America’s Invisible Sports Betting Epidemic

Stewart Lawrence

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The Cardsharps, c. 1594, by Caravaggio

What do Tiger Woods, Michael Jordan, Charles Barkley and Floyd Mayweather, Jr. have in common? They’re all sports superstars, of course. But they’re also something else: Hard-core gambling addicts.

Mayweather, Jr. regularly gambles as much as $400,000 on college football games. He reportedly once won $3 million on a single Orange Bowl contest. But his biggest bet – and loss — came in 2014, when he wagered $10 million that the Denver Broncos would win the Super Bowl. In fact, the Broncos were crushed 43-8 by the Seattle Seahawks in one of the biggest Super Bowl blow-outs in history.

Jordan, meanwhile, is fond of betting on golf, including his own head-to-head contests with Woods and Barkley. He once lost a $1.25 million golf competition with Richard Esquinas, a private businessman from San Diego.

There are rumors, never confirmed, that Jordan’s gambling habit – which includes unsuccessful betting on poker and roulette at casinos in Atlantic City — was a major reason behind his retirement from basketball.

Woods, it seems, has a penchant for card gambling. He reportedly bets $25,000 a hand when he plays his favorite game – Blackjack — and is known throughout the casino circuit as a high-roller player.

According to one source, “he’s even received a $1 million betting limit by the MGM Grand in Las Vegas, where he always requests for the table to be filled with beautiful girls.”

None of these sports celebrities seems to have lost it all gambling – and they have the talent and drive – and above all, the money — to rebuild their fortunes after suffering major reversals.

But the average Joe is rarely so lucky.

The “mainstreaming” of sports betting

Sports betting, mostly illicit, has existed on the margins for decades.  But these days there are more legalized gambling opportunities than ever, thanks to a landmark 2018 Supreme Court decision that lifted the federal ban on sports betting.

Since then, 38 states, including Nevada, New Jersey and Connecticut, as well as Washington, DC have legalized the practice, with another 21 states considering similar laws.  It won’t be long, industry experts say, before sports betting is as commonplace — and frequent – as purchasing a ticket to a movie.

Sports betting is not the only form of legalized gambling, but it’s spreading faster than most. In part, that’s because it appeals most heavily to younger demographics, especially Millennials.  About 86% of all sports betting occurs online or with mobile apps, a practice which favors youth cohorts.

Men are also the primary sports betters, about 90%, according to Helixa, a user-insights platform.  Young African-American and Hispanic males are disproportionately high users. More than half fall into the 18-34 age bracket.

In 2021, as the COVID-19 pandemic spread, there was an 80% increase in the practice.  Currently, more than 20% of Americans place a sports bet monthly.

But these numbers are paltry compared to what’s coming. Some of the country’s largest and most populous states, including New York, California and Texas, have yet to legalize sports betting, but almost certainly will within a year or two – barring a pushback from Congress or from federal regulators

Goldman Sachs estimates that the combination of legislative initiatives and wider consumer adoption could push online sports betting from $900 million in 2021 to a $39 billion market in 2033 – a 300% increase.

Prop betting is more widespread

Another factor fueling sports betting growth is that more kinds of sporting events are being targeted by betters than ever before.

In past decades major sporting events like the National Football League Super Bowl, the Major League Baseball World Series and the NBA Championship Finals were the main venues.  Many work colleagues and neighbors placed friendly bets with each other.  Some risk takers, like Floyd Mayweather, Jr. placed huge bets in Las Vegas, hoping for a jackpot.

But these days no sporting event, however small, is safe from the predatory clutches of gamblers and their “enablers.” Currently, the one main restriction on legal betting is college sports, but it may be only a matter of time before this restriction falls, too.

Another accelerating factor is that gamblers no longer just bet on the final outcome of sports events, or the “spread” – the point difference between the game’s winner and loser.  Increasingly, they also bet on the performance of individual athletes (for example, whether a quarterback will throw a touchdown, and how many) or on the outcome of individual plays (will the kicker’s field goal be successful?)

These so-called “proposition” or “prop” bets have transformed sports betting into a live ongoing practice, with gamblers placing bets continuously as a sporting event unfolds.  Typically, prop bets are fairly small – for example, $50-$100 on the success of a field goal kick, rather than $1,000-$5,000 on the game’s final outcome – but over the course of a single sporting event, their value quickly adds up.

Finally, it’s worth noting that sports betting is especially lucrative as a source of advertising revenue as well as tax revenue for fiscally-strapped states.  Consumers also tend to be more receptive to taxes on betting than on other activities.  All of these factors are acting as huge accelerants to the sports betting trend.

Risk of gambling addiction growing

Arnie Wexler, a compulsive-gambling specialist, predicts that “mainstreaming” sports betting will unleash “a volcano of gambling addiction in America.”  Prior to the legalization of sports betting, researchers estimated the lifetime gambling addiction prevalence rate at about 2% for “pathological” gambling and about 4% for the less severe condition dubbed “problem” gambling – or 6% total.

That may not sound like an epidemic, but it means that more than 15 million Americans, many of them poor and middle class, are suffering the fall-out from spending and losing hard-earned money on gambling.

And the numbers are getting worse. The National Council on Problem Gambling, a Washington-based nonprofit, estimates that gambling addiction, much of it sports-related, has doubled over the past two years.  State governments are aware of the problem but tracking and treating people with gambling problems is not yet a top priority, Wexler and others say.

