Tag: Business and Economics

Manna from Heaven: The Case for Universal Basic Income
April 9, 2021 2:35 pm Comments Off on Manna from Heaven: The Case for Universal Basic Income
In 2009, Broadway, a London based charity, attempted a radical and novel way of dealing with homelessness. Instead of the usual offer of a hostel room, Broadway gave each of the 13 participants £3,000 of unconditional spending money. The participant’s purchases varied from gardening classes to a telephone and even a dictionary. None spent their money on alcohol, drugs or gambling. After one year the average participant had spent just under £800. After 18 months, seven of the thirteen participants were no longer homeless, with another two about to move into an apartment. All 13 participants had seen significant improvements in quality of life, with many attending rehab, reconnecting with family and making plans for the future. The most remarkable aspect about this pilot social welfare program was how much it cut costs. The city of London spends an estimated £30,000 to £50,000 per homeless person per year, on expenses such as courts, police, and social security. However, Broadway managed to substantially decrease homelessness for just six to ten percent of this cost.
There are two myths about poverty that have kept on keeping on in our modern welfare state. Firstly, that the poor can’t be trusted to make sensible financial decisions, and secondly, that free money makes people lazy and dependent. These myths are thousands of years old, with Paul the Apostle declaring in 58 AD “those unwilling to work will not get to eat” (2 Thessalonians 3:10). Based on these assertions, we have constructed a modern welfare state made up of large, complex and overbearing bureaucracies. These bureaucracies are designed to supervise, scrutinise, and educate their benefactors, requiring them to apply for jobs, perform volunteer work and be retrained. The USA alone has an estimated 126 of such welfare programs, costing the US government an estimated $1 trillion a year. However, despite being specifically designed to reduce dependency and increase economic mobility, this is the exact area where modern welfare has failed to deliver on. As economist Michael Tanner argues “in recent years we have spent more and more money on more and more poverty reduction programs, but seen few, if any, additional gains”. One alternative to our current costly welfare system is comically simple, yet dramatically more effective: just give the poor more cash. Specifically, we should replace our current welfare system with a universal basic income.
In developing nations, direct cash transfers have proven highly effective at alleviating poverty. One study by the Massachusetts Institute of Technology analysed the impact of direct cash transfers of $274 implemented by the NGO GiveDirectly in Western Kenya. They found that the program increased household wealth by 58 percent, food consumption by 20 percent, improved the psychological well-being of recipients and their families and increased investment in livestock and local businesses. They also found no increase in spending on alcohol and tobacco.
Similarly, in 2013 the Ugandan government gave 1,800 poor women in the country’s north $150. One year after the transfer, income doubled, savings tripled, and short-term expenditure and durable assets increased 30 to 50 percent. The study also concluded that for the women who received support from an aid worker (at an additional cost of $350), it would have been more cost-effective to simply bundle the aid worker’s salary into the grants.
A common theme amongst direct cash transfer research is that the money is seldom spent on goods such as alcohol or other drugs. One study in Liberia even gave $200 to alcoholics, addicts, and petty criminals. They found that the money was mostly spent on food, clothing, medicine, and small businesses. A review by the World Bank in 2014 concluded that in 82 percent of all researched cases involved with direct cash transfers in developing nations, alcohol and tobacco consumption declined.
The evidence shows that the real ‘experts’ on how to alleviate poverty are the poor themselves. With a much greater understanding of their own needs and their communities, they can spend aid money more effectively than any social worker ever could. The University of Manchester has summed up the benefits of direct transfers as such: households put the money to good use, poverty declines, health improves, tax revenue increases, and the programs cost less than the alternatives.
Despite the success of one-time cash transfers, the question remains as to how people would respond if they were guaranteed a permanent income without having to lift a finger. Would the poor become lazy and dependent? Basic income experiments performed in North America in the 1960s and 70s suggest not. One basic income experiment performed from 1975-1979 in Dauphin, Canada, guaranteed that none of the 13,000 residents would fall below the poverty line. The study found that paid working hours reduced by one percent amongst men, and by three to five percent amongst women, noting that women took more time off work than men in order to get an education or spend further time raising their children. Additionally, the study reported that children spent more time in school and performed better academically than previous cohorts, and that visits to the hospital and mental health complaints also decreased.
Basic income experiments in the USA reported similar results. One study in New Jersey performed in the 1960s demonstrate that the number of children graduating from high school increased by 30 percent, and self-reported paid work decreased by nine percent. However, controlling for unpaid housework and increased hours spent on education, no statistically significant decrease in work could be measured. Although basic income appears to decrease existing paid work, people are using their welfare income as an opportunity to invest in their future earnings (e.g., through education) and in their children. This has led some economists such as Michael Tanner to argue that basic income may even increase economic growth in the long term.
It would seem that regardless of any guaranteed standard of living, people want to spend their time productively. A study in 2016 found that over 85 percent of lottery winners continue to work at their old jobs, and banning inmates from working in prison kitchens and shop floors is often used as a form of punishment. James Suzman outlines in his 2020 book Work, that even our leisure activities can be considered work in certain contexts. For example, to an ancient forager, hunting elk is work. Nowadays hunting elk is an expensive and time-consuming leisure activity. To a commercial artist, drawing is work, but to an amateur artist, it is a fun and engaging hobby. Even video games simulate work that others get paid for, such as fighting in a war or running a city. Anthropologist Jan Boersema argues that in ancient agricultural societies, our desire to overcome boredom and structure our day is the primary reason why early farmers created monuments such as the Moai on Easter Island and Göbekli Tepe in Turkey. It is human nature to want to work. We thrive both mentally and physically when given a challenge we can productively work at to complete. The idea that people would become lazy if they were guaranteed a comfortable standard of living does not hold up to the evidence or our understanding of human nature.
So how much would a universal basic income cost? The answer is: a lot less than what we currently spend on welfare. A 2013 study from Bruenig estimates that eliminating poverty through a basic income in the USA would cost just $175 billion — a fraction of the one trillion spent on current social welfare programs. A universal basic income is desperately needed to replace our present welfare system. As Rutger Bremann explains in his book Utopia For Realists, “the welfare state, which should foster people’s sense of security and pride, has degenerated into a system of suspicion and shame”. Instead of forcing people to prove how vulnerable and helpless they are (and thus reinforcing a mindset of learned helplessness), welfare should be a means to empower the less fortunate.
A universal basic income gives the poor the freedom they need to invest in their futures and make real differences in their lives. Instead of working two dead-end jobs to feed your children, a basic income can enable you to find the time to pursue a career with real opportunities for growth and advancement, without risking your children starving. As noted in Richard Florida’s 2006 book, this is why countries with strong social safety nets such as Sweden also have the highest levels of social mobility and entrepreneurship. You can afford to take business risks and spend time on education when you aren’t living from paycheque to paycheque or run the risk of being homeless if you lose your job. As a different biblical narrative tells us, when God gave the Israelites manna from heaven whilst wandering through the desert, they did not become lazy and dependent. Instead, the manna gave them the ability to escape enslavement in Egypt and reach the promised land.

