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Talking Politics

DavidSSS

Tiger Legend
Dec 11, 2017
8,623
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Melbourne
Interesting article on the ABC site today, especially given the imminent rise in interest rates:

https://www.abc.net.au/news/2022-07...e-expected-to-increase-unemployment/101192934

An excerpt:

Because after suffering through stagflation in the 1970s, policymakers wanted to prevent stubbornly high inflation ever becoming a problem again, so they abandoned the post-war policy of "full employment".

In its place, they started trying to keep just enough "slack" in the economy to prevent serious price pressures returning.

And they decided to maintain that slack by having more unemployed people in the economy than jobs available.

It was a radical departure from the previous way of thinking.

As historian Frank Crowley put it: "The ideal of full employment was lost, possibly forever; and politicians became accustomed to a notion which would once have appalled them — an 'acceptable level' of unemployment."

However, there was clearly a moral problem with the policy.

If the unemployed were going to be used as inflation shock absorbers for the economy, shouldn't their role have been officially recognised and appropriately compensated?

So, people are sacrificed to the great god that is the economy. On top of that they are harassed and paid a pittance.

If the policy is to deliberately keep a reserve of labour to inhibit wage rises and control inflation, and to do this they need to ensure there are more unemployed than jobs available, then all the BS such as work for the dole, all the punitive surveillance of the unemployed etc, is not justified.

Interest rate rises are a blunt bludgeon to try and control inflation and do not address the underlying causes of inflation.

People should never be sacrificed for "the economy", it is the economy which should serve the people not the other way around.

DS
 
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Baloo

Delisted Free Agent
Nov 8, 2005
42,070
14,830
The Barilaro situation needs to be investigated. Appoints himself to a half a million $ a year job? Wouldn't we all like that.
Fraud? Theft? Whatever you want to call it Australian Taxpayers deserve better.

Agree, but in this case it was a NSW funded role, so it's only NSW tax payers that were going to fund his working holiday
 

Sintiger

Tiger Legend
Aug 11, 2010
15,375
9,483
Camberwell
Interesting article on the ABC site today, especially given the imminent rise in interest rates:

https://www.abc.net.au/news/2022-07...e-expected-to-increase-unemployment/101192934

An excerpt:



So, people are sacrificed to the great god that is the economy. On top of that they are harassed and paid a pittance.

If the policy is to deliberately keep a reserve of labour to inhibit wage rises and control inflation, and to do this they need to ensure there are more unemployed than jobs available, then all the BS such as work for the dole, all the punitive surveillance of the unemployed etc, is not justified.

Interest rate rises are a blunt bludgeon to try and control inflation and do not address the underlying causes of inflation.

People should never be sacrificed for "the economy", it is the economy which should serve the people not the other way around.

DS
Its a difficult discussion DS.
When I studied economics ( many moons ago) the definition of full employment was about 1.5% so we always accepted a level of unemployment. The idea of that rate was that there were always people between jobs or new entrants yet to find employment.
The difference these days is that back then most people had a job or they didn't. There wasn't this concept of underemployment and there wasn't the level of part time and casual employment that we have now that skews the stats. The Libs trumpeted less than 4% as a rate but it seems to me that this number is misleading because anyone in management right now knows that staff are really hard and sometimes impossible to find. We also have a much more diverse workforce now where different industries and disciplines have different rates of unemployment far more than they did before.
That is why I don't pay much attention to the actual unemployment rate now but i do pay some attention to the movement in the rate.
Outside some industries and the public sector the market will dictate wages. I have had staff leave in the last 3-6 months for jobs they are not qualified to do for salaries 30% or more higher than they were getting. The issue with wages growth right now to me is one of supply and demand but using interest rates as a tool attacks what is probably the wrong side of that equation. We have a labour supply problem now which has been caused by reduced immigration, lack of foreign students and a lack of casual backpacker workers.
 

