industrial relations would boost productivity.

This model has exhausted avenues to productivity and long-term investment. The compact with workers has been broken, with the value of real wages still at 2010 levels and the social wage eroded through privatised health and education, funding cuts and rising out-of-pocket costs for essentials.

Financial and political conditions are deteriorating. The latest quarterly ANUpoll shows more than one in three Australians now find it difficult or very difficult to meet household expenses with their current income. More people are dissatisfied than satisfied with the direction of the country, for the first time since the poll started in 2008. Satisfaction with democracy remains stable, at 66 per cent, but for how long, with “burn it all down” as the sentiment driving an insurgent One Nation?

Facing higher costs and interest rates, workers know that their government acknowledges their pain. But short-term price subsidies and arms-length condolences work for only a limited time before people expect a fuller response. While Australians confront threats to their economic security in rising inflation, inequality and profiteering, even ambitious initiatives to improve public programs, such as Labor is doing with Medicare, may not resonate with the electorate. They treat the symptom and not the cause.

If government doesn’t show any appetite to address imbalances in income, wealth and power before they crystallise, weighing on living standards, the political language and symbolism of “progress” can become a lightning rod for backlash.

Although Labor’s commitment to healthcare and education is undeniable, the public services can’t be repaired while propping up private systems honed in the Howard era. The impacts are not abstract; they are experienced as indignities in everyday life. The better-off get a chance at healthier, happier lives, less friction with bureaucracy and more agency, while everyone else gets overcrowded crumbling classrooms, emergency care only, waiting lists, safety nets, and the means-testing quagmire.

Private health and education expand their remit by diverting taxpayer funds away from quality public provision, weakening the political salience of public goods. Worst of all, the underserved fund the inequality that subjugates them. Donations to private schools to build Hogwarts castles and Olympic-sized swimming pools are tax-deductible, while no dedicated federal funding stream exists for public school infrastructure. This leaves an accumulated capital expenditure gap of $38 billion between private and public schools over the past decade, something the Australian Education Union is campaigning to rectify.

Australia’s public health and education systems serve as minimum safety nets rather than high-quality universal systems. This is the outcome of welfare-state erosion since the neoliberal turn of the 1980s. Then, social security payments began transforming from citizen entitlement and right to a policed, undignified, conditional form of charity under the Howard government’s system of mutual obligations. From the 1990s, then prime minister Paul Keating began the process of shifting awards from industry-leading benchmarks on pay and conditions, to minimum pay floors, with a diminishing portion of workers able to secure better pay in enterprise bargaining agreements.

The slicing and dicing of institutions designed to protect the incomes and living standards of all, and the creation of new systems designed only for some, has driven increased income dispersion. Under such conditions, the welfare state ceases being an effective redistributor and equaliser and becomes part of a rigged economy that exacerbates inequality and drives division.

In its first term, Labor focused on resuscitating minimum wage-setting institutions and enterprise bargaining – the remnants of Australia’s internationally unique 20th century “wage earners’ welfare state”. These wage-setting instruments continue to protect millions of workers from poverty, but the global ramp-up in corporate power and other inflation drivers is outpacing them. Australians are worried about the runaway prices of essential services. This is a deeper structural problem that cannot be resolved by our industrial relations system.

The throughline for rising economic insecurity, anxiety and distrust is private actors making claims on workers’ incomes as they try to access the basics of life – from energy to culture. This is the culmination of privatisation, user-pays “markets” for government-funded services and inaction against the concentration of corporate power. The result is that Australians are bitterly exposed to high and rising prices. Over the two decades to now, the items in the Consumer Price Index basket running hottest have been gas, at 5.9 per cent average annualised inflation, electricity (5.7 per cent), water and sewerage (4.6 per cent), housing (3.9 per cent), private hospitals (5.5 per cent), private schools (5.2 per cent) and preschool/childcare (3.9 per cent). All were once delivered or made affordable by government.

The leash was let out on private organisations to own, deliver and set prices for the stuff Australians can’t live without. The beneficiaries of this agenda include multinational fossil fuel and private equity companies and their shareholders, as well as the state-backed entities of the US, Canada, Britain, China and Singapore that own significant parts of our essential services, critical infrastructure and utilities such as water and electricity. Foreign state capital owning Australian assets is a perverse outcome of privatisation. If other governments can own our resources, why can’t ours?

