The Australian’s editorial (“Despite challenges, the spirit of progress endures”, 2/1) acknowledges that on most average long term economic measures, life is improving globally, including here in Australia, despite the groundless carping we endure from our insatiable “aspirational class”.
However, the suggestion that increased incomes have resulted from declining union membership is the opposite of what global data shows. In fact, the decline in collective bargaining has softened the link between productivity and pay, meaning that workers benefit less from improvements in the economy.
The editorial cites a real wage rise of about 50% since 1984, but given that real per-capita GDP rose by about 85% in the same period, it could just as well be argued that had more Australians remained in collective bargaining, we may have received more of our fair share of the increased wealth.
It is disappointing that even Peter Van Onselen’s otherwise balanced account of the history of superannuation under successive governments (“Labor losing edge as champion of superannuation”, The Australian, 6/10) fails to mention a crucial fact: the government’s recent proposal is not to cut into super but to remove a large and unfair tax shelter enjoyed only by the wealthiest 1%, saving the taxpayer tens of billions of dollars – an astute piece of policy which seem to be a taboo subject at The Australian.
The Australian’s editorial warns us to “expect tax increases on the long-term retirement savings of workers” (“Political interest rates are highest in the wrong areas”, 3/10). From what quarter should we expect this? It can’t be from this government, whose proposal is to reduce the anomalous tax concession for the wealthiest 1%, to the same level as the rest of us enjoy.
It’s time for some perspective to balance the “hands off our super!” hysteria. Australia’s richest 1% currently receive a 30% tax break on their contributions, almost twice what those on ordinary incomes get, and at an annual cost to the taxpayer of $30 billion and rising. The government’s proposal to reduce this concession to 15% will partially level the playing field. But the 30% perk will still apply to those earning from $180,000 to $300,000 a year, indicating that, if anything, the changes do not go far enough. Super was never intended to be a tax shelter for the super-rich.
Peter Jacobsen (The Australian, Letters, 12/7) informs us that “Creeping socialism is responsible for most of the woes of Europe”. And here I was thinking that profligate behaviour by unregulated banks was more of a, you know, capitalist kind of thing.
It seems that my electricity provider Origin (among others) intends to increase its green power prices by the same amount as black (carbon-producing) power when the carbon price kicks in.
Green energy customers are buying a product which does not produce carbon emissions, and the vendor is telling them that its price has increased because of the charge on carbon emissions. That is untrue and deceptive. Further, it means they are effectively subsidising their black energy customers by charging green customers a portion of the extra cost of producing the black energy they do not use. This is is counter to the purpose of the carbon price. Continue reading
Dennis Shanahan’s story “Swan’s class war lifts Labor vote” (The Australian, 15/5) is labelled an “exclusive”, but somewhat redundantly: only The Australian would use such overblown language to describe a few minor reductions in welfare for the wealthy.
In rejecting the “user-pays” principle in relation to means-testing of aged care, Tony Abbott may seem to have forgotten which party he leads (“People will have to pay more, Abbott says”, The Australian, 21/4). But the Liberals’ record of opposing means tests and defending subsidies for the wealthy makes it clear that their policy of winding back welfare only applies to those who actually need it.
In her haste to protect the super-rich from the inconvenience of paying tax, The Australian’s Janet Albrechtsen misapplies the so-called “Laffer curve”, which hypothesises an optimum tax rate which maximises revenue and beyond which revenues fall due to decreased economic activity (“Let champagne socialists pay more tax voluntarily”,12/10).
She gives us a couple of anecdotes of increased revenue at lower tax rates – as a percentage of GDP. But Laffer’s theory is that decreased tax rates result in greater tax revenue through increased economic activity so, by normalising to GDP, she is not saying anything about the Laffer curve, only that those who can will simply move their money around to where it is taxed least.
For example, any higher revenues from capital gains which occur when the rate is lowered only prove that people hang on to assets until this occurs, providing only a one-off tax windfall.
As far as income tax goes, most quantitative studies of the Laffer effect put the optimum rate at about 70%. I’d like to see that.
Of the top 1% of income-earners, Albrechsen says: “When you tax people more, their incentive to work more and earn more income drops off”. News flash: that’s not how the super-rich make their money.
In defence of free-market capitalism, The Australian contends that European social democracies are slow to recover from the GFC because they have “interventionist” governments, unlike the US, “where open markets have assisted stability”. (“Capitalism to save social democrats from debt trap”, 25/9). This conveniently glosses over the fact that these very US markets triggered the crisis in the first place. The related suggestion that Australia survived not because of, but in spite of an “ill-considered” and “over-egged” stimulus, defies the opinions of most economists.
To maintain the view that economic problems are solved by doing nothing – in the face of massive, sustained evidence to the contrary – The Australian makes the mystical “invisible hand” into an irrefutable hypothesis: the market unerringly seeks efficiency, where efficiency is defined as whatever the market seeks, and can only fail because of interference, where interference is defined as whatever causes the market to fail.
This recursive logic leads to the prescription of more poison as the antidote.
Brad Orgill counts the real costs of thirty years of “an uncritical belief in free markets” and their “self-regulating nature”: social inequality, overcrowded prisons, crumbling infrastructure and environmental destruction (“Economic challenges should not polarise our egalitarian society”, The Australian, 26/8).
It is time we recognised that the “invisible hand” is the right-wing version of the Gaia hypothesis – a mystical, untestable notion which asserts that a complex system will arrive at some equilibrium, but with no guarantee that such a state will be of any benefit to human beings. As such, it is mere ideology.