Some sports betting centers have tried to limit the amounts that bettors can wager on a specific sporting event.  And a few states, while legalizing sports betting overall, still restrict online betting, which helps. But these measures are only slowing down the trend, Wexler and others say.  And many of these restrictions are poorly enforced, or easy to evade.

The larger problem, perhaps, is that compulsive gambling is something of an “invisible” addiction. Many Americans that gamble compulsively – like alcoholics – deny they have a problem, until it spirals out of control.  And the fall-out can be severe. Gambling addicts can rack up massive credit card debt, drain their retirement and savings accounts and eventually sell off valuables and even furniture to feed their “habit.”

While some are forced to stop – or “white knuckle” – their addiction because they simply run out of money, others are so addicted they turn to illegal activity – forging signatures on checks or other forms of outright theft, including embezzlement – just to secure more funds to gamble.  Gambling addiction is also linked to other addictions and mental disorders including depression, chronic anxiety and substance abuse.

With the rise of unregulated sports betting, and the introduction of more sophisticated and mobile betting technology, industry experts like Wexler say these problems are beginning to skyrocket.  Already more consumers are asking for help.  Calls to a national hotline for gambling addiction increased by 33% during 2020-2021.

“It’s this ticking time bomb,” Keith Whyte, the executive director of the National Council on Problem Gambling, told NBC News recently. “We have to take action now.”

Will regulation help?

Despite acknowledging a growing problem, the sports betting world is divided over whether and how to regulate an industry that is being fueled by an insatiable popular demand.  Sports betting also thrives because it’s a source of revenue for cash-strapped states facing persistent fiscal deficits. Most states impose a flat tax or take a percentage of gross profits from sports betting companies; they also collect a one-time application fee for operating in the state. New York, for example, earned $700 million in taxes from sports gambling in 2022.

But the chase after easy money could surely use more guardrails both to protect consumers and to share the benefits from sports betting – and online gambling generally – more widely. Just last week, the US Senate Judiciary committee held its first-ever public hearings to discuss the sports betting epidemic and possible solutions, including federal regulations that could supplant the current patchwork of laws and guidelines passed by states thus far.  Most of those testifying said they supported legalized sports betting but felt that the industry – led by BetMGM and DraftKings  – was being granted carte blanche to advertise and promote the industry with virtual impunity, ignoring the mounting social costs.

Among the reforms suggested at the hearing were a crackdown on the unrestrained advertising currently underway on college campuses that is  luring youngsters to place sports bets, as well as more federal and state resources to support gambling addiction programs.

Keith Whyte, the afore-mentioned executive director of the National Council on Problem Gambling told the committee, “As of last year, for every dollar states have generated from commercial gambling, just .0009 cents were invested in problem gambling services. While substance use disorder is seven times more common in the United States than gambling disorder, substance use disorder receives 338 times more public funding,” he noted.

Predictably, sports betting industry representatives boycotted the Senate hearing, saying the committee members were recycling “myths” about the dangers of sports betting while minimizing its benefits to states and to individual consumers alike.  But critics say the industry is kidding itself and could soon face the same kinds of pressures that led the tobacco industry to face a massive, indeed crippling, crackdown, including injury lawsuits and tight restrictions on sports gambling venues and products, especially mobile apps that have allowed the industry to mushroom in the space of a few years.

The road ahead

Online gambling – especially the recent surge in sports betting – is just the latest form of addictive activity that provides a dysfunctional palliative for the social and psychological ills that so many Americans face as they struggle with low-paying stress-filled jobs, declining real wages and widening income inequality.  For a growing number, sports betting – like playing the lottery, but with better odds – offers the fantasy of scoring a quick kill – or amassing a large fortune – to offset their current financial predicament, or simply to distract them from a host of personal problems and gnawing anxieties.  Some modest sports bettors do gain from their small periodic investments, enough to keep them in the game and supportive of the practice overall.  But too many of the heavy users, whose numbers are growing rapidly, run the risk of losing it all while leaving their lives and families destroyed or damaged.

Nearly six years after the US Supreme Court declared sports betting a constitutional right, some of the unfortunate consequences of that decision are finally coming into focus. But while debate is growing, there’s little consensus on how far the federal government or state government can go to rein in an activity that the High Court has allowed to flourish with such impunity. Fortunately, at least a dozen states are still holding out on the issue, and twenty one states are still opposed to sports betting conducted online or with mobile apps, which has allowed the practice to skyrocket.  In addition, a majority of older voters, ages 65 and above, and women – in contrast to youth, especially men – still tend to express staunch opposition to sports betting, according to opinion surveys. Opinions among middle range age groups are more mixed.  Surprisingly, Republican voters – in Red-leaning states like Texas and Missouri – seem decidedly more inclined than their Democratic counterparts to oppose the expansion of sports betting.

This partisan split is also apparent at the national leadership level. There is some evidence, in fact, that senior Democrats, while alarmed at the sports betting trend, may be more inclined than their Republican colleagues to support the industry overall. Back in 2019, in a surprise move, then-President Trump’s Justice Department called for restricting the promotion of sports betting across state lines, consistent with the 1961 Wire Act. But two years later, President Biden’s DOJ challenged that interpretation, arguing that additional restrictions on online gambling – beyond those established by Obama in 2011 – were unnecessary.  Democrats, consistent with their views on marijuana legalization – or even, the legalization of prostitution – may be more inclined to treat sports betting as a personal freedom, or “choice” issue, rather than a social issue with public health consequences. Moreover, some of the leading gambling states that support sports betting – Nevada, New Jersey, Massachusetts and Biden’s own Delaware, where some of the major betting forms are based – also lean Blue on the political spectrum. More research is needed, but it could be that lobbying by the major sports betting firms – plus, pressure from Democratic voting constituents – explains what appears to be Democratic favoritism toward the industry at the highest levels of its leadership.