Wealthier, higher-income individuals and powerful corporations move easily through this landscape. This inequity offends Australians’ egalitarian principles, fomenting distrust and a rejection of the status quo. Telling people they still live in a country of equal opportunity feels like a cover for an economy rigged against them.

The key to social progress in Australia during the 20th century was the state extending novel economic and social protections to its citizens. It did so against a backdrop of war and global economic crisis. This historic mission must be reconceived as a long-term vision that reconciles uncomfortable truths and rejects the neoliberal consensus.

Australia needs to break with the model of social betterment that focuses on regulating wages rather than delivering through the welfare state, as much of Europe does.

With so many workers unable to bargain effectively with employers, social gain through workplace agreement is a partial and uneven method for improving living standards. Expanding public programs with a wider general tax base is critical. We are already on this journey with new initiatives such as parental leave pay, but progress is stymied by the lack of a uniting vision about who pays for public programs and by what means.

The post-Accord framework unleashed the ills of privatisation, wage stagnation and outsized corporate power, changing the economic and institutional fundamentals underpinning Australia’s welfare state. The resulting social dissolution has flipped the old political framework of a “fair go” and opportunity for all into a political risk. Saving our precious social democratic tradition requires the government to step in, take the reins and act forcefully against unscrupulous private actors.

Building upon its disinflationary interventions in electricity and petrol prices, the federal government should adopt a more comprehensive program to reduce prices and protect citizens against profiteering. The recent focus on the supermarket giants was a start, and there are plenty of historic examples to inspire further action, from Chifley’s postwar price controls on food and rents to Whitlam-era tribunals requiring large companies with a high turnover to justify price increases. Rather than relying on interest rate hikes to protect people from destabilising inflation, a modern program could take inspiration from fiscal interventions by countries such as Mexico and Spain, with targeted price controls, subsidies and strategic tax adjustments.

In the long run, structural price stability is best achieved through public provision of essentials. The federal government should, using its lower borrowing costs and bargaining power in supply chains, prioritise direct public delivery in priority areas including home construction, renewable energy generation, and early childhood education and care (ECEC). Price stability means investing in our universal healthcare and education systems, weaning private parallel systems off the public teat and redirecting those funds to Medicare, public schools and TAFE, including integrating ECEC into the state’s public education “stack”.

Australia’s progressive income tax system cannot tackle record-high wealth inequality and the destabilising effects of concentrated wealth and power – it was never designed to. While capital gains and rents are going to be taxed more fairly, recent reforms leave the masses of wealth built up through decades of tax concessions untouched. With the wealthiest 20 per cent – about two million households – now owning 146 times the wealth of the poorest 20 per cent, and trillions to be inherited within the next two decades, we must have an honest conversation about ambitious, creative ways of taxing unearnt wealth.

None of this can be done tomorrow – meaningful action takes time, patience and determination. In the meantime, it’s a gift to federal Labor that Australians level most of their blame and frustration at global corporations. A modest program to tax windfall profits amassed by banks, supermarkets and gas companies would be popular and create a solid stepping stone for an early redistributive agenda. Such a program would buy time for more ambitious action.

With a demobilised public and no strong signal for public delivery, privatised essential services became the path of least resistance for ALP. It has allowed them to avoid any confrontation with business interests while providing a political tool that looks and smells like welfare state expansion.

The new compact between business and human services industries is strongest in Anglophone economies (Aus, US, UK, NZ, Canada) which dismantled and offshored their high-productivity manufacturing capacity. Business was chasing new markets, and essential services was the money ticket – and easy money too!

Under the political cover of fake welfare state expansion, business has hooked into multi-billion-dollar taxpayer-funded contracts. Minimum profit margins are backwards-calculated from the value of those contracts. (Not very innovative!). Then once they became essential to service delivery, these firms have the power to drive service quality into the ground (i.e. mass low-wage labour force, maggot-ridden food in aged care, paedophile rings in childcare), and ratchet up their funding demands because, ‘you need us!’

Australians know the service quality isn’t there, but the inflation shocks since COVID have revealed the true macroeconomic risk of handing all these new essential services industries to private actors. Rising out-of-pocket costs and economy-wide inflation.

Taming these inflationary forces through rate hikes won’t work and Australians are enraged with the injustice of being asked to ‘demand’ less childcare or healthcare. It’s hard to escape the conclusion that the ALP must return to a platform of public delivery in essentials as a matter of survival.

