Hockey and the unsophisticated argument

Joe Hockey, as I heard on the radio recently, is claiming that his recent ‘horror’ budget is fair because each Australian works one month a year to pay for welfare. Interestingly, he is not revealing how many weeks a person works to cover generous far-reaching tax concessions which significantly benefit the wealthy. Greg Jericho of The Guardian recently wrote that ‘billions of dollars in revenue … is forgone each year due to exemptions within the taxation system’.  He also relays that a recent IMF assessment of the failing Italian economy led to the IMF’s concern of the misuse by government of tax concessions that were vulnerable to lobbying. Jericho wrote that ‘the IMF working paper displayed that Australia actually has a greater amount of tax expenditures per GDP than Italy or many other advanced economies’. [1]

tax expenditure

Consequently, Hockey’s media grab reveals explicitly that his approach is a one-dimensional simplistic assessment, emotive and seeking to blame disadvantaged people for their situation. Like one friend recently made note, ‘rich people tell the middle class to blame the poor’.

So I have put together some points to assist Hockey and his government attain a more comprehensive view based on sound, academic and independent analysis, rather than ‘industry’ motivated, to enable them to achieve a more accurate understanding of the financial and social realities.

Reality Check No. 1  – The economic model in which we live is a human construct skewed to secure the more privileged individuals and entrench the less fortunate in disadvantage. This economic model does not assign wealth appropriate to work done. The reality is clearly acknowledged that in this economic model it takes money to make money. This is what the latest findings reveal as Michelle Grattan of The Conversation recently wrote:

“The wealthiest 20% of households now account for 61% of total household net worth. The poorest 20% account for only 1%.

“In recent decades the income share of the top 1% has doubled, and the wealth share of the top 0.001% has more than tripled. At the same time, poverty is increasing and many of those dependent upon government benefits, including the unemployment benefit, have fallen well below the poverty line.” [2] [my emphasis]

Being able to blame the disadvantaged for their circumstances rather than refer to objective analysis means they can remain blind to the myriad obstacles that impede those who suffer disadvantage.

Other factors that contribute to inequality include a lack of appropriate sharing of revenue from natural resources as in the low royalty payments of Australian natural resources blatantly evident in the mining sector and their immense earnings. The environmental exploitation by industry with impunity, that appropriate are not held to account for the degree and scope of their environmental destruction including the mismanagement of chemicals causing rampant health issues. Our population is seriously compromised by exposure and digestion of these chemicals in our food . These chemicals, often already known to create health issues, leave increasing numbers debilitated and are considered a primary cause of health issues in children especially those with learning difficulties such as autism [3].

The banking industry, making record profits annually for their shareholders, expect those with less to pay more through interest rates and fees skewed to benefit the wealthy. The more advantaged people manoeuvre through legislation have their vested interests serviced by sustaining disadvantage so to pay rock bottom levels for wages as workers compete for work. The list can and does go on. The point being that the economic model in which we live advantages the well off primarily, and so maintaining this status quo continues to disadvantage the already less fortunate. There are many references discussing this and most recently is the book by Thomas Piketty [4].

It is not a perfect world but we don’t need to add to its imperfection and especially at the expense of the less fortunate. It is not an even playing field and the economic model we live with consciously works to entrench unequal opportunity and unfair disadvantage for the financial and social advantage of the more fortunate.

It would seem to be that the predatory nature of the human condition is just as present now as it ever was and that the superficial concept of being more sophisticated today has little basis when we look at the disparity and abuses not only in Australia but world-wide. What is different are the tools used to play out the predatory behaviours within the western world which exploit and disadvantage the vulnerable using political and economic policy. The use of unnecessary over complicating systems in the market place to obfuscate comparison for financial gain is also used in politics and economic policy. That way people cannot easily assess the machinations and comprehend the reality of the situation and therefore are left to fall back on spin and personality rather than actual policy detail.

Reality Check No. 2 – If Hockey is so concerned about welfare payments, then why is he seeking to introduce a new payment in the parental payment scheme which again is tailored to give much more advantage to those already well off. I do think there should be a parental payment scheme but it should only ever be at the same rate as the unemployment benefit. There are also large payments made as superannuation incentives to high-income earners, not middle or low-income earners as outlined in the tax concessions especially in superannuation.

Swinburne University says,

“It’s worth reconsidering concessions granted for super: they’re as costly as the age pension ($44.8 billion compared to $44.9 billion in age pension), but are growing more rapidly.”[5]

This particularly unfair use of public funds when people are anxious about supporting themselves through potentially longer retirements and an uncertain expectation of pension support.

Reality Check No. 3 – The Australian society, like all human societies since the beginning of time, do contain people who are not able to formally contribute to the economic bottom line. There are the young, the old, the physically disabled, the intellectually disabled and the sick. There are also those who care for these family members or friends through obligation or through choice or both. This takes us to, what some might say, an unfortunate or unsavory aspect of the human condition and reality. Life does not provide fair outcomes by design and it seems, that the way this is managed by many societies, makes these conditions harder to bear for those who need care and for those who care for them. When are we going to realise, and relish, that society is for its people, including business and economic activity, and that life is enhanced by the diversity.

The real sophistication of any society, is only and always undeniably, connected to how the society bears with, or positioned in another set of values, embraces the challenges along with the joys of existence in the wholeness of an inclusive society. The reality is that while many benefit from bestowed advantage there are always those, through circumstances outside of their own making and choice, who suffer disadvantage. We need a society that enables all, not just some, and not everything can be valued in a monetary currency. Enabling people will ultimately lead to many being capable to take charge of their own needs. This may take one or two generations according to the degree and circumstances of the disadvantage, but people do well if they can. To enable each person is the hallmark of a civilised society. It is the wise society and the richer society in every way that practices this.