The same questions must also be raised about the incoming Trump administration. The president-elect owns several hotels with gambling casinos in Las Vegas and elsewhere. He’s also a diehard supporter of the unregulated free market. But he’s proven equivocal on the sports betting issue in the past.  His first administration took no formal action to promote the industry – quite the contrary.  And the proposed policy agenda for his new regime – Agenda 47, like his first administration – makes no mention of sports betting or gambling at all. (Neither, for that matter, does the policy agenda, such that it is, of his Democratic opponent Kamala Harris).

The upshot? Presently, there’s a dearth of public and political awareness of the scope of the sports betting industry and the benefits and risks of its rapid, largely unchecked growth. An explosion of consumer demand – stoked by rabid unchecked industry advertising – is driving the market to new heights, largely under the radar screen. But pushback from hold-out states – including Democratic California – is growing, and some prominent members of Congress on both sides of the aisle have finally begun to take notice. Fortunately, the industry – and the issue – is still in its infancy.  Which means there’s still time for a full-fledged national debate – and appropriate federal intervention – before sports betting becomes so deeply ingrained in the popular consciousness – and entrenched in state and local economies – that a discussion of meaningful reform becomes practically impossible.

Explosive growth of homelessness in England

Simon Whelan

Homelessness in England has increased by 14 percent in the last year, according to the charity Shelter, who described their latest figures as “shocking” and “astounding”.

The report estimates that on any given night more than 354,000 people in England are homeless—an incredible one in 160 people. The figure includes 161,500 children in the world’s sixth biggest economy. Last year the figure was one in 182 people.

Homeless people in tents adjacent to Manchester Town Hall, December 21, 2024

In May, the Financial Times, informed by Organisation for Economic Co-operation and Development data, estimated the UK as the world’s worst country for homelessness, with one in 200 UK households living in temporary accommodation. This appears a serious underestimation in light of Shelter’s figures and because homelessness in Scotland, Wales and Northern Ireland is considered worse than in England.

The 354,000 homeless would fill Wembley Stadium in London almost four times over. The number of homeless children alone in England is not far short of filling the national stadium twice. Shelter believes even these shocking figures are a significant underestimation because phenomena like “sofa surfing” goes unrecorded.

“Across England”, Chief executive of Shelter Polly Neate explained to the media, “extortionate private rents” combined with a “dire lack of genuinely affordable social homes” is “trapping more and more people in homelessness”.

“Parents are spending sleepless nights worrying about their children growing up in cramped and often damaging temporary accommodation, as weeks and months turn into years without somewhere secure for them to call home.” Neate said she believed “temporary” was a misnomer because it was frequently anything but, with family stays often extending for years.

Neate’s point about lack of affordable social homes is a crucial one, with the Labour government nominally set to build some 1.5 million housing units but with very few plans for a genuine social rented status, i.e., affordable rents around 50 percent of market rates paid to either the local authority or a housing association.

Increasingly “affordable” and “social rented” mean rents of approximately 80 percent of the market or part owned property purchases from housing associations that are increasingly detached from their role as providers of public housing and becoming more marketised and profit seeking.

Shelter claims their research represents “the most comprehensive overview of recorded homelessness in England”. Shelter’s estimate is more encompassing and therefore more accurate because it counts people living in local authority arranged temporary accommodation, those who have arranged their own temporary accommodation, rough-sleepers and single people in hostels but not counted in government figures.

Shelter also included figures from Freedom of Information requests made to councils seeking to ascertain accurate numbers in temporary accommodation arranged by social services. They also included those made “legally homeless”, who cannot continue to reside in the present property, including those whose property is being foreclosed by a lending agency.

Consequently the homeless categories utilised by Shelter in their total include; 3,556 living in accommodation provided by social services—and the estimated number of people homeless and living in temporary accommodation arranged by them or “homeless at home”—at the end of June 2024 was 7,004 in total.

Shelter cited several factors; “extortionate private rents”, rising evictions and a chronic and “dire lack of genuinely affordable” public housing, for “trapping” ever greater numbers in homelessness. In addition, more protracted issues have exacerbated the housing crisis; inadequate rates of housebuilding, both private and public, a dwindling and increasingly residualised public housing sector and yearly cuts to housing benefits making affordable market rental properties increasingly rare.

London, with extortionate living costs, has the highest ratio of homeless people in England (one in 47) with the total number of people experiencing homelessness in the capital rising by 12 percent over the last year to 187,000. The London borough with the highest rate of homelessness is Newham—with a population of over 350,000—with a jaw-dropping one in 18 homeless!

The English local authority with the highest rate of homelessness outside the capital is Slough, Berkshire, where one in 51 people are homeless. In Luton one in 57 people are homeless; in Manchester one in 61; in the UK’s second biggest city Birmingham one in 62; and in coastal town Hastings, Sussex; one in 64.