Australia is reckoning with this assault. The widespread economic and social damage resulted from the way we were hooked into a new global economic order focused on advancing the ability of big powerful corporations to exploit and extort everyday people. It started with seemingly benign ‘microeconomic reforms’ like enterprise bargaining and toll roads, and its climax is the anti-human AI technologies headed by psychopathic global billionaires promoting AI to kill, maim, lay off workers, and generate new authoritarian regimes to resolve the political mayhem they created. It is human elimination for profit.

But humans were being discarded by the economy much earlier than this. Millions of unemployed, poor, young, non-university educated, women, older, indigenous, migrants, ex-manufacturing and more who had no economic use were discarded in the new neoliberal Australia. As people put their head down and focused on pushing through, our solidaristic culture of extending a helping hand to others, working together against the common enemy, has been eroded. The worst and most cynical representation of that loss, is that government dooms the poor to destitution for fear of appearing ‘too nice’ to ‘dole bludgers’.

The sum total of decades of this economic and social assault is fatigue and desperation for change. I, like many of you, are wondering to what extent Australia’s parochial Right project in One Nation, now flush with billionaire class money, will embed itself among Australian workers as a political force. What plagues me most right now is that they have captured the terrain of nostalgia for a past Australia that delivered broader-based prosperity (of course, linking that to a totally imagined monoculturalism that never existed), and have positioned themselves as protectors of those left behind by this global capital assault. And they can do this after decades of bipartisan poor-bashing creating a vacuum for the many Australians who really do give a shit.

The rise of ON is due to the absence of a genuine serious political force that is responding to the material crisis everyday people see and experience every day. It is neutered not by focusing on countering them, pointing out their incoherence or contradictions, but through the positive articulation of a new agenda for working people that gives them back power over their lives, and restores living standards and hope for the future. This is the task I am committed to, and I look forward to working with those who share that goal.

But instead of going on the defensive, domestic political pressures have become the catalyst for a more ambitious reform push this Budget. These domestic pressures were created by the rising cost-of-living and a growing view that Australia’s social contract with wage earners and future generations has been eroding, marked by the ascent of a tax-subsidised wealthy, older asset class.

Ensuring workers can earn the living standards that wages once delivered to older generations was the leading frame in Budget 2026-27. But has this budget, billed as Labor’s most ambitious, managed to set Australia on the path to achieve this?

Retaining low unemployment despite inflationary pressures

The government’s employment and spending forecasts show it expects wages to grow after an initial hit, while unemployment remains mostly steady, rising from 4.25% in 2025-26 to 4.5% in 2026-27 and holding for two years before reducing again. This shows government intends to keep workers in jobs rather than cutting spending drastically to lift unemployment in response to this oil crisis.

It should be noted that the Budget’s central forecasts rest on the highly optimistic view that the US-Israel War with Iran resolves this year, with global oil prices dropping mid-2026 and stabilising mid-2027.

Inflation is expected to halve dramatically from 5 per cent in 2025-26 to the RBA’s target of 2.5 per cent in 2026-27, which would defy the persistence of high prices after the last energy price shock subsided.

Interestingly, Treasury’s 4.5% unemployment rate projection from next year is now aligned with the RBA’s Non-Accelerating Inflation Rate of Unemployment (NAIRU). The government’s Employment White Paper argued for a more ambitious, proactive approach by government to lowering structural unemployment, rather than relying on a narrow, technical NAIRU, and this projection will diminish the policy space for RBA to justify more rate hikes on the basis that unemployment is not high enough.

Wealth vs work takes centre stage

Central to the Budget are significant CGT, negative gearing and trust tax reforms. The new inflation-adjusted regime for capital gains after 1 July 2027 (i.e. only taxing real gains), with a 30% minimum rate and the 50% discount retained for new builds, negative gearing changes limiting the concession to only new housing, and a new 30% minimum tax on trust distributions will genuinely help rebalance the scales with worker incomes. With the average tax rate for labour incomes set to rise to almost 28 per cent in the next decade, up from 24.5 per cent now, allowing capital gains to be taxed at half the rate of workers, or for trusts to be exploited widely for tax avoidance was neither fair or sustainable.

Essentially the changes will create two lanes in the individual income tax system, where every dollar of investment income is taxed at 30%, while labour incomes are taxed for every dollar earned after a new low-tax threshold of $19,985.