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Angus Padley
Dignity, Healthcare and Reform
March 15, 2021 4:51 pm Comments Off on Dignity, Healthcare and Reform
At first glance, it looks unlikely that the wider United States and Vermont have much to learn from one another. The United States is fuelled by division and discourse, a land of countless contradictions and winner-take-all races to the top. Vermont is one of the most homogeneous states in the nation. For the past 30 years, Vermont has embraced liberal progressivism, democratic socialism and has coveted its image as one of the most left-leaning states in the union. So, what could the United States possibly learn from a place that appears so different to the rest of the country? The answer is simple — Vermont’s past political battles both won and lost, are the future battles of the United States.
In America today, millions are without access to quality healthcare. At this moment, in the world’s wealthiest nation, cloaked in immense power, the middle-class is required to choose between going bankrupt or getting sick. Despite the lack of a universal healthcare system, the United States spends more on healthcare than any other nation in the developed world. The only thing Washington DC appears to agree on is that the current system doesn’t work. Since 1993, countless administrations have tried and failed to fix America’s broken healthcare system. Where the United States has defeated itself time and time again, Vermont has forged a path to victory. By learning from Vermont’s battle to correct the failures of American healthcare, the United States can begin to plan for a future where universal health care becomes the only viable option.
Sufficient access to quality healthcare represents perhaps the most fundamental ingredient to any functioning, equitable and sustainable society. If an individual’s capacity to become unwell and their degree of suffering is dependent on their wealth or social status, such a society is politically, economically and morally bankrupt. An individual’s health and wellbeing are crucial to their capacity to exercise key socio-economic and political liberties. This reflects their ability to function as a human being with dignity. Without a government-led system which ensures that every citizen has the same equal expectation to quality healthcare, the capacity for a sick individual to work, to vote or to thrive will wither away.
In a society without a sufficient healthcare system, the sick are forced to gamble their income against their health as they are pushed defenceless and without leverage into a market characterised by asymmetric information, exuberant prices and unequal bargaining power. A society which allows markets to discriminate against the sick and the poor entrenches dormant inequalities. Over time these foster resentment, anger and social violence, fracturing societies into hundreds of tiny pieces. The lack of a universal system in the United States has given birth to a society dominated by class warfare, social tension and a broken politics defined by anger, hate and envy.
In 2011, Vermont set to work creating a new healthcare system, one which sought to cover all people, regardless of their health, income or creed. The state legislature created the framework for a single-payer healthcare system, which would see everyone in the state covered by the government and offered the same standard of care. However, this once popular proposal was stagnated by Vermont’s limited state-budget and became feared by the very people it intended to serve. The combination of a federal government hostile to single-payer healthcare and the size of Vermont’s population and finances meant that there was no way the plan could be implemented without increasing taxes. This ultimately led to the abandonment of single-payer healthcare in Vermont in 2014 and the retirement of its cheerleader, Governor Peter Shumlin, just two years later.
Ultimately, Vermont’s failure to achieve this goal reflects America’s self-defeating approach to policy and governance. Since the great inflation of the 1970s, the United States has long had an aversion to government, big or small. Lyndon Johnson’s Great Society fell prey to Nixon’s law and order, Reagan’s states’ rights and Clinton’s third way. The last 50 years have engineered a deep fear and visceral loathing of tax increases, federal government intervention and anything with traces of communitarianism. For much of the 20th century, those seeking power exploited political and economic crises to convince people that the powerful had abused their position.Their goal? To create an imperial state characterised by excessive public expenditure and unrestrained government intervention.
This has created a society hostile to and fearful of its own survival and prosperity. One that shuns the very efforts of good men and women in the nation’s capital who are trying to correct the failures of the free-market excesses of the 1980s. The elimination of Roosevelt’s New Deal consensus and the triumph of the myth of small government has created an electorate fearful of change and progress. The 2008 Global Financial Crisis, the Great Recession which followed and the comprehensive failure of the United States government to adequately respond to the COVID-19 pandemic are all symptoms of this anti-government disease. The chaos and pain this schism has inflicted on the United States and the world has fostered a deep mistrust of politicians. This has rendered reform painfully stagnant and creating a global political class characterised by indifference, frustration and populism.
Even in Vermont, the closest thing the United States has to a socialist republic, these same concerns killed the state’s single-payer plan. The Obama administration, concerned about the political ramifications of supporting single-payer healthcare, refused to cooperate with Vermont’s government. In addition, a coalition of ideologically and culturally similar states such as Massachusetts and New Hampshire failed to materialise due to the recent election of small-government socially liberal republicans. This meant that the only option available to finance the plan was to raise small-business taxes, something that even the country’s most liberal state could not stomach. The populist backlash, where both sides of the debate united in their anger and frustration to almost defeat the incumbent governor, led to the abandonment of this noble, necessary and fundamental first step.
This dangerous anti-government ideology has cost the United States time and lives. The last 10 years have proven that only strong institutional reform can correct the unchallenged structural rot of America’s economy and society. Healthcare reform in the United States is long overdue. The COVID-19 pandemic, the failures of Obamacare and an ultra-conservative Supreme Court have put healthcare front and centre in the minds of the American people. When the time does come for massive institutional reform, the United States should look to its most progressive state. Vermont’s attempt at reform was a long, painful and lonely process which was ultimately unsuccessful. However, it offers a crucial lesson about the nature and failures of the American system of governance and politics which the next generation of leaders must grasp.
The United States should learn from this failure and wage reform with an eye to heavy federal-state cooperation, working with all states and parties, regardless of ideology or power, to set up a system which will endure for the long-term. Taxes are critically unpopular and have become as ‘unamerican’ as Michael Moore. Those in power in the coming generations must prove to the American people that programs reminiscent of Roosevelt’s New Deal or Johnson’s Great Society like single-payer healthcare, vast infrastructure projects and investment in renewable energy are worth the taxes they pay. Democrats and Republicans must show the people they serve that the government can work for them, if they only give it a chance.
Current US President Biden was perhaps the only candidate who could have beaten President Trump. Even with 200,000 Americans dead, the worst recession since the Great Depression and the rise of racism, bigotry and white supremacy, if just 1.16% of Biden voters changed their minds nationwide, Trump would have snatched victory from the jaws of common sense and dignity. Given America’s pain and long sojourn into midnight, Biden must now prove that he is the right man to bind the wounds of division, end America’s flirtation with populism, authoritarianism and fascism, and govern in a way which puts an end to America’s darkest decade since the 1930s. Healthcare is perhaps the best and only way to begin.
The United States is in a race against the fiscal clock. Eventually, the costs of healthcare will become unsustainable and the system will collapse. When that time comes, the United States will have a choice; either it can allow millions to go bankrupt and live without care, or it can choose to recognise that healthcare is a human right and implement a system which entrenches a basic level of socio-economic equality and human dignity. It is only through such radical and moral institutional reform that the United States can truly promise opportunity, prosperity and justice for all.