Unprecedented pressure on working class household budgets and ruthless private landlords mean many people were now often experiencing homelessness for the first time in their lives. Shelter used the case study of Sally, 43, who is now living in temporary accommodation provided by Shelter in Dorset with her 14 years old daughter. Sally was evicted and spent eight hours on the street before getting a hotel room.

“I’ve always paid my rent on time but was still locked out of my home on the day the bailiffs came. I had to wait on the street for the whole day before me and my daughter were put in a hotel room by the council. It smelled like a urinal and was covered in pet hair, which made my chronic illness worse and left me very poorly. I’m grateful for Shelter’s support stepping in and getting us out of there.”

Conditions in temporary local authority accommodation are often “atrocious”, admitted the FT, with damp and mould commonplace, likewise rodent and insect infestations.

Working class families find themselves out on the street unable to afford private rented accommodation, and with local authorities managing a declining number of public housing units whilst demand grows in inverse proportion.

Workers’ incomes have been devastated over the past decade and a half by austerity measures and the cost-of-living crisis, with longer term welfare cuts and wages falling drastically in real terms under inflationary pressure. After a period of decline the number of English households living in temporary accommodation more than doubled between 2010 and 2023 from 48,000 to 112,000, which then was the highest figure since records began.

The primary reason for the explosion of homelessness is the deliberate decimation of public housing beginning in the late 1970s and accelerating since through right-to-buy legislation, demolition and gentrification by Labour, Tory and coalition administrations alike. Media estimates of a 25 percent decimation of the public housing stock since the 1970s are conservative, especially for the major cities and London formerly with high numbers of now demolished multi-storey estates.

The destruction of council housing is a social crime that continues to wreak havoc across working-class communities. England’s chronic shortage of public housing has left over 1.3 million households on council housing waiting lists across the country. Over the past five years, the parlous state of temporary accommodation has been cited as a contributing factor in the deaths of 55 children in England.

With so few housing units left, families who become homeless have little hope of moving into a safe and secure property. Instead, thousands of families are forced to eke out an existence, spending months crammed into inadequate rooms, often sharing kitchens and bathrooms with strangers. Those who do not meet draconian conditions for acceptance and are deemed not entitled to homelessness accommodation are forced to rotate through friends and family or sleep-rough on the streets.

Relative to population size, 65 million, the UK builds far fewer new homes, private and public, than most comparable sized economies. The housing shortage has sent private sector rents skywards. According to research by the Institute of Fiscal Studies the share of private rented homes in England where rents are covered by housing benefit has declined from one in six to one in 20 in just a decade.

What makes human culture unique from culture of other animals?

Philip Guelpa

Human beings are animals, evolved from ancestral great apes. We are part of nature and yet unique in many ways. 

It was once thought that humans were the only animals with culture: the learned rather than genetically determined behavior that is passed on from one generation to the next and is subject to modification. Many decades of research have revealed, however, that a number of other species of animals also have culture, notably other primates and corvids (crows). Nevertheless, human culture is clearly qualitatively distinct from all others. We rely on highly complex cultural inheritance for our very survival. What accounts for this difference? Is it merely a matter of degree or is there something unique about human culture? 

Researchers Thomas J. H. Morgan, Arizona State University, and Marcus W. Feldman, Stanford University, have addressed this issue and proposed a new hypothesis, presented in a paper published in the journal Nature Human Behavior, titled, “Human culture is uniquely open-ended rather than uniquely cumulative” (November 7, 2024). 

Chimpanzees learn to use tools. For example, they strip leaves from small twigs and then insert them into termite mounds to extract and eat the clinging insects. This behavior is not instinctive (i.e., genetically determined) but learned by observing the actions of other chimps. Monkeys and chimps have been observed to use hammer and anvil techniques to crack open nuts. Young carnivores are taught to hunt by their parents, etc. 

These and many other behaviors of a variety of animal species are learned by observing other members of that species carrying out the given activity. The ability to learn is genetically inherited, but not the specific behaviors. However, these behaviors are of a limited nature. Change occurs slowly and not intentionally. 

The authors of the new study first identify and evaluate two existing hypotheses regarding the distinct nature of human culture. The first is that human culture is cumulative, knowledge is built upon from one generation to the next and, thereby, increases in complexity. Non-human animals’ cultural knowledge is relatively stagnant. 

Acheulean handaxe

The second hypothesis “identifies our capacity for stable, high-fidelity transmission as the enabling cognitive factor behind cumulative cultural change.” This is based on “imitation, teaching and language.” Other animals have transmission limited to imitation and teaching, resulting in a much lower level of fidelity (i.e., accuracy), or to extend the metaphor, too much “noise.” Intentional teaching through the use of language greatly increases both the accuracy and complexity of the information being conveyed. However, the authors contend that this is insufficient to explain the unique characteristics of human culture.

They then review seven other explanations that may underlie the distinctive character of human culture that are found in a variety of animal species, even in some invertebrates. These include: the inheritance of acquired characteristics, the pathways of inheritance, the non-random generation of variation, the scope of heritable variation, effects on organism fitness, effects on genetic fitness and effects on evolutionary dynamics. But after study, none of these are found to be unique to humans. 

Instead, the authors of the present study propose that human culture is distinctive for its “open-endedness.” In contrast to all other animals, humans have the ability to learn and execute complex sequences of steps to accomplish an ultimate goal. These steps or subgoals are “modular” in the sense that they can be employed individually to accomplish a number of different tasks. Furthermore, they can be creatively recombined in novel sequences to meet new needs. 