DavidSSS

Tiger Legend
Dec 11, 2017
8,623
13,160
Melbourne
Its a difficult discussion DS.
When I studied economics ( many moons ago) the definition of full employment was about 1.5% so we always accepted a level of unemployment. The idea of that rate was that there were always people between jobs or new entrants yet to find employment.
The difference these days is that back then most people had a job or they didn't. There wasn't this concept of underemployment and there wasn't the level of part time and casual employment that we have now that skews the stats. The Libs trumpeted less than 4% as a rate but it seems to me that this number is misleading because anyone in management right now knows that staff are really hard and sometimes impossible to find. We also have a much more diverse workforce now where different industries and disciplines have different rates of unemployment far more than they did before.
That is why I don't pay much attention to the actual unemployment rate now but i do pay some attention to the movement in the rate.
Outside some industries and the public sector the market will dictate wages. I have had staff leave in the last 3-6 months for jobs they are not qualified to do for salaries 30% or more higher than they were getting. The issue with wages growth right now to me is one of supply and demand but using interest rates as a tool attacks what is probably the wrong side of that equation. We have a labour supply problem now which has been caused by reduced immigration, lack of foreign students and a lack of casual backpacker workers.

Unemployment was a bit higher when I did some economics at uni.

It is not simple but the strategy over the last 40 or so years, lets just call it neo-liberalism since that is the usual label, has changed to have a reserve of labour to ensure that wages are kept down and the result has been that the profit share of total income has risen.

We have also reduced the redistributive effect of progressive taxes by flattening tax rates and doing things like removing death duties. Both of these, Piketty showed in Capital, did have an impact on income distribution. Plus there has been a deliberate weakening of trade unions so the power balance between employers and employees has shifted.

But the same free market fundamentalists are dead against pay rises, and wages are not rising, even though their neanderthal abstraction of how economies work says wages should rise when there is a supply shortage.

Meanwhile the reserve bank deploys the sledge hammer on inflation and screw the people who suffer as a result.

Basically the system is not designed to serve the people and that is fundamentally wrong.

For a start lets use some of that good old fiscal policy, raise taxes on those who do well under inflation, won't be any less effective than the interest rate sledge hammer.

DS
 

Sintiger

Tiger Legend
Aug 11, 2010
15,375
9,483
Camberwell
Unemployment was a bit higher when I did some economics at uni.

It is not simple but the strategy over the last 40 or so years, lets just call it neo-liberalism since that is the usual label, has changed to have a reserve of labour to ensure that wages are kept down and the result has been that the profit share of total income has risen.

We have also reduced the redistributive effect of progressive taxes by flattening tax rates and doing things like removing death duties. Both of these, Piketty showed in Capital, did have an impact on income distribution. Plus there has been a deliberate weakening of trade unions so the power balance between employers and employees has shifted.

But the same free market fundamentalists are dead against pay rises, and wages are not rising, even though their neanderthal abstraction of how economies work says wages should rise when there is a supply shortage.

Meanwhile the reserve bank deploys the sledge hammer on inflation and screw the people who suffer as a result.

Basically the system is not designed to serve the people and that is fundamentally wrong.

For a start lets use some of that good old fiscal policy, raise taxes on those who do well under inflation, won't be any less effective than the interest rate sledge hammer.

DS
I agree with a lot of that but I also think the Trade unions themselves are responsible for a good portion of their own weakening, but for whatever reason the power balance between capital and labour has moved away from labour in the last 25 years or so.
 

Panthera Tigris

Tiger Champion
Apr 27, 2010
3,222
1,194
Unemployment was a bit higher when I did some economics at uni.

It is not simple but the strategy over the last 40 or so years, lets just call it neo-liberalism since that is the usual label, has changed to have a reserve of labour to ensure that wages are kept down and the result has been that the profit share of total income has risen.

We have also reduced the redistributive effect of progressive taxes by flattening tax rates and doing things like removing death duties. Both of these, Piketty showed in Capital, did have an impact on income distribution. Plus there has been a deliberate weakening of trade unions so the power balance between employers and employees has shifted.

But the same free market fundamentalists are dead against pay rises, and wages are not rising, even though their neanderthal abstraction of how economies work says wages should rise when there is a supply shortage.

Meanwhile the reserve bank deploys the sledge hammer on inflation and screw the people who suffer as a result.

Basically the system is not designed to serve the people and that is fundamentally wrong.

For a start lets use some of that good old fiscal policy, raise taxes on those who do well under inflation, won't be any less effective than the interest rate sledge hammer.

DS
I actually don’t mind a tax system built on the back of a flatter (less progressive) personal income tax structure, like that of New Zealand. As well as a heavier reliance on more broad based consumption tax (GST).

The caveat being that as a quid pro quo you then draw on the likes of wealth taxes, death duties, broad based land tax (instead of stamp duty), as well as reducing current tax concessions on real estate (negative gearing, CGT) as your redistributive tools. And, as the article suggests, super profit taxes for those industries that disproportionately benefit in a high inflation environment - such as energy and certain commodities producers as examples.
 