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Elliott Merchant
The Problem with Cash
11:17 am Comments Off on The Problem with Cash
Do you ever wonder why pirates hid their booty in treasure chests, buried deep underground? Or why people in many countries still stuff their money into their mattress at night? As a bank robber in the cult Australian classic Getting Squareput it, “I don’t trust banks. People keep robbing em.”
As much as we joke about the idea now, for the majority of history, leaving your money in a bank was as risky as betting on the horses, or investing in Enron, or crossing the Clintons. Banks had a nasty tendency for going bankrupt and disappearing with your life savings. These were individual institutions that printed their own money, had no government safety net and had nothing resembling insurance to back them up. Basically, they were even worse than the big banks are now. This was a big issue. When people bury treasure or hide their cash, money isn’t being invested in the economy. With no investment, there’s very little growth. Hence, the Dark Ages. No one is using their life savings to invent a new form of blacksmithing or to try out that new-fangled ‘steam power’ that seems to be all the rage with the youngsters. Instead, the money is in mattresses, rotting away and giving princesses a crappy night’s sleep.
But with government backing, bank-to-bank lending and Central Banks, suddenly it became safer to stick your hard-earned coins in the vault with everyone else. Growth explodes. Hooray, the day is saved, bring on the industrial revolution and black lung! But then there comes a new problem: inflation. Look, I know I’m not the history channel, but bear with me. Inflation has been around ever since cavemen started stockpiling carvings of big boobied ladies and painting cows on the walls. However, for the most part, inflation was only really a problem when there was war or famine. For the rest of the time, a dollar one year was a dollar the next, and the next, and so on. But with central banking and a central currency came a consistent inflation that, over the last 100 years, has averaged two percent. So now we had a safe place to store money, but that money was losing value over time.
But Lachlan, you audacious Adonis you, what about savings accounts? Don’t you get paid by the bank for that, effectively combating inflation?
I was getting to that, sudden second voice in my script. Your bank uses your money to lend out and make a profit, which is why you get paid. But when the banks can’t find anymore sheep to fleece – I mean, businesses and first-time house buyers to lend to, they lend between themselves. This is set at the Central Banks set funds rate. This all might sound confusing, but to bankers, these are the sweet, honeyed words of a poet. This system meant that everyone not only had a reason to use banks, but were now pretty much forced to. If you didn’t, you would lose money every year from inflation. Buried treasure was no longer a valid retirement plan. Banks were.
Now, you may have noticed during the recent crisis that the Central Banks around the world have been dropping their interest rates to nearly zero percent . Okay, you probably weren’t paying attention, but you did notice that your bank has reduced the amount of money they’re paying you down to roughly the square root of a fart in the wind. Those two things are connected. I can’t go into detail in this article but the reasoning behind this is to help stimulate the economy and save us all from the dreaded bat cough. But things still suck and Central Banks have already hit zero percent. What can they do now? One suggestion is to introduce negative interest rates. Again, I’ll explain why in another article, but if they do this, banks would be forced to charge negative interest rates to people keeping money in banks. In other words, they’d charge you a fee for you storing money with them. Thanks to the circular genius of the financial system, we are back to buried treasure and money in mattresses. This means, if you go back and read from word 84, taking your money out of the system, while good for you personally, would stuff the economy even further.
So, most Central Banks feel they can’t lower their rates below zero percent. Physical cash money prevents most economies from lowering their rates below 0%, because otherwise, everyone will just take their money out in cash.
Side note: It’s interesting to notice that, as interest rates started nearing zero percent, Australia and a number of other countries began preventing the withdrawal of more than $10,000 in cash on any given day. Their argument was that it’s to prevent cash being used in the black market. You are going to hear that defence brought up a lot in the next few years.
Anyway, this zero percent problem is known as the Zero Lower Bound and many economists argue that we need to get past it to help the economy. One option would be to move away from physical money, perhaps by introducing some kind of Digital Money. Maybe the central banks could control it. Then it would be some kind of Central Bank Digital Currency (CBDC). Would you look at that? Every central bank and their dog are in talks to introduce a digital currency, with some nations like China already implementing them. So, how do you charge people for keeping their money in a bank without them just withdrawing it all? Make it digital and make it impossible to get physical cash. Then you have to keep your money in a bank.
CBDC’s are the great solution, at least in the eyes of the bankers. You aren’t going to find gold buried on your local beach anytime soon, but the time of piracy is far from over.

Think your name would look good in print? Woroni is always open for submissions. Email write@woroni.com.au with a pitch or draft. You can find more info on submitting here.