The changes will have a strong effect on investor behaviour and raise $3.6 billion in additional revenue over the next four years. The inclusion of assets purchased before 1985 for CGT will widen the tax net, with any capital growth from mid-July captured upon sale on these formerly exempt investments. Though it should be noted that most of Australia’s over 2 million investment properties were purchased after introduction of CGT.

Importantly, the 30% floor will disincentivise the practice of delaying property sales till retirement when investors hit a lower income tax bracket, reducing their tax bill. For instance, under the former settings John would wait till retirement to sell his $1m investment with capital gain of $400,000, paying tax on only $181,800 of that gain ($200,000 minus current $18,200 minimum tax threshold). Now an investor will pay a 30% effective rate on every dollar made in capital gains, regardless of whether their marginal rate is below 30%.

The reality is grandfathering and slowing house price growth means the majority of wealth accumulated through housing tax loopholes will remain under those settings, and a capital gain of the scale like John’s is unlikely to materialise under the new regime. Since the CGT changes cannot compensate for rising wealth inequality, more should be done to address this.

The only way to tax what has already been accumulated, is wealth taxes and inheritance taxes. For starters, McKell Economist Tom Probst and I have proposed a moderate wealth tax on Australia’s largest land fortunes valued over $20 million, with an estimated $3 billion in revenue raised to cut stamp duty for FHB.

It is clear that the 50% CGT discount overcompensated investors for inflation. Pegging tax to gains above inflation is better, but claims to rebalancing the treatment of passive incomes vis-à-vis earned incomes should factor in that workers pay tax on their income regardless of how much prices rise. Their taxable incomes don’t change with the rising cost of mortgages, rents, groceries, utilities and other essentials.

A new $250 Working Australians Tax offset for labour incomes at a cost of $6.4 billion over two years introduced from mid-2027 will help address some of the bracket creep faced by workers. Furnishing the ‘wealth vs work’ political frame, higher revenues from housing and trust tax reforms will mean that investors ‘fund’ workers’ tax cuts. This increase in the tax-free threshold to $19,985 is minimal, and far from compensates workers for surging inflation. It is a powerful political device for the government to draw upon though. With further tax cuts on work incomes already flagged by the Treasurer today, it suggests this new worker-specific tax infrastructure will be built upon soon.

Efforts still needed to ‘recouple’ wages and home price growth

Rising real wages are a key measure of workers’ living standards. If they decline, workers go backwards. In the period leading into the Budget, real wages had been in recovery after the last global supply shock in early-2022, which saw inflation reach over 6 percent. Real wages then began clawing back lost ground over the two years 2023-24 to 2025-26, until the Middle East war kicked off, sending oil prices soaring, and the RBA unwinding its last three cuts with three more hikes.

If wages decoupled with home prices under Howard’s CGT changes, then the goal must be to ‘recouple’ wages with home price growth. Therefore, wages must grow at least at the same pace as projected house price growth. House prices are expected to rise at around 3% this year, and 3% in 2027, but Treasury are forecasting a decline in real wages this financial year 2025-26, and only 1% growth in 2026-27, and 1% in 2027-28.

For context, the savings challenge to buy a home is already immense for a young worker today. A 20% housing deposit on a median capital city unit price of $767,901 is around $153,000. The average 25-35-year-old who saves 15-20% of their income will take 10-15 years to save this deposit. With average earners already thousands of dollars behind their real wage position before the 2022 price shock, and real wages projected to decline in the government’s own forecasts for this year, new measures will be required to lift the power of paypackets. A stronger collective bargaining regime that covers more workers with guaranteed union representation would help deliver guaranteed above-WPI wage increases, and more action to reduce the costs of essentials, especially housing would help wages go further.

Little action on prices

The lack of measures addressing rising costs is my big Budget omission. The Budget confirms an end to the fuel excise cut on 30 June 2026, all-but guaranteeing the RBA raises rates in August. With 1.5 million mortgage holders – 28% of all – at risk of mortgage stress, the government’s 5% deposit regime starts to look dangerous, bringing new meaning to the adage ‘what the government gives, the RBA taketh away’.

High-cost subsidies like the electricity rebates after the 2022 energy price shock would have been politically difficult with the threat of RBA hikes hovering over this Budget. Nor would they have been effective since these urgent time-limited measures overcompensate producer profits, in turn doing nothing to reduce prices long-term. But they should be placeholders while more fulsome, long-term cost reduction plans are developed.