This is evident, for example, with respect to language, which can be employed very fluidly to accommodate and adapt to a wide range of factors. Though the authors do not specifically refer to this, the basis of this flexibility lies in the nature of language itself, that is, the mechanism of thought by which actions and phenomena in the external world are abstracted into mental symbols or ideas. This allows ideas to be manipulated and applied in new ways to situations distinct from those from which they were originally derived, in the same way as words can be combined to make new sentences which in turn can be combined into novel paragraphs, and so to express things that did not previously exist. 

Behaviors such as using sticks to fish termites out of their mounds by chimpanzees are highly specific, involving only a very limited number of individual actions (selecting a suitable stick, stripping off any leaves, and inserting it into the mound), and are evidently not transferable to other uses. Attempts to teach chimps and gorillas more complex sequences of tool manufacture or human language have met with limited success. By contrast, humans have the ability to conceive of behavioral modules as abstractions which can be mentally manipulated and recombined almost without limit, enabling them to address new phenomena and novel situations. This is what the authors term open-endedness. Of course, the efficacy of these mental constructs is subject to a dialectical process of interaction. They have to be tested and refined or discarded in real-world applications. 

Oldowan tool from Bokol Dora 1, Afar Region, Ethiopia [Photo by David R. Braun / CC BY-NC-SA 2.0]

The development of such behavioral complexity can be traced archaeologically in the evolution of stone tool technology from the simplest Oldowan (2.9 to 1.7 million years ago) and beyond. At each stage, the number and variety of manufacturing steps and production techniques to produce increasingly specialized tools grew, with greater flexibility and innovation in the process.

In addition, because of the ability to use language, human culture is subject to a high degree of horizontal transmission. In other words, not only can it be passed from one generation to the next (i.e., from parent to child or vertical transmission) but shared contemporaneously with other members of the group, horizontal transmission. This expands the number of individuals who can come up with novel combinations of behaviors and thus increases the potential to solve new problems. 

An even more recently published study amplifies and adds complexity to the Morgan and Feldman study. In “Nonadjacent dependencies and sequential structure of chimpanzee action during a natural tool-use task” (PeerJ, December 5, 2024), Elliot Howard-Spink and colleagues utilized data from a decades-long database of video footage depicting wild chimpanzees in the Bossou forest, Guinea, where chimps were recorded cracking hard-shelled nuts using a hammer and anvil stones. The researchers observed a total of 8 chimpanzees ranging in age from 6 to 60 years encompassing 3,882 nut-cracking attempts. These involved multiple individual actions. Among these were “grab,” “pour,” “turn,” and “spill.” 

They found that in about half the cases involving adult chimpanzees, the task involved multiple actions arranged in an extended hierarchy, sometimes separated in time, similar to the types of organization employed by humans. They observed that this complex level of behavior occurred only among half of the observed individuals. That this difference did not improve with time suggests that the cognitive ability for hierarchical structuring of labor tasks is not an essential aspect of chimpanzee adaptation.

It is not surprising that that our closest evolutionary relatives—chimpanzees—possess at least the beginnings of the mental capacity that underlies human cultural uniqueness. This ability, at least at a rudimentary level, would appear to have existed in the last common ancestor of humans and chimps.  Evolution usually works on existing “raw material.” It rarely starts from scratch. The next big question is how did the capacity for open-endedness expand so tremendously among humans but remain at a low level among chimpanzees?

New Zealand economy in deepening slump

John Braddock

New Zealand’s gross domestic product (GDP) fell by 1 percent in the September quarter, a much larger decline than economists had expected. The slump came after a revised 1.1 percent drop in the June quarter, according to figures released by Stats NZ on December 19.

New Zealand Prime Minister Christopher Luxon delivering state of the nation speech in October 2024 [Photo: Christopher Luxon Facebook]

The report points to an accelerating decline in the position of New Zealand capitalism. Amid geo-strategic tensions globally including the drive to war, the ruling elite is preparing to wage an intensifying assault on the living standards and basic democratic rights of workers and youth.

The two successive negative quarters place the country in the deepest downturn since the COVID-related slump in 2020–21. The falls were the biggest since late 2021 at the height of the pandemic lockdowns. Excluding those, the six-monthly fall was the largest since mid-1991.

GDP per capita, a measure of economic output per person, fell 1.2 percent during the September quarter—the eighth consecutive fall in the series. As a measure of historic decline, New Zealand was third in the world in terms of GDP per capita in the 1950s but is now ranked 37th.

September quarter economic activity declined in 11 of the 16 industries that measure GDP. The main contributors were a 2.6 percent fall in manufacturing, 3.7 percent in electricity and gas, 2.8 percent in construction and a 1.1 percent decline in retail. The fall in manufacturing in part reflected the mid-winter energy crisis which forced some businesses to reduce or halt production. 

The recession is the second in less than 18 months. The economy had officially contracted by 0.1 percent, and 0.7 percent per capita, in the December 2023 quarter, following a 0.3 percent contraction in September. GDP figures had shrunk in four out of five quarters, with a stagnant annual growth rate of just 0.6 percent.

The weakening New Zealand dollar fell by a third of a US cent to US56.30c on the back of the worse data. Economic activity is the weakest of all the country’s major trading partners and is ranked 33rd out of 37 by the Economist. Of OECD economies, New Zealand is placed ahead of only Finland, Latvia, Turkey and Estonia.