Lachlan Holt
Why the US Dollar is a Beast
August 13, 2020 9:49 am Comments Off on Why the US Dollar is a Beast
Imagine a marathon. Each country’s currency is a contestant. Most are far behind, stopping to catch their breath and grab a quick smoko break. Some have broken away into their own little pack.
Sweden’s Krona and Switzerland Franc’s are chugging along, sticking to the centre of the group to conserve energy, and keeping hydrated.
Great Britain’s Pound, on the other hand, is powering ahead confidently, if only they could stop dropping hurdles in front of themselves to trip over.
The European Union’s Euro evidently got the wrong memo and have taped all their legs together. Now they’re too busy bickering about who isn’t running fast enough to actually run.
Canada’s running like they just watched Chariots of Fire and Australia is running like they just stole something… which they probably did. There’s only one problem… they’re both 4-foot-tall and their little legs can only run so fast.
Zimbabwe’s dollar decided to start juicing to get an edge… and ran into a brick wall.
Japan’s Yen was surging ahead of the competition and some even thought it was leading, but a while ago it blew a hamstring and has been limping along ever since.
Russia’s Rubel is a hulking behemoth of a man… with the little baby legs of Australia.
Cryptocurrencies like Bitcoin weren’t invited to the race and are at home furiously sprinting on a treadmill and live streaming their results.
And finally, the Malaysian Ringgit… is irrelevant but admit it, that’s a cool name for a currency.
That leaves the two main contenders: America’s Dollar and China’s Renminbi, also known as the Yuan.
China actually can run faster than it currently is, and many think it should. Maybe it will in the future, who knows. But for now, China has a side bet going and will make more money if it’s not in the lead, so whenever they start to pick up speed, they jam a fork into their thigh.
Now, I didn’t mention it before but America is hosting this marathon. Unbeknownst to the other runners, America pooled together all the fees that the other countries paid to enter the race and has paid Usain Bolt to run for them.
As you can imagine, this slapdash group of miscreants don’t stand a chance against Bolt. So, when it comes time to bet on the race, every punter with cash in their pockets puts their chips on America.
This is important so I will say it again. Since everyone expects Bolt to win, everyone bets on Bolt.
This is even if America (Bolt) messes up. Even if falters, no one is banking on Bolt being overtaken by the likes of baby legs Rubel.
There are two other factors to this race that makes it weird. Clearly its originator was a big Keanu Reeves fan because the track is rigged to explode if everyone drops below 50 mph. Effectively, all currencies can’t be worth $0 all at the same time. The second factor comes from the Hunger Games movies… Do you remember that scene where popular contestants are given care packages from the viewers at home to help them survive, teaching children the importance of being popular and the value of match fixing?
Well, the economy is like that.
You see, everyone has a lot of money riding on Usain Bolt winning. Not only the viewers, but the other runners have bet that Bolt will win. So much so that the reward for winning the race is less than winning the bet on Bolt.
So if Bolt trips up (from a national financial meltdown) or leads all the runners down the wrong path (like a global financial crisis), there is always someone desperate enough to not lose their bet that they will strap a rocket to Bolt’s back (in the form of Quantitative Easing and the buying of US Bonds).
If instead Bolt decides he wants to slow down (and we’ve all seen him do it before), the rest of the runners might slow down to match him, ending up in the world’s dorkiest power walk.
It might not seem like it, but most currencies don’t want Bolt to lose.
Much like China hobbling themselves and keeping their economy undervalued, countries would rather have a high-valued US dollar to help with trade.
This leads to its own problem (the Triffin Dilemma) but that’s an issue for another metaphor.
This is starting to get confusing. For now, all that matters is that when things are good, people bet on the US dollar and when things are bad… people bet on the US dollar.
So, if you’ve wondered, amidst COVID and sky-high healthcare debts and student loan debts, how the American Economy can be doing so well, just picture Usain Bolt with a rocket so big it would make Kim Jong Un blush. Just don’t Google it.

Think your name would look good in print? Woroni is always open for submissions. Email write@woroni.com.au with a pitch or draft. You can find more info on submitting here.

Lachlan Holt
The Post-COVID Economy
9:46 am Comments Off on The Post-COVID Economy
For the first time in most university students’ lifetimes, Australia is in recession. But this is not an ordinary recession. It is a recession that I think will change our society for the better.
When we hear of the current state of the economy, the phrase “this is the worst recession since the Great Depression” is often used. So, what happened in the Great Depression and what did the economy look like after it?
Unemployment in 1929 reached up to 30 percent. The government of the United States responded to the depression in a way that is unimaginable now. Based upon the economic thinking of the time, the government pursued cuts of 20 percent to spending and 10 percent to wages in the name of ‘balancing the budget’. This was well intended but only worsened the economic environment.
Whilst the Great Depression was occurring, a Cambridge mathematician-turned-economist known as John Maynard Keynes wrote of a new way of approaching economic crises. Keynes thought that when the economy enters a recession, governments should spend more money than they earn, creating a budget deficit.
Keynes’ theory was not adopted in the Great Depression, but ten years later when another crisis shook the globe, World War II, his theories were welcomed by policy makers across the world. In Australia we pursued a policy that was known as Full Employment, where the government facilitated a job for anyone who was willing to work. There was massive stimulus to welfare, housing, electricity generation and manufacturing after the war. And this was all done based on Keynesian theories.
Fast forward to a decade ago when the Global Financial Crisis threatened the livelihoods of Australians. Our policy makers continued this near century-old Keynesian method. The Labor Government injected billions of dollars into the economy, saving Australia from recession whilst creating a budget deficit.
Since that deficit was created, it has been the mission of both sides of politics to ‘balance the budget’ and deliver a surplus. At the 2019 election, the Liberals based their campaign off delivering a surplus in 2020 whilst Labor promised an even bigger surplus than the Liberals.
However, no one could predict COVID-19. Instead of delivering the first surplus since 2008, this year the government is going to create the largest budget deficit in history. The deficit is predicted to be upwards of $200 billion whilst debt will exceed $1 trillion.
These are financial figures which are incomprehensible. And something is going to have to change in our management of the economy. Right now, I am taught in my economics major that governments should achieve a budget surplus and then pay down debt. Australia won’t achieve a budget surplus whilst I’m at university and it will take at least 20 years of budget surpluses to pay back the $1 trillion of debt. I will be nearing retirement before Australia can achieve what I’m told is ‘good economic management’.
So what needs to change? Like Keynes did in the 1930s, there are already economists now thinking of new ways to approach budget management. And whatever new approach is adopted, it needs to consider that budget deficits must be continued in the long run. The only way you can create a budget surplus, especially in the post-COVID economic environment, is if governments tax more than they spend. There are only two ways to achieve this:

Spending stays the same whilst taxes are increased
Spending is cut whilst taxes stay the same

When unemployment is above 10 percent and the economy is in the worst recession since the Great Depression, doing any of those two things in the name of a ‘balanced budget’ would only spiral us into a deeper recession. It is what occurred in the Great Depression and we’re still learning from it a century later. But we need to do more than just learn from the mistakes of the past. We need to respond to the issues that pervade our current economy.
Wage growth was stagnant even before the crisis. That needs to change. The workforce was increasingly casualised before the crisis. That needs to change. The climate was not at the forefront of economic policies before the crisis. That needs to change. And marginalised groups in society had not achieved economic equality before the crisis. That too needs to change.
When we can acknowledge that budget deficits are now going to be integral in our post-COVID economy, and when we acknowledge that there are systemic barriers in the economy, we can progress the economic management of Australia to a more inclusive economy that promotes sustainable growth.
This is the worst recession since the Great Depression. And this is a horrific economic environment to be living in. But it is also a moment which will change the future of our world. Let’s hope that change is for the better.

Think your name would look good in print? Woroni is always open for submissions. Email write@woroni.com.au with a pitch or draft. You can find more info on submitting here.

Marlow Meares
Pegging a Petrodollar
9:38 am Comments Off on Pegging a Petrodollar
Joke 1
A young boy walks into his father’s office.
“Can I have some money to buy a bitcoin?”
His father looks up from his newspaper. “How much?”
“$10.”
“$45? Do I look like I have $204? Where am I going to get $13?”