All tools should be on the table – regulation, super-profits taxation, and public sector financing, direct investment and delivery.

Gas reservation and tightened regulation on fuel retailers are steps to getting a grip on prices in this Budget, but more decisive foundations should be established this term of government, to prepare for a new macroeconomic stabilisation regime as the 1990s monetary policy regime continues to fray.

Housing supply ambitions could be hampered by conflict

A number of housing supply measures are in the Budget, including $2 billion paid to states and local councils to build infrastructure for 65,000 homes over 10 years, faster planning approvals, and support for youth at risk of homelessness, combined with continued demand measures like higher income caps on the 5% deposit and shared equity schemes. Treasury forecasts the combined effect of housing policies and tax changes will extend homeownership to an additional 75,000 first-home-buyers over the decade.

I see challenges with the government’s plan here. The retained 50% CGT discount and negative gearing for new housing will be powerful incentives for investors to buy new houses. Rising housing costs due to supply chain pressures from war in the Middle East will work against these signals, reducing the pace of new dwelling stock construction. With a lower volume of housing built, investors will also be in an even more competitive position compared to FHB, pushing up prices at the bottom end of the market. If reversing collapsing homeownership rates among working-age Australians is the objective, a larger quote of minimum stock must be allocated for first home buyers, as well as measures to leverage lower public sector financing costs and purchasing power to build homes directly in the public sector.

The other challenge is State and territory FHB incentives are currently working in the opposite direction to these Budget changes, with bigger stamp duty cuts for FHB buying new dwellings.

Stamp duty exemptions on new dwelling for FHB became the implicit recognition that competition with investors for established dwellings was too great for FHB. New greenfields supply projects led by states are also implicitly developed for FHB too.

New buyers were already competing with downsizers and now investors will be crowding into the new dwelling market.

Limiting tax avoidance, channelling more productive investment

The minimum 30% floor for CGT with a new 30% tax on trust distributions equalises the tax treatment of different forms of investment (property, shares, interest etc), and ends business incentives to operate through family tax structures to avoid company taxes on business income. Before this change, trusts could facilitate income flows from both active trading businesses and passive investments. Income-splitting allowed them to pay a lower rate of tax than businesses under the company tax rate, and a lower rate than workers’ labour incomes. Tax-avoidance through trusts has exploded with over 1 million registered trusts in Australia. This is an important reform for fairness, productivity and reducing inequality.

By aligning the 30% rate across CGT and trusts with the company tax rates, government is equalising the tax treatment of business income – tax neutrality.

By ending Australia’s long-held preferential taxation of housing (with the exception of negative gearing available for new housing), capital can choose returns in more productive assets and innovative activities than houses which is good for Australia’s lagging productivity growth rate.

Housing market investors who’ve fattened their pockets under prior settings claiming this equalisation will harm productivity should be ignored. The public mostly understands that the billions in largely-speculative investment stored in bricks and mortar is not the same as investment in productive, employing, value-adding businesses. Which raises the question of where new investment should go?

New reforms to the Superannuation Performance Test have been flagged, which will help unlock investment in renewables and housing previously limited by the test’s restriction to short-term returns. This would separate returns to renewable energy, affordable housing and venture capital from traditional assets, allowing their assessment over longer timeframes. With the government falling short on two key targets – housing builds and renewable electricity generation – in part due to over reliance on markets unmoved by public underwriting or concessional loans, it has an opportunity to lead with its own direct investment in building houses and renewable energy infrastructure, ‘crowding’ in new investment and closing the investment gap.

Cuts warrant caution

Many questions have been raised about the revenue ‘bankability’ of the NDIS cuts, with ambitious savings targets of $38 billion over the forwards. But merits-aside of the government’s move to refocus this burgeoning quasi-market, there is a real risk that the cuts just show up in other government-funded services – most notably schools.

The NDIS cuts will channel greater resourcing constraints to schools and teachers, who are already ill-prepared for the volume of children with complex needs and disability. But salt on the wound is a hidden Budget savings measure cutting $472 million cut to disability support in schools. A tidy saving in the short-term to help balance books, but a world of pain for workers in schools that’ll show up in future industrial campaigns.

An inflection point for Labor, but more to do

The CGT and negative gearing reforms will dampen investor heat in housing, and reduce house price growth marginally. By reducing tax benefits to investors and people using trusts, it’ll mean the tax burden of higher wealth individuals will increase relative to those relying on work incomes to secure their needs, who are disproportionately younger. Unwinding this unfairness in the tax system is worth applauding, and opens the door for future ambitious reform.

