ATO probes anus of the services economy

Shane Wright is doing a decent job at Domain recently. Today he peers into the anus of the services economy and does not like what he sees:

According to the ATO, in 2016-17 (the last year for which there are a full set of figures), 360,000 firms used the [instant asset write-off] scheme with the average claim $11,000.

…Small construction firms were the most likely to use the system, maybe on a new trailer to carry around their gear or for an on-site generator or for new electric saws.

Farmers were the next most likely.

Then came people in the professional and scientific space (that’s a lot of laptops and software getting written-off) then our healthcare sector.

…It may not be as politically sexy as our builder with their new trailer or a farmer with a small silo to hold seed for next year’s crop, but the massage table is just as much a part of this “economy enhancing” instant asset write-off.

…The Productivity Commission, in a new report into trends in our productivity, has found it is “mediocre” and slipping.

Warning that Australia is going through a period of “capital shallowing”, in which the ratio of capital to labour has fallen, the commission found a particular weak spot in research and development.

“Growth in R&D capital formation is even more subdued than capital formation generally, so that the R&D investment share of total investment has also fallen,” it found.

This will come as no surprise to MB readers who long ago probed the anus of the services economy:

It struck me as I sat there that it was wonderfully convenient to have a Thai massage joint just around the corner, especially given my local shops are not very large. I briefly surveyed the other shops and realised swiftly that what I was looking at was the lion’s share of the Australian services economy supply chain. Nearly all of it was directed not at the production of anything, nor the supply of anything, nor the inputs to some factory, but at servicing my person. Specifically, it was mostly targeted at various components of my body. There was an inordinately expensive organic grocer for my stomach. A retro barber for my head. A manicurist for my nails. A tatooist for my ink. A specialist wine purveyor for my tongue. A gift store for my birthday. A shop front personal trainer for my flab. An Asian tailor and presser for my clothes. Any number of cafes of course. And a real estate agent on every corner.

I realised that it was I that was the factory. My body, or more to the point, my mind, my intellectual property, was being supported my an extensive supply chain of services that plumped, fattened, thinned, preened, pressed, fluffed, trimmed and massaged me into the ongoing production of ideas.

There was one thing more that was obvious. These various services were not just the slapdash Aussies of yesteryear. There were no lackadaisical loafers working for the man and hanging for a smoko. Each of the services on display was a finely crafted specialist, an artisan in his and her craft, immensely serious with extraordinary attention to detail. The massage offered a limitless array of options right down to your chosen incense and its specific impact upon your chakras. The barber wore a perfect replica suit from the 1920s and sported enormous mustaches to match. The personal trainer rippled in the window. The grocer glowed with ruddy peasant health and one could almost smell the fresh loam on her fingers. The cafe’s were a rival for Tate Modern in their timberwork and ceramics, and one could literally choose a vintage decolletage in which to hang as if riding in a time machine.

The amount of effort and innovation going into finding a competitive edge for the privilege of servicing my sagging flesh was spectacular.

And that’s the thing. All of these local shops are a hive entrepreneurial beavering. But all of them are directed inwards in an endlessly dividing paradox of insignificance. None of them is tradable, as services mostly are not, so none has the chance to flower much beyond the local shops, let alone nationally or internationally. That poses a problem for the economy because if all you ever do is service one another in more elaborately infinitesimal detail then there is no actual wealth generation going on. There was no organic capital generation, no capital deepening nor breakthrough’s in efficiency. The capital that drives this machine by definition comes from outside of it in the form of a visitor, a new buyer of a local asset or someone that has borrowed to invest.

In short, this bulging prolapsed anus economy is based upon population growth to supply illegally cheap labour, more warm bodies in the absence of income growth and debt for houses to create wealth. It is a near complete waste of everybody’s time and effort other than for a very few oligarchs that can milk the prolapsed anus from above.

There are jobs but they all lead nowhere beyond the confines of your own date. Corrupt authorities’ answer is to back-fill this lack of income growth and demand with ever more people, intensifying the “capital shallowing” and slicing the income pie into ever thinner pieces.

It is a prolapsed anus doom loop that will eventually see the low rent services rectum distend outwards and upwards until it engulfs and smothers the entire host.


  1. “…that can milk the prolapsed anus from above” – still grappling with this one?

    Seriously to though, if you want a archetypal case study in how the Australian economy works the R&D tax incentive would be a good one. Partly via my own experience and maybe covered by MB, too bureaucratic for any SME to manage the paperwork, milked to within an inch of its life by huge mining companies with very ‘marginal’ R&D type activity. End result: no change nor effective investment, massive dead weight losses to the economy and govt subsidy for oligarchs. Same story over and over here. Just stop it!

  2. Anyone noticed the decline of the Queens Plaza shopping centre in Brisbane CBD?

    It’s anchor store is David Jones, and once had more high-end stores; now there is a number of down-market nail saloons, beauty saloons, Asian takeway, a phone repairer, and a Mr Keys-type outlet.

    All very tired and mostly run and staffed by vibrants.

    • DominicMEMBER

      It gets tattier by the year. I just don’t understand what the attraction is. Probably a function of all the modernised malls in the ‘burbs. For some reason, large groups of tourists and itinerant visitors just bring a place down.

  3. If I read about another Alt-pub/café or craft beer outlet opening in Canberra this week I’ll restart the Communist party!

  4. Jumping jack flash

    “In short, this bulging prolapsed anus economy is based upon population growth to supply illegally cheap labour, more warm bodies in the absence of income growth and debt for houses to create wealth. It is a near complete waste of everybody’s time and effort other than for a very few oligarchs that can milk the prolapsed anus from above.”

    Yes! So good! I think I need to light a ciggy now…

    The system has morphed into a system to generate infinite debt. Its a self-sustaining system to create as much debt as required to give the illusion of a properly functioning economy.

    The debt is created and attached to houses and makes their prices rise. The rising prices allows more debt to be attached. There is no risk because the houses are worth whatever we say they are worth, and LVR is the only measure of risk that is considered.

    The debt growth takes care of the economic growth, so all that’s left to do is sit back and get serviced.. Its an amazing system. . Years in the making.

    It doesn’t even need additional people to work. The capital gains caused by the debt allows people with debt to take on more debt.

    That is, they would… but somewhere along the way wages forgot to rise… somehow the magical link between increasing debt and increasing wages just doesn’t seem to exist, and it has everyone baffled….

    because, conveniently, bankers keep the effects of their interest on the down-low. Nobody mentions the interest. Ever. Except when they’re cutting interest rates to cheapen debt so people can take on more.

    The 3rd-world workers aren’t here to take on debt because they’re not paid enough.

    No, the 3rd-world workers are here to work, servicing those who are (aspiring to be) instantly rich from debt, and get paid as little as possible so their employers can pocket the difference, so they can obtain more debt, because their wages wouldn’t rise otherwise.

    And this doesn’t even touch on the gouging of the costs of living by the private companies that provide them, so their workers can, too, take on as much debt as they need.

  5. I guess you didn’t like the way I put it last time, ey?

    “A service economy is one where everyone reaches to the dick on the right and tugs.

    It’s a massive circle jerk with only shame and mess as a result.”