Reality Check No. 4 – Studies and experience have shown us, for many years now, countries that have equal access to health and education are happier and healthier, have more stable society, and importantly, enjoy significant economic benefit that is clearly shown in their financial bottom line. The International Monetary Fund has a lot to say about this, based on studies and statistics.[6] Also, Scandinavian countries have these priorities as a working model. Their working model, though not perfect, is heading along a path that is worth the taking.

The Economist wrote last year:

“… the four main Nordics—Sweden, Denmark, Norway and Finland—are doing rather well. If you had to be reborn anywhere in the world as a person with average talents and income, you would want to be a Viking. The Nordics cluster at the top of league tables of everything from economic competitiveness to social health to happiness. They have avoided both southern Europe’s economic sclerosis and America’s extreme inequality. Development theorists have taken to calling successful modernisation “getting to Denmark”… you need to be willing to root out corruption and vested interests. And you must be ready to abandon tired orthodoxies of the left and right and forage for good ideas across the political spectrum. The world will be studying the Nordic model for years to come.” [7] [my emphasis].

What economic model Hockey uses to base his belief that increasing the disadvantage of the already disadvantaged will lift them into new heights of performance, is not one that I have personal knowledge, and possibly not one that actually exists. The only models that I am aware point to greater disadvantage spreading further and deeper, entrenching multiple generations and increasing numbers to disadvantage. As in any significant social change, it may take one or two generations to get people back on their feet if done appropriately and consistently.  Each person grows up wanting to make their own way in the world  so they can entirely support themselves and their families. This is what they want, this is what we all want for them. Abandoning the disadvantaged has no economic or moral basis.

Mr Hockey’s choice of ideology, which is the only factor directing this ‘horror’ budget, reveals an unsophisticated and biased understanding of economic and social factors. Most unpleasantly though is its insight into a darkness of heart that is impoverished in its grasp of the financial and social world. As such, this type of worldview has no vision for Australia or the world that anyone could rationally want to be a part of, let alone aspire to hold and promote as a vision for a nation.

Australia and the world can do better than this, and want to do better than this. There are many people, paid and unpaid, working tirelessly for a society that has a place for everyone not just the mean few. Without doubt, it is the vision and energy for a positive future of an inclusive and productive Australia that underpins those that do the hard-yards, in many ways, everyday, that reveals the strength, beauty and creativity which is realistically possible and worthy of a humanity to be proud of. It is these people who bring joy to the world, get my respect, my admiration and my vote.

 


References

[1] Jericho, Greg (2014) Billions lost in tax concessions exposes Australia’s hypocrisy over federal aid, The Guardian, Retrieved in June 2014 from http://www.theguardian.com/business/grogonomics/2014/feb/03/billions-lost-tax-concessions-hypocrisy-aid

[2] Grattan, Michelle (2014) Increasing inequality brings high social cost: report, The Conversation, Retrieved in June 2014 from http://theconversation.com/increasing-inequality-brings-high-social-cost-report-27867

[3] Mercola (2014) Environmental Toxins Linked to Rise in Autism, Mercola.com, Retrieved in June 2014 from http://articles.mercola.com/sites/articles/archive/2014/04/02/environmental-toxin-exposure.aspx

[4] Piketty, Thomas (2014) Capital in the Twenty-First Century, Harvard University Press. See also Jackson, Tim (2009) Prosperity without Growth: Economics for a Finite Planet, Earthscan.

[5] Swinburne University (2014)’End super distortions before raising pension age’, Retrieved in June 2014 from http://www.swinburne.edu.au/media-centre/news/2014/04/end-super-distortions-before-raising-pension-age.html

[6] Kwek, Glenda (2014) IMF chief urges spending on health, education, Sydney Morning Hearald, Retrieved in June 2014 from http://www.smh.com.au/federal-politics/political-news/imf-chief-urges-spending-on-health-education-20140220-3348y.html

[7] The Economist (2013) Retrieved in June 2014 from http://www.economist.com/news/leaders/21571136-politicians-both-right-and-left-could-learn-nordic-countries-next-supermodel

 

Other References

Jackson, Tim (2009) Prosperity without Growth: Economics for a Finite Planet, Earthscan.

https://melissereynolds.wordpress.com/2013/11/30/australias-working-poor-during-time-of-prosperity/

http://gofactessays.wordpress.com/2014/01/12/the-widening-gap-between-the-rich-and-poor/

http://faculty.cua.edu/hoffmann/courses/201_1068/Plato-5%20Republic.4.pdf

http://www.abc.net.au/news/2013-11-02/older-people-struggle-to-reenter-workforce/5065854

http://www.crikey.com.au/2012/04/19/senior-job-seekers-in-australia/?wpmp_switcher=mobile

http://www.abs.gov.au/AUSSTATS/abs@.nsf/Lookup/4102.0Main+Features20Sep+2011#2

http://www.abs.gov.au/AUSSTATS/abs@.nsf/Lookup/4102.0Main+Features20Sep+2011#5

http://www.theaustralian.com.au/national-affairs/age-pension-quarantined-from-welfare-review-kevin-andrews/story-fn59niix-1226806633530

http://www.smartcompany.com.au/growth/economy/35246-world-s-richest-85-people-are-as-wealthy-as-half-the-world-s-population-combined-the-gap-grows-in-australia.html?utm_source=SmartCompany&utm_campaign=b7fad1a81a-Tuesday_21_January_201421_01_2014&utm_medium=email&utm_term=0_234118efee-b7fad1a81a-93943241

 

Related articles

 

Advertisements

One thought on “Hockey and the unsophisticated argument

  1. Pingback: Reduced welfare integrity | melisse reynolds

Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s