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DavidSSS

Tiger Legend
Dec 11, 2017
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The trouble with a flatter tax system is that it is less progressive, and a GST is regressive (tax on purchases is a higher proportion of income the less you earn).

Would like to see wealth taxes, land taxes etc as the real disparity is not so much in income (although income inequality is very large now) but in wealth. Wealth concentration is returning to the situation it was at before WWI. In fact, the period after WWII where wealth inequality reduced quite a lot is looking like the aberration. The sort of wealth inequalities we see now are getting to the levels of the GIlded Age in the late 19th and early 20th centuries. The other issue, as usual, is that wealth taxes and the like are often avoided. If they bring in things like a wealth tax (politically not really possible) it needs to be really simple and hard to avoid.

Piketty is involved with the Wealth Inequality Database which has a lot of info on inequality trends: https://wid.world/

No easy solutions but it remains the case that fighting inflation by sacrificing the poorest and most vulnerable is not the answer.

DS
 

mrposhman

Tiger Legend
Oct 6, 2013
14,221
13,438
I actually don’t mind a tax system built on the back of a flatter (less progressive) personal income tax structure, like that of New Zealand. As well as a heavier reliance on more broad based consumption tax (GST).

The caveat being that as a quid pro quo you then draw on the likes of wealth taxes, death duties, broad based land tax (instead of stamp duty), as well as reducing current tax concessions on real estate (negative gearing, CGT) as your redistributive tools. And, as the article suggests, super profit taxes for those industries that disproportionately benefit in a high inflation environment - such as energy and certain commodities producers as examples.

I don't like the idea of super profit taxes personally, but for those commodity cycles, I have no problem with higher royalty rates on commodities being sold. QLD have just done this relating to the coal industry, whereby it raises progressively as the commodity price increases.

Having said that, I saw what Marc McGowan said about commodities and particularly things like gas, there needs to be some government control over supply. He has dictated in WA that a minimum of 15% of production from all WA producers has to be retained in WA for domestic supply, the eastern states haven't done that and we have been dramatically exposed as consumers because of this. My view is this must be government controlled like they do in WA, as if you leave it to market dynamics, gas companies will sell this gas to the highest priced customer which will be overseas. We then need to buy back gas from overseas and we end up screwing ourselves completely as a country like we are seeing right now with the dramatic price hits that are occurring in the energy sector.

BTW - I am also totally against death taxes. Morally they are just pure wrong and should be avoided at all costs IMO. I'm with you on land taxes and reduction to the benefits provided on negative gearing etc.
 

Panthera Tigris

Tiger Champion
Apr 27, 2010
3,222
1,194
The trouble with a flatter tax system is that it is less progressive, and a GST is regressive (tax on purchases is a higher proportion of income the less you earn).

Would like to see wealth taxes, land taxes etc as the real disparity is not so much in income (although income inequality is very large now) but in wealth. Wealth concentration is returning to the situation it was at before WWI. In fact, the period after WWII where wealth inequality reduced quite a lot is looking like the aberration. The sort of wealth inequalities we see now are getting to the levels of the GIlded Age in the late 19th and early 20th centuries. The other issue, as usual, is that wealth taxes and the like are often avoided. If they bring in things like a wealth tax (politically not really possible) it needs to be really simple and hard to avoid.

Piketty is involved with the Wealth Inequality Database which has a lot of info on inequality trends: https://wid.world/

No easy solutions but it remains the case that fighting inflation by sacrificing the poorest and most vulnerable is not the answer.

DS
I suppose what I was getting at is that I’m not ideological here. I’m taking a bit from both sides of the left/right fence.

Create a system where people are incentivised for being productive while they are here (flat income tax structure), backed by wider GST to make up the shortfall. Perhaps a higher tax free threshold too for lower income earners.

Then on the flip side, using more efficient taxation tools (wealth, property, death taxation etc) as the redistribution component. That income then going into social programs to make up for the regressive nature of the first two. As you say. The inequality isn’t so much income, but accumulated wealth.

In addition to super profits tax on those parts of the economy that disproportionately benefit from high inflation, I did half hear a tax expert talking about how a floating GST rate can be used as an alternative to interest rates to fight inflation. Didn’t hear the full interview as I came in half way through. But would be interested in hearing more as to how it works, while also protecting those with less ability to pay (because he did seem to be covering off on this last component from the little bit I heard).