The joke is that Bitcoin’s prices fluctuate a lot…
I’ll wait for the raucous guffawing to die down. But as funny as that side-splitter was, to people that must deal with exchange rates for a living, this is serious business. Let’s say you sold onesies for cats that have their owner’s face on them… you know… to really hammer home the loneliness… and you tried to sell these yourself, pricing them in each country’s native currency.

Joke 2
A young boy walks into his father’s office.
“Can I have some money?”
His father looks up from his newspaper.
“How much?”
“$67 Arubian Florins.”
“$113 New Israeli Shekels? Do I look like I have $38 Costa Rican Colons? Where am I going
to get $4 Polish Zloty?”
A good joke is worth repeating.
So, if you’re trading one product all around the world, it’s prohibitively difficult to figure out how much to charge. It’d be a lot easier if you just used one currency. Thankfully, almost everyone trades in US dollars.

Joke 3
A young boy walks into his father’s office.
“Can I have some money?” His father looks up from his newspaper.
“How much?”
“$10.”
“$10.02? Do I look like I have $9.99? Where am I going to get $10.01?”

The joke’s still a hit.

“But wait,” some of the more pedantic of you readers cry, “there is still some change each time.” Right you are. There would still be a difference in exchange rates between your currency and the US dollar. There isn’t a huge difference, but with the scale of sales of Cutesie CatsieTM, discrepancies in price add up to a lot of money. The solution? Peg your currency to the dollar. This means that your currency is always worth the exact same number of dollars.

Joke 4
A young boy walks into his father’s office.
“Can I have some money?”
His father looks up from his newspaper. “How much?”
“$10.”
“$10? Do I look like I have $10? Where am I going to get $10?”
You get the idea.
This is exactly what petrocurrencies do. A country with a petrocurrency is just a currency that’s main export is oil. Bubbling Crude. Texas Tea. None of this extra virgin garbage. These nations rely so heavily on the price of oil, that they peg themselves to the US dollar in order to keep it stable. Places like Saudi Arabia, Kuwait and the United Arab Emirates all follow this method.
This is good for trade, but it does mean you are very dependent on oil prices going up. As Venezuela can tell you, when oil prices are good, they are very very good and when they are bad, they are horrid. This would be like finding out your cat onesie is knitted out of lavender. If you already knew cats were allergic to lavender, you know too much about cats. In good times, these countries make more money than they know what to do with, and in bad, they starve. Let me stand on my bio-degradable hippy soapbox and point out that oil is not a renewable resource. Eventually, oil wells dry up. To these Petrocurrencies, this is what you would call, a bit of a bummer.
So how do you fix this?
Well let’s say that after you had to discontinue Cutesie CatsieTM, you had millions of dollars in sales, but no way of getting any more. Would you:

A) Blow it all on a drunken bender in Vegas with cocaine and women?
B) Invest the money in shares like the kind of sweater-wearing cretin that reads the financial section of a newspaper and really enjoys chess?

If you picked B, congratulations, you’re thinking like a petrocurrency giant. When a country gets so much money so quickly that it doesn’t know what to do with it, rather than throw a rager, it invests the cash into a sovereign wealth fund. This is sometimes known as Petrodollar recycling, but the scientific term is ‘a big ol’ pile of stocks, bonds and assets.’ When the money from the oil runs out, these countries can use the dividends they make off the sovereign wealth fund to pay for government services. This means that Kuwait, with its sovereign wealth fund of 650 billion, Saudi Arabia with 900 billion and the UAE with its fund of 1.35 trillion, seem to own just about 1 percent of everything on the planet. It also makes these oil producers some of the world’s leaders in the funding of renewable energies. Doesn’t that just mess with your moral picture of climate change?

Joke 5
A young boy walks into his father’s office.
“Can I have some money?”
His father looks up from his newspaper. “How much?”
The child’s phone pings.
“Wait, never mind. My amazon stock just paid me a couple thousand in dividends.”
The child walks out of the room.
The father, being nothing but a facilitation device for this joke, continues to read his paper,
trapped in an endless purgatory, waiting for a punchline that never comes.
He is not needed anymore.
His life lacks all meaning.
The point of all this was to teach you a bit about currency pegs, sovereign wealth funds and how some countries with no resources can still make money, but I promise you that the only thing you will remember is that terrible joke.

Think your name would look good in print? Woroni is always open for submissions. Email write@woroni.com.au with a pitch or draft. You can find more info on submitting here.

Lachlan Holt
Risky Business
April 24, 2020 11:50 am Comments Off on Risky Business
CONTENT WARNING: Sexual Exploitation, Body Image, Brief Mentions of Xenophobia and Misogyny

Sometimes the stories that make the biggest impact are those which play out in real time. News and academia seem immeasurably married to events. If someone in the Sydney Morning Herald wrote an amazing article about the eruption of Mount Vesuvius and the destruction of Pompeii today, few would read it. However, a lower quality story about the spontaneous eruption of Mount Ainslie would probably crash the Sydney Morning Herald’s website. Very limited attention is given to stories about things that have happened over long periods of time. Business and economics is not a topic that inspires ‘The eruption of Mount Ainslie’ type stories.
Instead, it gives material form to abstract patterns, evolutions and phenomena that we would otherwise forget about, but which shape our world as we know it. It is my view that articles and stories about business and economics should aim to shine a spotlight on these changes and the implications that they carry for our society, our money and ourselves.
So much of our reality exists without material form at the behest of companies like Netflix, Amazon and Facebook to name a few. These corporations control so much of what we do every day and often bleed into one another to the point where they monopolise everyday life.

Since the emergence of computers and smart-phones, more and more of our lives are conducted online. Some of our relationships exist as much online as they do in person. Our money, most of which we will never see nor hold exists only as a number on our screens. We spend hours binging shows like Sex Education, The Office and Watchmen (all personal favourites) on streaming services, all of which exist on our laptops and phones, not anymore, it seems, on our televisions.
As a consequence of their great size and power, these companies often contradict themselves and operate outside of their own corporate identities. Amazon, for example, was established as an online book store. It now controls the online shopping market, Whole Foods shopping markets (with 500 stores in the United States and counting), produces films and has launched its own streaming platform to rival Netflix. Imagine if 20 years ago someone told you that by 2020, a company which sold books online would control a chain of supermarkets, launch its own on-line television channel and become one of the largest tech corporations in the world. What more can a company control other than food, technology, entertainment and shopping?
It gets weirder. The Walt Disney Company, originally responsible for Mickey Mouse and The Lion King, not only owns Lucasfilm and Marvel but is the par- ent company of Fox Corporation. The very network that gave us Fox News and Roger Ailes, Bill O’Reilly and Tucker Carlson is owned by the same company that gave us Lilo and Stitch and Bambi. I don’t know if Pinocchio would agree with their demonisation of immigrants or their blatant misogyny, but I guess the board of Disney wouldn’t invite him.