Two days before the GDP figures were released, Finance Minister Nicola Willis delivered the Half Year Fiscal Update (HYEFU) revealing the government’s books are also worse than most economic forecasts.

Treasury now predicts sharply slowed economic growth with unemployment, currently 4.8 percent, rising to 5.4 percent next year. Far from heading towards promised budget surpluses by 2028, the government’s books will be in the red for at least the rest of this decade.

Willis told parliament; “The downturn started earlier, was deeper and persisted for longer than previously expected.” In fact, the deteriorating economic situation is a direct product of the austerity agenda pursued by successive Labour and National Party governments and intensified by the current far-right National-NZ First-ACT coalition following the October 2023 election.

While Crown expenses are $1.4 billion higher than expected due to welfare, superannuation and education costs, nearly $5 billion is going to the military this year amid the US-led drive to war. The Ministry of Foreign Affairs and Trade, which oversees these preparations, is the only department to escape major funding cuts.

The government expects to borrow an extra $57 billion over four years. The gross debt-to-GDP ratio will hit 46.1 percent in 2027/28, up from 41.8 percent forecast in the May Budget. Government debt is expected to rise to $234.1 billion by 2029, up $24.3 billion from the Budget forecast.

Tax revenue is $NZ13 billion lower due to escalating unemployment, lower Goods and Services Tax from falling retail sales and lower business taxes. The Budget handed major tax cuts to the wealthy, including residential property investors. Landlords can now deduct tax on 80 percent of their loan interest, cutting their tax obligation by a total of $2.1 billion. From April 2025, the deduction will lift to 100 percent.

Behind the dismal figures is a deepening social disaster with the costs imposed on the working class.

Like capitalist governments around the globe, National, ACT and NZ First have launched a scorched earth assault on jobs and services across the public sector with a view to privatisation. Willis imposed funding cuts of 7.5 percent on almost all ministries. Some 10,000 public sector jobs have already been axed, including more than 2,000 in the health sector.

Employers based in Wellington have shed around 19,500 jobs since January, 11.6 percent of the capital city’s workforce. Auckland has lost over 10,000 jobs. Radio NZ reported on December 2 that business insolvencies are running at more than double the rate of last year, with one economist saying the failure rate exceeds that of the 2008 Global Financial Crisis (GFC).

While official unemployment stands at 148,000, there are 204,765 people, or 6 percent of the population, receiving the Jobseeker benefit. The number of working-age people on a main benefit, including health and disability payments, is approaching a record 400,000. This represents 1 in 9 people (11.4 percent), almost the same proportion as after the GFC.

Jobless figures would be much higher if not for the exodus of people leaving the country. A record 79,700 NZ citizens permanently departed in the year to September, with half going to Australia. A net immigration gain of 44,900, mainly from Asia, was sharply down from 136,300 in 2023. The numbers going overseas could well exceed those entering next year.

Direct attacks on the working class are underway. Last week, Workplace Relations Minister Brooke van Velden announced a real-term pay cut for minimum wage workers, the second in a row. From next April the minimum wage will rise by 1.5 percent to $23.50—below the 2.2 percent inflation rate. It is the smallest rise in dollar terms since 2013, and the smallest percentage increase since the 1990s. Training wages and starting wages will increase to just $18.80, 80 percent of the adult minimum wage.

Van Velden is introducing a range of legislation to attack fundamental workers’ rights and conditions. She has vowed to “simplify and clarify” already anti-worker laws to enable pay deductions for partial strikes, which could lead to workers losing pay even for running “work-to-rule” campaigns, and to gut occupational Health and Safety regulations.

The trade unions have played a central role in enforcing the assault on jobs and wages. No unified industrial and political campaign against the government has been mounted. Nevertheless, key sections of the workforce are beginning to fight back. Some 36,000 nurses have been striking this month against a pay offer from Health NZ of 0.5 and 1.00 percent over two years.

The Treasury predicts real wage growth to fall from a paltry 1.7 percent per annum to an average of under 1 percent over four years. Workers have already suffered under the drive by the Reserve Bank, among the most aggressive central banks in the world, to engineer a recession. Beginning in March 2020 the Official Cash Rate was progressively lifted to 5.5 percent before being eased in August.

The result has been a massive increase in household costs of 5.4 percent in the 12 months to June, driven by mortgage payments, rent and other expenses.

Treasury predicts tepid growth to 1.7 percent in the year to June 2025 then picking up to average 2-3 percent over the following years. But no one is factoring in the dramatic decline in the Chinese economy, on which the ruling class depends as its largest export market, or US President-elect Donald Trump’s threats of a catastrophic global trade war.

Berlin state government adopts austerity budget

Tamino Dreisam

In the face of large protests, the Berlin Senate (state government) last week passed the supplementary budget for 2025, thereby approving cuts of three billion euros. This will result in sharp social cuts and affect many sectors.

#Unkürzbar demonstration in front of the Berlin House of Representatives, 5.12.2024

In the area of mobility, transport and the environment, €660 million [$US688 million], or almost 20 percent of the total budget, is to be “saved.” Some €150 million euros will be cut from housing subsidies, €370 million from education and €309 million from science, health and care, some 8 percent of the original budget. The cultural sector will lose 12 percent of its previous budget, or €130 million. Only the police and the judiciary have been spared from the ax.

