If you’re jealous of those with more money, don’t just sit there and complain, do something to make more money yourself.
~ Gina Rinehart
WE WERE SOLD A LIE.
The brilliant among us speculated that technology would deliver us from drudgery. Now we have bullshit jobs and record hours, despite historic productivity.
The liberal within us predicted that our infinite economy would grow infinitely. Now real wages, per capita growth and innovation fall, while wealth outguns incomes.
The elite amid us assured us that inequality was fine, so long as the worst off were not worse off. Now even our parents had it better, as living standards decline and the poorest go backwards, with scarce income growth to offset billowing inflation.
Perhaps I should check my testosterone levels and guzzle full-fat milk. Don’t like it? Leave! Hasn’t the world radically improved since the 19th Century?
With hard-won billions from sole inheritance and commodity price surges, heed Gina:
‘If you’re jealous of those with more money, don’t just sit there and complain, do something to make more money yourself.’
The rort
But these narratives no longer console.
We were told the best and brightest carry us with productive enterprise, only to pay millions to contrive accounting losses and trade within a byzantine tax system of offsets and deductions.
The market lets losses lie where they fall, as we gift $38 billion in JobKeeper subsidies to companies that weren’t making losses and then refuse to claw back from those posting record profits the following year.
Tax causes our geniuses to strike, even though 31% of our largest companies do not pay any tax and the 25 wealthiest Americans only paid a "true tax rate" of 3.4%. (The ATO refused to provide equivalent data as it would cause a ‘lack of confidence in the tax system’.)
Inflation is all supply chain, while energy providers and grocery retailers smartly drive up prices well above their costs. (In it together, they say.) We fuss over Centrelink fraud but lose $4.6 billion yearly from multinational avoidance. We save Qantas from Qatar, but automate debt recovery for the most vulnerable.
We burden our assetless young with HECS debts and climate costs, while inflation-hedged boomers relish the free lunch of Super concessions and franking credits, draining over $50 billion annually. Incredibly, they pay two times less tax than a priced-out household earning $100,000 a year.
Have things gotten worse?
We could justify this if things were improving. But we can no longer assume progress.
So much for The Castle — homeownership is decreasing. The Prodigal Son has turned senile, for while boomers boom, Goldeneye kids spend less and less and live the Australian rental dream. While net wealth has barely moved for those under 45, wisened wealth appreciation is as inexorable as biohacker Bryan Johnson’s inevitable death, despite his $2 million-per-year quest to find eternal youth.
Whether you blame union decline, enterprise bargaining, Bob Hawke, John Howard, or John Setka, capital share of GDP has usurped the labour share. Despite full employment and (historic) productivity, workers get neither a "social wage" nor a "real wage" increase — a real fair go.
The less said about the gossip-worn housing market, the better. But remember the "golden era" of two genders, Ford factories and lipsticked women who would not dare set foot in a man’s office? The median house prices in the 1970s were five times median salaries; today, they are 14 times.
Lest I forget our poor renters, whose champion is the greatest of NIMBYs, vacancy rates have plummeted and rental affordability is at an all-time low. Fairy Floss yields 50 comments on dark, dingy rooms and still, we scramble like freeloading loaded parents vying for a school zone.
The data is drab and dreary and forecasts are dim. A per capita recession, with seven consecutive declining quarters. Productivity is now decreasing. Private research and development is waning. Business investment is down. Public and private debt is breaking records. Growth is migration and resource-dependant, as we thank and curse god for our depletable bounty.
But surely some prosper? Certainly. Economic inequality is at a 70-year high. Profit announcements tumble like the Paris Agreement. Asset holders bless Matthew, Mark, Luke and John, and Paul Keating before bed. Bowing before their wooden idol of Peter Costello, foreign shareholders gorge on scarcely taxed minerals. Banks celebrate each rate hike with oysters, intern bullying, and another public service announcement commiserating the cost of living.
Lost mandate
If I had mates or any courage, I’d be marching in the streets. And yet, this inequality is something we all know. We tolerate it because it is not so bad; there is growth; it is worse elsewhere.
Is it a surprise that our brilliant economists, once holding the keys to the city, have lost political and public credibility? Twenty-three Nobel economists warned against Trumpian economics and America shrugged.
But complete blame is unfair. There has been elite capture, a foul mix of cronyism and corporate cuckery, that classical economic theory, even supply and demand theology, would abhor. It was not always like this. We did have a golden era and there is a reason we have influx, rather than exodus.
Happily, there are solutions:
- simplify the wasteful tax system;
- tax the riches of nature;
- liberate markets that are externality-light;
- producers pay for market failure;
- limit impending transfers with a modest inheritance tax;
- capture economic rents from rent-heavy, extractive industries;
- require domestic gas reserves or a windfall tax on gas exports;
- cease treating land as yet another asset class and strengthen land value taxes; and
- lower income and corporate taxes and increase indirect taxes.
But we cannot unwind the clock. We squandered the mining boom. Howard’s 50% capital gains tax deduction fueled the housing crisis. Abbott’s abolition of the carbon tax and minerals resource rent tax set climate policy back decades. Given Telstra, Qantas, CBA and the big three companies (let alone our alms to Woodside), privatising without profit sharing or securing decision influence was myopic, if not pigheaded.
Put another way, Norway does this resulting in huge benefits for the nation while we sit and weep.
But policies without politics is wonkish. Yes short-term, media-sensitive governments are culpable, but we elected them and still buy into scare campaigns about economic reforms. Reform takes courage and care, it must be willed.
When former Treasury Secretary Ken Henry's systemic review of the tax system proposed 138 recommendations, for example, we would have implemented more than three (and not repealed two).
What gives?
Since the 1980s, we have experienced climate degradation, consumer failure and weakened labour. These were to pave the way for the economic holy trinity of efficiency, growth and low inflation but praise the Unitarians, the trinity never revealed itself.
And so I ask, if modern capitalism can no longer be justified by its promises, why do we accept its downsides?
If the economy is growing, if new wealth is being created – if that proverbial pie is growing – then inequality is a small price to pay. But when the pie is stale, growing inequality is nothing but upward wealth redistribution. Ramming sticks between our spokes, we sacrificed, bungled our prosperity and got nothing in return.
So forgive me for flogging a dead horse but we have been duped.
Suckered, swindled, sold a lemon.
Conned and cheated, they laugh while making off with public goods and public wealth, and we have no one left to blame.
Hamish Mitchell is a criminal law associate, writer and essayist. You can read more from Hamish here.
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Australia License
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