These companies, through monopolising everyday life and exploiting it, for all it’s worth have managed to creep into politics and business to amass great wealth and power. They remind me of the fictional media conglomerate Waystar Royco from the show Succession, gigantic and seemingly indestructible but morally corrupt. Like Waystar Royco these corporations wield enormous political power, sourced from the sheer volume and size of their political donations and their control over news networks. Facebook for example decides what political material appears on our feeds no matter the legitimacy of the add or the substance of the claim. This has an enormous impact on how we form our political opinions and ultimately how we exercise our right to vote.
Amazon, Disney, Facebook and others represent the closest thing we have to despotic actors in the world of business and economics, these titans of industry wield enormous power sourced from their immense wealth and ability to control what we see and how we see it. The $4 trillion question is, how did we let them grow so powerful to the point where they are en- trenched in our economic, social and political fabric?
The answer is sex.
Sex, bodies and seduction, and business and economics seem to have nothing in common. Monetary policy appears to play little role in who we find at- tractive and talk of fiscal policy would never make us swipe right. The reality is that how we spend our money is governed by appearances and sex. We are more likely to spend big on something that is glamorous and sold to us by a perfect celebrity or model, even if it is in our interests to do the opposite. Over time, media conglomerates like Facebook, Amazon and Disney have monopolised this dynamic in order to control not only what we buy but what we see, when we see it and how we see it. As a result, these companies have amassed great wealth and power to the detriment of consumers. The monopolisation and commercialisation of sex has had untold consequences on our economy, our politics and on ourselves.
People will often succumb to the ‘buy this get this’ trick or the ‘buy this become this’ idea whereby some model will stand behind a product, leading the consumer to buy it due to some subconscious wish to become or attract the model. Fox News has expand- ed on this to create a ‘believe this get this’ dynamic where questionable news and political claims become more believable because of the glamour be- hind the ugly propaganda.
Selling products or news using sex also encourages impulsive buying, which is particularly common on-line. Most of the things we buy online are low-risk, relatively cheap and low-information products such as books, accessories and small electronics. Amazon for example, tries to make it as easy as possible to purchase something so that you have little time to consider if you really need it. The model standing behind the product telling you how great it is makes it even more likely that we will think ‘if only I buy this useless hat, I can be as good-looking as they are’.

The same dynamic is exploited in news. Some channels push fast-paced discourse and furious agreement so that the viewer doesn’t have time to consider the implications of what is being discussed. All we see is two seemingly respectable, good looking people in such vehement agreement that there is no time to think more deeply about the issue until they have bought the claim being discussed. Viewers seem more likely to believe something if it is sold to them by someone they find attractive or alluring, especially if the news program is fast-paced and filled with more graphics than analysis. This has allowed Facebook and Disney to buy millions of viewers, giving them one of the biggest viewerships in the world and the billions that come with it.
It doesn’t take a genius to see that giving billions to lawless and morally corrupt media conglomerates by allowing them to play on our sexual desires and in- securities isn’t great. It is impossible to calculate the psychological or economic damage that it has had on people who suffer from severe body issues and chase product after product clinging to the hope that it will give them the perfect body and appearance. Who knows how much Facebook or Fox has been able to push its own agenda by tuning us to accept questionable, or blatantly wrong claims because we are more inclined to believe someone who we find attractive? This has only allowed these companies to amass great wealth and power, making them so politically immune that they can survive even the most strident efforts of government to regulate or monitor their behaviour.
It has become fact since the emergence of the inter- net and these conglomerates that sex breeds sales and viewers, sales and viewers breed money, money breeds power and power breeds impunity. This is not something that has happened all at once, and there is no moment in time that can be pinpointed as the day this began to go beyond our control. This is not an ‘Eruption of Mount Ainslie’ story. This is something that has developed over a long period of time as our everyday lives became more and more dependent on the online economy.
The use of sex and envy in advertising and news has allowed these conglomerates to maximise their market share and become some of the most powerful entities in the modern world. To the psychological and economic detriment of consumers, we have been trained to neglect our better judgment and give into our lesser desires. The dynamic they have created be- tween us and them is dangerous, toxic and seemingly-unshakable. It might not quite be the eruption of Mount Ainslie, but volcanic events are limited by the rules of nature. Facebook, Amazon and Disney know no rules, natural, political, economic or otherwise.

Elliott Merchant
All Tip and No Iceberg: Ceremonial Economics in Australia
March 12, 2020 11:07 am Comments Off on All Tip and No Iceberg: Ceremonial Economics in Australia
What is something ceremonial? Shiny objects like orbs, crowns and sceptres? Or grand and powerful characters such as the Governor-General, the Pope or the Queen? They are highly revered, and beautiful to look at. However, too close a step can offer a glimpse beyond the façade and reveal the idleness beneath the surface. The power of ceremony is that it can distort the true meaning of things with fancy rhetoric and hyperbole. The Imperial Crown of the United Kingdom, while beautiful and famous, is still an object. The Pope, while admired and worshipped, is still human.

Ceremony is also present in our politics and economics. Over the past 40 years, countless governments and oppositions have coated simple phenomena and concepts in spin and hyperbole to distort their meanings for personal benefit. They have created ceremonial economics in order to sell political narratives to voters for political gain.

Today, Prime Minister Scott Morrison’s surplus is the best example of ceremonial economics. If, as the Liberal government has promised since they were elected in 2013, there is a return to surplus this year, it will not mean what the government wants us to believe it means. Morrison will spin it as a return to the predictable and prosperous fiscal discipline of the ‘Howard years’, and as an indication of a healthy and rot-free economy. It will be presented as a sign of economic and political success that belies its actual significance and implications. A budget surplus now has a conferred ceremonial power which alters its true meaning.

The creation of ceremonial economics has had alarming effects on our politics and public discourse. As the state of the economy and fiscal management are key concerns of Australian voters, real political outcomes are decided on the basis of distorted meanings and ceremony, while meaningful substance is neglected.

Since Morrison came to power in 2018, he and his treasurer have emphasised the government’s determination to return the federal budget to surplus in the 2020 to 2021 financial year. In the 2019 federal budget, the centrepiece of Josh Frydenberg’s speech was restoring ‘fiscal discipline’, announcing that Australia’s gross national debt had steadily decreased, and that there would be an $11 billion surplus in the coming year.