Despite popular perception, Switzerland is a country that successfully administers a very effective wealth tax regime in most Cantons (States). So it can be done.
 

Panthera Tigris

Tiger Champion
Apr 27, 2010
3,222
1,194
I don't like the idea of super profit taxes personally, but for those commodity cycles, I have no problem with higher royalty rates on commodities being sold. QLD have just done this relating to the coal industry, whereby it raises progressively as the commodity price increases.

Having said that, I saw what Marc McGowan said about commodities and particularly things like gas, there needs to be some government control over supply. He has dictated in WA that a minimum of 15% of production from all WA producers has to be retained in WA for domestic supply, the eastern states haven't done that and we have been dramatically exposed as consumers because of this. My view is this must be government controlled like they do in WA, as if you leave it to market dynamics, gas companies will sell this gas to the highest priced customer which will be overseas. We then need to buy back gas from overseas and we end up screwing ourselves completely as a country like we are seeing right now with the dramatic price hits that are occurring in the energy sector.

BTW - I am also totally against death taxes. Morally they are just pure wrong and should be avoided at all costs IMO. I'm with you on land taxes and reduction to the benefits provided on negative gearing etc.
Yeah, my reference to death taxes was more just a discussion point along side wealth, land tax etc as other more efficient ways of redistribution (rather than disincentives to being productive). All these kind of act as quasi wealth taxes. People will have their varying opinions on the merits of each of these.

Agree, a sliding scale for royalties based on underlying commodity prices is another tool that can be used, slightly differently to what I propose. Variations on a theme that I’d certainly support. Heavier government oversight on energy supply as you propose (like in the WA example) sound policy for mine as well.
 
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DavidSSS

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Dec 11, 2017
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Melbourne
I can't see the problem with death taxes, you get taxed on money you did not earn. Hardly seems fair to tax people on money they earn through sweated labour but not on money just given to them for no effort. Now, I'm not saying they should be a high rate, a progressive scale up to maybe 5% or 10% for really huge fortunes. The other thing is that so many western countries talk about how we are all the land of opportunity and everyone can get ahead. Well, those who inherit get ahead just by virtue of their parentage and this is one of the biggest reasons for wealth inequality, the ability to hold on to wealth and pass it to the next generation. You want less wealth inequality then death taxes are essential. If not, then whatever.

As for the mining industry and royalties. If we don't get substantial, and I mean substantial, royalties from mining companies, mostly overseas owned, to dig up and export the minerals which are here, then what the hell are we getting? A few jobs, and it is a few with the ongoing automation of the mining industry. FFS the arts employs more people than mining but there's no squealing and gnashing of teeth when their jobs disappear. Most other mineral exporting countries don't just give away their natural wealth, they charge big royalties, I don't get why we don't do the same.

Baloo, that tweet is so right. If companies want to get bailed out then they have to give equity to the government bailing them out. Yet another thing I cannot understand, why would you give a private business money and expect nothing in return? Makes no sense at all. Also acts as a disincentive to screw up.

DS
 
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mrposhman

Tiger Legend
Oct 6, 2013
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I can't see the problem with death taxes, you get taxed on money you did not earn. Hardly seems fair to tax people on money they earn through sweated labour but not on money just given to them for no effort. Now, I'm not saying they should be a high rate, a progressive scale up to maybe 5% or 10% for really huge fortunes. The other thing is that so many western countries talk about how we are all the land of opportunity and everyone can get ahead. Well, those who inherit get ahead just by virtue of their parentage and this is one of the biggest reasons for wealth inequality, the ability to hold on to wealth and pass it to the next generation. You want less wealth inequality then death taxes are essential. If not, then whatever.

As for the mining industry and royalties. If we don't get substantial, and I mean substantial, royalties from mining companies, mostly overseas owned, to dig up and export the minerals which are here, then what the hell are we getting? A few jobs, and it is a few with the ongoing automation of the mining industry. FFS the arts employs more people than mining but there's no squealing and gnashing of teeth when their jobs disappear. Most other mineral exporting countries don't just give away their natural wealth, they charge big royalties, I don't get why we don't do the same.

Baloo, that tweet is so right. If companies want to get bailed out then they have to give equity to the government bailing them out. Yet another thing I cannot understand, why would you give a private business money and expect nothing in return? Makes no sense at all. Also acts as a disincentive to screw up.

DS

I agree on mining royalties.