This Budget could be an inflection point for federal Labor. Reforms supplanting the highly privileged position of investors in the tax system set the stage for a deepened, pro-social program for government, and an opening to buck global trends where old social democratic parties elsewhere are tanking. The race is on to rebuild living standards for workers in this small trade-exposed country facing the risk of rolling global supply shocks. This is then a dual race to lift both living standards and our domestic productive capacity, reducing our reliance and exposure to trade upheaval.

More is needed to tangibly shift the dial for workers without assets, homeownership access, and a rising cost-of-living, to rebuild the capacity of work incomes to secure good living standards long term. Raising wages as well as a more hands-on approach to controlling prices including through more direct public sector investment and delivery in housing, electricity and childcare will help, as well as developing our high-productivity sovereign industries for the future.

Overall this report’s analysis and solutions foster the idea that our democracy is just a system to be better managed (presumably by people with the formal education and time to read these reports), or a market that just needs better information. Needless to say, people hate this sort of elitism. It reinforces their belief that the political system is managed by people who don’t understand their struggles, share their goals, or govern in their interests.

Working people are time-poor, working long hours, multiple jobs, stressed, trying to pay bills, seeing their incomes fall behind, getting priced out of homes, mortgaged to their eyeballs, raising kids, price-gouged by big business at every site of consumption, surviving on low income support payments. They don’t lose trust in liberal democracies within a vacuum. For decades, workers across the liberal democracies have seen living standards erode, while a minority’s wealth and power ascend. Australia is feeling that moment now. That’s not ‘foreign interference’ or social media misinformation. It’s material reality.

People’s living standards are being pilfered, and they’re being kettled into far-right political movements funded by the same wealthiest pilferers, like Gina Rinehardt who is the biggest funder of One Nation. Nothing in this report on the relationship between beneficiaries of rising inequality and political ‘polarisation’. Glaringly, nothing on lifting wages or resolving inflation more equitably. Instead, living standards are presented as mere by-products of the virtuous cycle of economic growth and fiscal prudence!

Shockingly, there are 65 pages in this report, and not *one* mention of the word ‘union.’ The institutions that built modern democracy! In the Parliament winning the right to vote, but first in the workplace through winning good jobs, where workers have power (that’s called ‘economic democracy’). The dismantling of unions from over 50% membership in the 1970s to 13% today is key to understanding growing distrust and disconnection of working people from mainstream politics.

Democracy is about the collective efforts and participation of people in the decisions that affect them, and unions help do this at the sites where working people spend most their waking time - at work. People experience the success or failure of their political systems based on whether their jobs pay enough and treat them with respect, the solidarity fostered between others with whom they share toil and create meaning, and the sense that their individual efforts are part of a bigger force capable of matching the power of business and politicians.

Democratic backsliding is downstream from backsliding living standards.

Modern technology conflicts extend beyond energy, into private finance and AI too. When Russia was cut from the EU-owned international payments system SWIFT in 2022, it was supposed to cripple the economy. Russia took a hit, but their problem-solving also generated demand for China’s Cross-Border Interbank Payment System. And so it is a problem that China’s international financial technologies are expanding, many of it cloud-based, bank-free, faster and cheaper (or free), facilitating the rise of the digital yuan. This tech is undermining the capacity of US private financiers and banks to both profit from global transactions, and enforce $USD dominance in trade. This conflict will keep bubbling away, and is the most existential for the US.

In the near term, AI will be the next site for visible technology conflicts. US AI’s shift into big state contracts including for surveillance and war is an implicit acknowledgement that it is overcapitalised and overhyped, and will not experience widespread consumer market penetration. US AI hedges its risky investments through warmongering in the White House because China’s AI is a permanent threat, capable of producing breakthrough AI cheaper, quicker, and on an open-source basis (remember DeepSeek?). This would obliterate the US for-profit AI model. Unlike the US AI advertising bluster, China is also not claiming that CoPilot or LLMs for professional workers represent some sort of productivity revolution, as is claimed in western services economies like Australia. They have a significant industrial base engaged in complex value-added production, and the war only improves their position to benefit from all 3 major technological innovations in renewables, finance, and AI with new trading partners and increased demand for their green industry exports.