Federal budgets, while officially a statement to the public about the state of the national accounts, are always political. The return to surplus was qualified with the assertion that ‘only one side of politics can do this’, with a casual reference to former Prime Minister John Howard and former Treasurer Peter Costello’s paying off Labor’s ‘debt’. Neither in the speech, nor in the election material that followed, was there any exploration of what paying off Labor’s debt would mean for voters. Instead, the Coalition used the misleading ‘surplus’ to convince voters that it had saved the Australian economy. And it worked. They won the ‘unwinnable’ election, and proved that in elections, economic management is always supreme.

Despite this victory, and the surplus we will no doubt see within in the next three years, the Australian economy continues to sputter, one painful limp at a time. In October of last year, the International Monetary Fund (IMF) predicted that the economy had grown just 1.7 per cent in 2019, and would only grow by 2.3 per cent in 2020. This was before the catastrophic bushfires that have devastated much of NSW and Victoria. This makes 2019 the worst year for the Australian economy since the Global Financial Crisis 11 years ago. Given that a healthy growth rate is considered to be between two per cent and four per cent, there is considerable cause for concern.

The government has reassured people that despite ‘economic headwinds’ the ‘fundamentals’ of the economy are strong. What these fundamentals are, if wages are stagnant, trade tensions are rising, and interest rates are dangerously low, is unclear. A budget surplus in the near future will not solve these problems. At a time when the Governor of the Reserve Bank has pleaded with the government to spend to stimulate the economy and prevent recession, a manufactured surplus might be the last thing we need. In fact, it will be window dressing, the much anticipated delivery of a political promise made in 2013. The Coalition will use it as evidence of their prudent economic management and remind the electorate of how long it took to clean up ‘Labor’s mess’. This is despite the threats that Australia faces and the deep structural imbalance of our economy.

The $11 billion question is why, at a time of great economic uncertainty, is this surplus, the result of inaction and political points-scoring, so celebrated? Why isn’t it seen for what it is? Why is it all tip and no iceberg?

The answer is, ceremony. For decades both sides of politics have painted one another as incompetent economic managers, and pronounced themselves as the only party that can be trusted with the economy. This has led to 40 years of spin and ritual. Simple economic phenomena have been dressed up so much that their significance has become distorted and their meaning malleable, if not broken altogether. Through endless attacks, rhetoric, and tricks, a lack of fiscal discipline has become deadly in Australian politics. Politicians have conferred a type of nominal power on economics, resulting in its purely ceremonial meaning.

In 1975, former Prime Minister Gough Whitlam and his government, the first Labor administration in over 20 years, werewas removed from office in a crushing electoral defeat after just three years. Despite their sweeping social reforms, the Whitlam government was plagued by chaos and economic mismanagement. The Coalition argued that Labor had failed to control inflation, led the country into an oil crisis, and induced a recession. This, compounded with the many scandals of the Whitlam administration, was enough to remove Labor from office. The failures of the Whitlam government became the foundation of a narrative that economic mismanagement is always linked to internal chaos and instability.

In 1983, the newly-elected Hawke government turned the tables on the Coalition by publicly revealing that the deficit left by former Prime Minister Malcolm Fraser was $3 billion larger than what was stated during the campaign. This deficit of $9.6 billion (around $31 billion in today’s dollars) meant that the incoming government would have to cut most of its spending plans for its first term. The blame was used to paint the outgoing government as fiscally incompetent, unbalanced, and untrustworthy. This cycle was repeated in 1996 when John Howard inherited a $14 billion deficit (roughly $24 billion in today’s dollars), which was significantly larger than expected. Howard also came into office with the national debt approaching 20% of GDP, the highest level since Whitlam.

In both these cases, highly unpopular governments were swept from power in dramatic fashion. Fraser in 1983 and former Prime Minister Paul Keating in 1996 were both vehemently disliked, and avoided answering questions about the deficit and the net debt accumulated during their time in office. In both cases, fiscal mismanagement was linked to untrustworthy, unpopular, and chaotic administrations.

Conversely, Howard was able to marry economic prosperity, rising wages, and low inflation to surplus after surplus. After the 1997 to 1998 budget, all but one of Peter Costello’s next nine budgets were in surplus. Howard and Costello won four successive terms and governed for over 11 years. In the minds of the electorate, stability and general wellbeing went hand-in-hand with a balanced budget.

A crucial element of Labor’s successful campaign in 2007 was painting themselves as ‘economic conservatives’ who would not spend big as Whitlam and Keating did, but would follow Howard’s prudent fiscal management. However, Labor was forced to erase Australia’s budget surplus, and spend to avoid a potential recession brought on by the Global Financial Crisis. Despite the fact that Rudd’s policies likely prevented a recession, the opposition used this to convince the public that Labor could not manage the economy. This was not helped by the instability that plagued Labor from 2010 onwards: a minority government, a midnight coup, and spill after spill followed by deficit after deficit. Once again, economic mismanagement followed chaos and instability.

Whitlam proved that governments live and die on their management of the economy. Hawke tied together unpopularity, failure, and untrustworthiness with a massive budget deficit. Howard married political stability and economic prosperity with unbroken rivers of gold flowing from the treasury. As the Rudd/Gillard government ate itself alive, the public again saw headline after headline about a rotten budget and a sky-rocketing national debt. Gradually, the meanings of economic terms hadwere been eroded, and all that remained was their raw political value. Because a surplus must be good and a deficit must be bad, their significance is lost. Instead, the budget is smothered in ceremony as complex economics are reduced to ritual talking points on breakfast television programs Sunrise and Today. Both sides of politics have used the state of the federal budget to attack each other and promote themselves, to the point where a surplus has become the jewel in the crown of competent economic management. Like a crown, when removed from ceremony, it becomes irrelevant.

The problem is that the state of the budget is so much more than just a shiny object. The finer, but more important, implications of budgets and economic phenomena are so often lost in political noise.

As the last four decades have made the national accounts purely ceremonial, the government is chasing a budget surplus to try and once again marry a balanced budget with prudent economic management. However, a political, at-all-costs surplus is the last thing the Australian economy needs. All signs point to a global slowdown and stagnant growth in the very near future. A recession is more than possible. Interest rates are at historic lows, and monetary policy has run out of room. If the government continues to chase a surplus it will be unable to stimulate the economy, resulting in a recession for the first time in 25 years, rising unemployment, falling revenues, and years of recovery. It would be a surplus that Australia could not afford.