I'm not sure you fully understand some of the implications of death taxes. I'll give you an example, a family has a house that is worth lets say $1.5m, in the UK the inheritance tax is based on 40% of amounts over 325k GBP or 500k GBP IF you give all your money to a spouse or a charity.

So, lets say a family has a house for $1.5m. The 2 parents are killed in an accident and 2 children survive. The house passes to the children so the lower rate exists (this is about $550k based on the UK rates. So $950k is eligible for inheritance tax, and they would need to pay nearly $400k. Even if this was 10%, you have to find $95k. The alternative is to sell your house. Why is it fair that you force people to sell their house.

You are right that the people receiving inheritance have not paid tax on that money, but their parents did. Why should you have to pay tax purely because that family member has unfortunately passed. IMO its a ridiculous tax that shouldn't exist anywhere. You sound like the epitomy of a socialist - just because someone has a rich parent, why should they pass that down. Maybe thats why said person has worked that hard for their money, to provide a step up for their family's future even after they have passed. Its not all million heirs and heiresses that never have to work, its middle income families that would be worst hit by this sort of tax.
 
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Ridley

Tiger Legend
Jul 21, 2003
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I agree on mining royalties.

I'm not sure you fully understand some of the implications of death taxes. I'll give you an example, a family has a house that is worth lets say $1.5m, in the UK the inheritance tax is based on 40% of amounts over 325k GBP or 500k GBP IF you give all your money to a spouse or a charity.

So, lets say a family has a house for $1.5m. The 2 parents are killed in an accident and 2 children survive. The house passes to the children so the lower rate exists (this is about $550k based on the UK rates. So $950k is eligible for inheritance tax, and they would need to pay nearly $400k. Even if this was 10%, you have to find $95k. The alternative is to sell your house. Why is it fair that you force people to sell their house.

You are right that the people receiving inheritance have not paid tax on that money, but their parents did. Why should you have to pay tax purely because that family member has unfortunately passed. IMO its a ridiculous tax that shouldn't exist anywhere. You sound like the epitomy of a socialist - just because someone has a rich parent, why should they pass that down. Maybe thats why said person has worked that hard for their money, to provide a step up for their family's future even after they have passed. Its not all million heirs and heiresses that never have to work, its middle income families that would be worst hit by this sort of tax.
Agree 100% Posh.
 

RoarEmotion

Tiger Champion
Aug 20, 2005
2,774
3,078
I agree on mining royalties.

I'm not sure you fully understand some of the implications of death taxes. I'll give you an example, a family has a house that is worth lets say $1.5m, in the UK the inheritance tax is based on 40% of amounts over 325k GBP or 500k GBP IF you give all your money to a spouse or a charity.

So, lets say a family has a house for $1.5m. The 2 parents are killed in an accident and 2 children survive. The house passes to the children so the lower rate exists (this is about $550k based on the UK rates. So $950k is eligible for inheritance tax, and they would need to pay nearly $400k. Even if this was 10%, you have to find $95k. The alternative is to sell your house. Why is it fair that you force people to sell their house.

You are right that the people receiving inheritance have not paid tax on that money, but their parents did. Why should you have to pay tax purely because that family member has unfortunately passed. IMO its a ridiculous tax that shouldn't exist anywhere. You sound like the epitomy of a socialist - just because someone has a rich parent, why should they pass that down. Maybe thats why said person has worked that hard for their money, to provide a step up for their family's future even after they have passed. Its not all million heirs and heiresses that never have to work, its middle income families that would be worst hit by this sort of tax.
I’m sure there are solutions to all these problems and I think David was only proposing 10 or 15 per cent. If we want less disparity then this seems a fairly direct way of moving money from richer to poorer people.

It would drive You to leave your kids different forms of wealth - health, intelligence, values and networks ahead of just pure dollars. But I’m sure the rich would employ accountants to find work arounds and governments would be slow to catch up.

My issue is more that governments do a horrific job of spending money as the accountability for outcomes is pretty much non-existent / correlated to election outcomes IMO given the time scales involved. So no guarantee that doing this would achieve the goal it would be done in the name of.
 

DavidSSS

Tiger Legend
Dec 11, 2017
8,623
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Melbourne
The biggest implication of death taxes is to reduce inter-generational wealth inequality.

I'm all for that.

Of course, doing away with private property would be a better solution but we're talking short term here.

DS

PS: don't ever call me a socialist, I'm not that conservative.
 
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