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Day to Day Politics: Is capitalism stuffed?

Day to Day Politics: Is capitalism stuffed?

Friday June 3 2016

There is much debate at the moment about which Party has the best economic plan going forward. The Coalition maintains that the best way is by giving large tax breaks to business.

This is currently being called ‘Pre GST theory or old style trickle down economics’.

Lenore Taylor writes:

“The investment bank once chaired by Malcolm Turnbull has backed the view that much of the benefit from the Coalition’s company tax cuts could flow to offshore investors, as the prime minister insisted his plan was the best way to ensure continued economic growth”.

“The domestic benefits would be far bigger if companies used the tax cut to grow their business, but according to Goldman Sachs “survey evidence suggests that companies are less likely to voluntarily lower the dividend payment ratio”, in other words the real-world impact was likely to be closer to the scenario where 60% of the benefit flowed offshore”.

Some contend that we are moving toward a Fascist style governance.

Dr. Venturino Giorgio Venturini in a 50 part series titled The facets of Australian fascism: the Abbott Government experimentthat started yesterday on The AIMN and describes Fascism as follows:

“Fascism should more appropriately be called corporatism, because it is the merger of state and corporate power”.

“Fascism as a mass phenomenon is a product of a capitalist system which is in deep social and political crisis”.

Others think we have a crisis of Capitalism. In a piece for The Guardian titled ‘You’re witnessing the death of neoliberalism – from within‘ Aditva Chakrabortty says while commenting on an IMF report that:

The results, the IMF researchers concede, have been terrible. Neoliberalism hasn’t delivered economic growth – it has only made a few people a lot better off. It causes epic crashes that leave behind human wreckage and cost billions to clean up, a finding with which most residents of food bank Britain would agree”.

“Even so, this is a remarkable breach of the neoliberal consensus by the IMF. Inequality and the uselessness of much modern finance: such topics have become regular chew toys for economists and politicians, who prefer to treat them as aberrations from the norm. At last a major institution is going after not only the symptoms but the cause – and it is naming that cause as political”.

“And the longer the slump goes on, the more the public tumbles to the fact that not only has growth been feebler, but ordinary workers have enjoyed much less of its benefits. Last year the rich countries’ thinktank, the OECD, made a remarkable concession. It acknowledged that the share of UK economic growth enjoyed by workers is now at its lowest since the Second World War. Even more remarkably, it said the same or worse applied to workers across the capitalist west”.

Call it what you will, fascism, neo liberalism, neo conservatism, there is a growing consensus that Capitalism is failing and inequality is growing at an alarming rate.

The Labor Party contend that an enormous investment in education and social structures will bring better dividends. It is known as ‘Post GST economic theory’.

“We have continued to fund privilege rather than disadvantage in education” said Mr Cobbold, who is the Save Our Schools (SOS) spokesman.

“It’s a straight choice. Do you fund wealthy private schools at the expense of disadvantaged schools, or do you turn some of that funding around to support disadvantaged students in the public and private sector?”

Inequality. What is the answer, can Capitalism be upgraded?

We are experiencing a new form of government. Something fast approaching fascism.

I have long been an admirer of Robert Reich, the former Secretary of Labor under President Bill Clinton, from 1993 to 1997, who was named by Time Magazine as one of the ten most successful cabinet secretaries ever. He writes eloquently on the subject of inequality.

Inequality has been described as one of the two universal moral challenges of our times. The other being Climate Change.

Reich has produced a film on the subject. In it he makes a simple proposition:

“What is a good society, and what role does the widening income gap play in the deterioration of America’s economic health? We are endeavouring for ‘INEQUALITY FOR ALL’ to be a paradigm-shifting, eye-opening experience for the American public. We want to accurately show through a non-partisan perspective why extreme income inequality is such an important topic for our citizens today and for the future of America”.

Traditionally two-thirds of the American economy has relied on consumerism. Wages are still at levels they were 30 years ago. Even people on average wages require food stamps to survive. People no longer have disposable income to feed the hungry giant of consumerism.

In Australia a similar situation is developing. Wages growth is at an all-time low and the government seems intent on keeping them so. The problem though is that without wages growth consumers don’t have expendable income sufficient to meet consumer demand for goods and services. America has found that out. Conservatives don’t seem to comprehend that you may be able to obtain growth on the back of low wages but if the low wages prevent people from buying what you produce. You have defeated your purpose.