The Berlin state government responded to the enormous anger within the population and the various protests, particularly strong among artists and cultural workers, by announcing it would partially reverse the cuts in the cultural sector. However, this was only a numbers trick.

While cuts were withdrawn or reduced for several renowned theatres, the amount to be saved in the cultural sector remains the same. This means that the savings are merely being redeployed, at the expense of the independent art scene. For example, the subsidies for the development of workspaces for artists are now being reduced from the original €21 million to €3 million. The savings of €18 million are thus almost eight times as high as previously planned.

The savings target for the Friedrichstadt-Palast, Berlin’s largest theatre, has also been increased by €250,000 to €1.85 million. The funds earmarked for the renovation of the entrance area of the Berlin Museum of Technology have been cancelled altogether, instead of halved as previously planned.

Particularly severe cuts have been made in the higher education and science sectors. The announced cuts in the areas of science, health and care have increased steadily in recent weeks: from €100 million to €280 million and now to €309 million. For the university contracts alone, the cuts have increased from €100 million to €142 million euros.

Berlin’s Senator (state minister) for Science, Health and Care, Ina Czyborra (Social Democratic Party, SPD), has already announced, “If these cuts are maintained at a critical level over the next few years, it could also mean a reduction in staff and courses of study.” In some circumstances, the number of university places could also be reduced.

In certain cases, this is already noticeable. At Berlin’s Technical University, the chair of the staff council, Stefanie Nickel, said that a hiring freeze would apply to the central administration of the TU from the beginning of the year. This is despite the fact that many positions are not being filled because the necessary personnel cannot be found under the current conditions.

In particular, mid-level academic staff, where most contracts are temporary, are affected by these cuts. Originally, the Senate passed a resolution that as of April 1, 2025, all employees with a doctorate had to be offered a permanent position after a temporary position. In view of the cuts, this decision to abolish the time limit is now to be repealed. This will further exacerbate the already precarious situation for thousands of academic staff with temporary contracts.

The cuts to the subsidy for the Studierendenwerk (Student Services) by €6.55 million, i.e., almost a third of the previous amount, will also have devastating effects for Berlin’s 170,000 students. The Studierendenwerk is responsible for advising on funding, cafeterias, cafés, dormitories, nurseries and counselling for mental health issues.

Rotes Rathaus, seat of the Berlin Senate [Photo by Olbertz / CC BY 3.0]

On its website, the Studierendenwerk has already announced the consequences of these cuts, including:

·        An increase in the social insurance contribution that students have to pay, from €63 per semester to at least €93, i.e., by 50 percent. As early as the coming summer semester, for which fees must be paid by mid-February, the social insurance contribution will be €85. Even now, many students have to think twice about every euro they spend.

·        Several dining hall locations are being closed and dining hall prices are rising overall. The dining hall at Humboldt University’s Faculty of Economics has already been closed. At least two bake shops will follow. Starting next year, the least expensive dining hall meal will become 20 percent more expensive. The price of desserts will rise by seven percent.

·        Much-needed renovations of student dormitories are being postponed indefinitely, thus leaving them to decay, and the sustained provision of living space for students is seriously endangered. At the end of the year, the waiting list for a room in the Studierendenwerk’s dormitories stood at 4,238, with a minimum waiting time of 1.5 years. The loss of even a single additional residence hall would have dramatic consequences for the students affected.

·        Cultural and support services for students will be reduced. These include, for example, training courses that support students in academic writing or in coping with stress, and other measures designed to promote mental health.

For tens of thousands of students who are already living in precarious circumstances, these cuts will have drastic consequences. The fundamental rights of students to housing, nutrition and health are being directly curtailed.

In recent weeks, there have been mass protests against the planned cuts. Thousands of public employees, artists and cultural workers, nurses and students have demonstrated against the cuts. On the day of the vote in the Senate, 3,000 people, mostly students, gathered in front of the parliament building.

But the protests remained limited in scope to the extent that the organisers themselves support the austerity measures and the pro-war policies behind them. Most of the protests were organised by the Verdi trade union. Its failure to oppose cutbacks was already evident in the 2000s. In close cooperation with the then SPD-Left Party state government, it enforced every austerity dictate, wage reduction and privatisation against the workers.

The character of the protest organisers became particularly clear at the rally on the day of the vote itself. The co-organiser and first speaker at this rally was Humboldt University president Julia von Blumenthal. Far from being an opponent of the cuts, she merely does not want them to happen on her watch.

In an interview with Tagesspiegel, she stated that she recognised “that the state of Berlin has to save money” and merely “criticises the way the cuts are being made.” In response to Tagesspiegel’s comment that “people in the cultural and social sectors will lose their jobs overnight,” she replied, “It’s not a scandal when something is decided politically. It’s just not good governance when you don’t justify your decisions and these cuts.”

Australian government cuts international student numbers by decree

Mike Head

Australia’s Labor government is so intent on slashing the numbers of international students in the country that it has now resorted to potentially unlawful means to do so via a ministerial directive.

Having failed to get its proposed student enrolment caps through parliament last month, the Albanese government last week issued a new immigration Ministerial Direction 111, despite warnings that it could be illegal.

Signed by Assistant Minister for Citizenship Julian Hill on December 18, the direction orders the slowing of the processing of visas for overseas students once their intended university or other tertiary education provider hits 80 percent of the government’s previously announced cap.