Elliott Merchant
Want To Write For Edition 2? Check Out These Prompts!
February 19, 2020 4:00 am Comments Off on Want To Write For Edition 2? Check Out These Prompts!
Woroni is looking for YOU to write for our second edition of the magazine! You can write about pretty much anything, but here are some prompts to get your creative juices flowing (hint: the theme of this edition will be SEX!). First drafts are now due next Tuesday (25/2).
International:

What is considered ‘appropriate’ when it comes to sex? How does it differ between cultures?
Are standards of sexual attractiveness different in different cultures? Do you think we can all be sexy?
Talk about STIs – why is there a stigma surrounding it when it happens to so many people?

Reviews:

Parasite
Tame Impala’s new album
Literally anything else!

Arts:

How can sex and bodies be used as protest? Think the #freethenipple, sex strikes etc. Do they work?
How do you feel when you see your body naked? Are you liberated, or embarrassed, and why is this?
How has the tv show Sex Education brought sexual wisdom to a mainstream audience?
Talk about a sexual experience that has had a lasting impact on you, positive or negative. What was it about this experience that made it so memorable?

Multilingual (for foreign language speakers):

Talk about sex and social media! Think about sexting, online dating etc. and the impacts they’ve had on you.
Talk about the presence of sex in the films you’ve watched and the music you’ve listened to! Who are the people who engage in this, and does it matter?
How has your mental health affected your sex life? (can be anonymous)

Creative:

Poetry
Fiction
Photography
Painting and drawing
Scripts
Satire

Science

Talk about fat-shaming! How can we have productive discussions about health without implying blame?
Apparently, giraffes express sexual attraction through drinking each other’s pee! What are some examples of animal sexual practices that put humans to shame?
Are ageing and death as inevitable as we thought? Are they even preventable?
Turns out, some people don’t have an inner monologue! Do you have one? How does having a rich inner life or the lack thereof impact on your life?
Have you ever had imposter syndrome in a sexual relationship? Why was this?
According to several studies, our generation is having a lot less sex than previous generations. Why do you think this is? Why are these studies so important?
How do you really feel about your body? Tell us openly and honestly (and anonymously, if you like).

Business and Economics

Porn is a multimillion dollar industry! Why is porn so popular, and why, despite its popularity, is it still stigmatised?
Talk about sex work! Is sex work inherently oppressive? Should we legalise it?
Do you own any sex toys? Talk about them! Why are they important to you, and why don’t people really talk about them?
Give an overview of online dating. Talk about some of the various websites, how popular they are and what purposes they serve.

Woroni Editor
The Business of Audio
November 13, 2019 5:33 pm Comments Off on The Business of Audio
My podcast addiction began three years ago with The Tim Ferris Show, a podcast in which bestselling author, entrepreneur and investor Timothy Ferris interviews high-performing people across a wide range of disciplines. Since then, I’ve listened to countless conversations between bestselling authors, billionaires, television personalities, athletes, presidential candidates, philanthropists and justices of the Victorian Supreme Court. Russell Brand to Jordan B. Peterson. Elon Musk to Melinda Gates. History, politics, marriage counselling and book reviews: Apple Podcasts has it all.

The idea of listening to podcasts might still seem like something your overcommitted friend studying law and commerce might do (guilty). But the reality is that a greater number of people are choosing Revisionist History over Coldplay. It seems that every day a new celebrity announces their foray into the ‘audio space’, armed with nothing but a quirky ‘personality’ and ‘a story to tell’. It is also true that an increasingly large number of companies are using podcasts to promote their message, inform their client base and recruit new people. Being a commercially orientated student with an interest in this audio space, I decided to determine just how commercially viable podcasting as a medium is.

What actually is a podcast?

For the few readers unaware, a ‘podcast’ is a type of digital content, produced episodically, usually in the form of an audio or video file. Common genres involve dramatic retellings of historical events, ‘round-table’ conversations on a particular topic and interviews with interesting high-achievers. Popular podcasts like The Joe Rogan Audio Experience and Dan Carlin’s Hardcore History usually release long-form content unsuitable to the traditional platforms of radio and TV – we’re talking three or more hours of content per episode.

There are a number of common reasons to start a podcast: to promote a book, a business or a cause, to produce interesting content that can be monetised, or a mixture of both – to produce content that promotes a certain message and can be monetised due to the insightful nature of its material.

How do podcasters make money?

True to form, Tim Ferris has produced an insightful article which breaks down this question nicely. Podcasters who are taking the ‘monetisation’ approach usually produce interesting content that users are willing to either: (1) support through the purchasing of sponsored goods, or (2) support through the use of donations. Hardcore History is a podcast that makes usage of the latter model, producing 12-hour-long epics and asking for $1 donations at the end of each episode. Clearly, it works, as they pay an entire team to research for and produce the podcast all year round. Tim Ferris uses the former approach, monetising his podcasts using a CPM (cost-per-thousand) approach. After approaching a sponsor, Tim will set a price – usually between $25-$100 CPM – and is paid depending on how well the podcast does. He’s quick to note that despite the possibility of his podcast generating $2 to $4 million USD per year using this approach, he likes to ‘cap’ the amount sponsors will pay in order to retain his audience. If that number seems incredible, Tim’s podcast barely breaches the Top 50 podcasts on Apple Podcasts. In 2015 The Joe Rogan Experience was seeing approximately 15 million downloads per month, and Rogan usually includes about three sponsors per episode.

How big is podcasting?

These figures prompt the question, how big is the podcasting industry? This is a multi-faceted question with a complicated answer. Like with YouTube, actually identifying an exact figure is difficult. Podcasters do not always publish their listener numbers, let alone their earnings, and the process of identifying either is usually a matter of speculation.

In addition, many podcasts are designed to promote external content and businesses, so the monetary value they generate is even harder to identify. A good example of this approach is the The GaryVee Audio Experience, with which the company Vayner Media promotes its vision and mission in the form of a podcast called the Ask GaryVee Show. The original production involves the company’s CEO sitting down with another influential business and sports personality as they answer a number of user-submitted questions. The program runs for about 30 to 60 minutes. This content is then dissected into 10 to 15 minute long pieces of content, distributed on Instagram, Facebook and LinkedIn. Particularly impressive anecdotes are further transformed into cartoon panels for distribution on these same platforms, or one-minute long ‘insights’ that viewers can easily share with their unsuspecting family members. Instagram and Snapchat stories are next, hosting their fair share of insights that divert viewers back to the long-form content where the message is clear: Vayner Media knows what it’s talking about when it comes to Topic X. All in all, the company is able to produce around 30 to 60 pieces of content a day – all from a single 60 minute podcast.

Clearly, podcasting is on the rise, and with larger numbers of celebrities, companies, and even government departments using this platform to connect with their respective audiences, it is bound to grow even more in the years to come.

Edward Andreyev