Direction 111 seeks to ensure that Labor achieves its goal of reducing enrolments by 53,000 (or 16 percent) on 2023 levels, eliminating thousands of jobs in the process in universities and private colleges.

Legally, however, the immigration department is required to process each visa. The government could try to sidestep that requirement by shifting resources to delay processing and put an effective halt on selected applications.

“Legally the government is obligated to process all offshore visa applications in a timely way… It would be illegal to deliberately engineer a backlog in order to use it as some sort of de facto cap,” former Immigration Department deputy secretary Abul Rizvi told the Australian.

Once again, Albanese’s government is seeking to outdo the openly right-wing Liberal-National Coalition in making international students, and immigrants more broadly, scapegoats for the worsening housing and cost-of-living crisis affecting millions of working-class households.

Home Affairs Minister Tony Burke speaks in parliament on November 19, 2024 [Photo by Parliament of Australia / CC BY-NC-ND 4.0]

Home Affairs Minister Tony Burke said: “[Coalition leader] Peter Dutton wants to talk tough on migration but has voted to let it rip when it comes to international students.”

The latest Australian Bureau of Statistics (ABS) data on overseas migration, released this month, showed there were 207,000 international student arrivals in 2023–2024, a decrease from 278,000 in 2022–23.

The attack on international students forms part of Labor’s plans to halve overseas migration to 235,000 annually for the next three years. The Coalition has vowed to cut annual net migration even further, to 160,000, which could reduce annual international student inflows to less than 15,000.

This offensive mirrors those by the political establishments in the US and Europe—now spearheaded by US president-elect Donald Trump’s pledge to mobilise the military to deport millions of immigrants. This agenda seeks to divide the working class and divert mounting social and political discontent in reactionary nationalist directions.

International students, who make up an estimated 4 percent of the rental market nationally, are not the cause of the lack of affordable housing for workers and their families. The soaring rents and home mortgage payments are the result of profiteering by billionaire property speculators and developers.

This has been intensified by the Reserve Bank of Australia’s hiking of interest rates to try to drive up unemployment and cut real wages further, backed by the efforts of the Labor and trade union bureaucrats to keep imposing below-inflation pay deals on workers.

The cuts are also part of the government’s anti-China agenda, in line with Labor’s commitment to the US economic and military confrontation with Beijing. The universities to be hardest hit are those, such as the University of Sydney, University of Melbourne, Australian National University (ANU) and University of New South Wales, with the highest proportions of students from China. They are set to have their 2025 international student enrolments reduced by close to 15 percent, compared to 2023 figures.

Direction 111 replaces Direction 107, which cut numbers by slowing visa processing for smaller universities and students from countries with an alleged higher risk of breaching visa rules in order to work or stay in Australia.

Under Direction 107, there already had been a 60,000 decline in the number of student visas granted in the 2023 to 2024 financial year. Regional university student commencements dropped by 30 percent from 2023 to 2024.

This year, the Labor government also more than doubled non-refundable student visa application fees from $710 to $1,600—the highest in the world—slowed visa processing and imposed harsher English language requirements and “genuine student” tests.

In this month’s Mid-Year Economic and Fiscal Outlook (MYEFO), Labor went further. It increased the application charge for temporary graduate visas by 14.75 percent from next February, estimated to increase government revenue by $1.7 billion over five years.

The country’s 39 public universities have been thrown into further chaos by the government’s latest decree, announced just weeks before the start of 2025 courses. Labor’s moves have already triggered more than 2,000 job losses at universities in recent weeks alone, especially in the humanities and arts, including at ANU, the University of Canberra, James Cook University, the University of Southern Queensland and the University of Wollongong.

While allocating hundreds of billions of dollars for nuclear-powered AUKUS submarines and other weaponry, Labor is continuing to starve the universities of adequate funding. This is exacerbating a crisis produced by their ever-greater reliance on exorbitant international students’ fees because of years of funding cuts by successive Labor and Coalition governments.

This financial squeeze is also aimed at forcing the chronically under-funded universities to integrate themselves more fully with the demands of big business and the military, as set out earlier this year in the Albanese government’s Universities Accord.

The Accord insists that universities must reshape both their teaching and research in partnership with employers, and in line with the building of a war economy, including through the AUKUS pact, in preparation for a US-led war against China.

International students have been treated as cash cows as a direct result of the “education revolution” imposed by the Rudd and Gillard Labor governments of 2007 to 2013. This “revolution” created a corporate-style market, which forced universities to fight each other for full fee-paying international enrolments.

Since barely scraping into office again in 2022, Labor’s support has disintegrated among workers and youth because of the gutting of living standards and its backing for the US-armed Israeli genocide in Gaza.

The main campus trade union, the National Tertiary Education Union (NTEU) is trying to prop up the government. Far from opposing the attack on international students, the NTEU has effectively lined up behind it, while blaming university managements, not Labor, for the job losses.

NTEU national president Alison Barnes issued a media statement, saying: “Vice-chancellors have already shown a willingness to use changes to international student arrangements as fig leaf to cover their own failures, and unfairly threaten job cuts. The scaremongering must now end once and for all.”

Previously, the NTEU urged its members to sign a petition to ask the government to “phase in” the enrolment caps, claiming this would save jobs. Months later, it is ludicrously calling for “an iron-clad commitment from universities and the federal government that this ministerial direction will not lead to a single job being cut.”