Of course inequality is not just confined to the United States. It is truly universal. The two countries with the highest populations have chosen to improve the quality of life of their citizens with greedy economic capitalism which is the same system that has caused inequality in the advanced economies. The advances in China, particularly over the past forty years has been spectacular. And at the same time it is breeding billionaires like confetti. And all on the back of a low wage work force. In 50 years or so, if they continue on the same path, they will face the same problems that the west faces now.

Robert Reich outlines a plan to resolve the issue which is sound in economic rational.

In the absence of another economic system, capitalism is what we have. The problem with it is its inherent greed and misuse. It is a system that could be moulded and shaped for good. However, the conservative forces of the right of politics seem determined to enshrine the existing hungry evil greed of unregulated capitalism on us.

Revolutionised morally regulated capitalism could, if legislated and controlled enable everyone an equitable opportunity for economic success. With equality of opportunity being the benchmark of all economic aspiration and legislation.

In America 400 Americans have more wealth than half of all Americans combined?

None Union wages are also affected by the decline of unions.

Tax cuts to the wealthiest have not improved the economy or created more jobs.

The incomes of the top 1% have increased exponentially since the GFC.

Conservative Republicans couldn’t care less.

The problem is the politics.

In Australia, although not yet at the same level as the US, inequality is manifesting itself in a similar fashion. At the end of Peter Costello’s tenure as treasurer he was asked why the rich had become 7% richer. His answer was to say that at least the poor had not become poorer.

Joe Hockey said that:

“The bottom line is we have to lift the tide so that all boats rise”.

This is akin to Thatcher’s:

“The poor will be looked after by the drip down effect from the rich”.

Time has proven this a nonsense. So will Hockey’s.

The government’s actions since the 2013 election have been anything but an attempt to bridge the gap. To the contrary there has been an unashamedly concerted effort to take from those less well of (there is no need for me to list them) and give to the rich. And all indications suggest that this will continue with unabated irrationally.

The problem is the politics.

Richard Dennis executive director of the Australia Institute writing in the Canberra Times had this to say:

“Political debate is broken and those with money and access to power are the beneficiaries”.

“Political debate in Australia is broken. There are no rules. There is no blow that is too low. There is no sanction for lying or character assassination and there are enormous advantages to simply shouting louder than anyone else. Groups with privileged access to political power and the money to run large campaigns are distinctly advantaged, in the short-term at least, using their money to silence public debate and leapfrog over democratic process”.

The economic gap is of course but one part of the equation. The other is the influence gap. Who has the influence? At the moment there is not a current enquiry that is not being led by an influential businessman or conservative thinker. The ability of the ordinary citizen to influence the system has all but gone.

As Dennis says:

“The gap between those with the most and those with the least continues to rise in Australia but the gap is no longer simply financial, it is political. Money talks and civil society has silenced the fact the gulf between the capacity of an unemployed factory worker and a billionaire mine owner to influence the political process grows ever wider”.

The Australian political process fell apart with the rise of Tony Abbott. He found a formula for obtaining government predicated on mass propaganda, negativity and lies. To quote Dennis again:

“It has taken thousands of years to develop structures that prioritise honest debate over the passions of the mob. The Coalition and their backers in big business successfully rode into government on the votes of a mob they helped to whip up. While it was obviously an effective way to win office, history suggests it is a poor plan for holding it”.

The problem is the politics.

Thus far on the evidence available it is clear that the Abbott/Turnbull Government is taking us on a journey of inevitable inequality. Every action, every decision seems to be designed to advantage wealth and privilege. And they are doing it aided and abetted by big business, the IPA, mining corporations and lobbyists plus the influence of one of the most corrupt and malevolently obnoxious media barons that ever walked this earth.

The Turnbull government is willing to suppress information if it suits their aims and one has to wonder what other information they are suppressing.

Lying is so common and frequent in Government that it has invaded our normal vernacular to the point where the average punter is no longer able to distinguish between it and truth.

And this raises another question. Are the political ideologies of today suited to address the problems of tomorrow?

My thought for the day.

The word Frugalityis one of the most beautiful and joyful words in the English language, yet one that we are culturally cut off from understanding and enjoying and a consumption society has made us feel that happiness lies in having things, and has failed to teach us the happiness of not having things”.

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  1. Terry2

    Interesting battle being waged by the IPA against the coalition’s superannuation changes and they are demanding a back down or they will mount a very aggressive campaign against the coalition.

    At this stage Turnbull and Morrison are not for turning but Sinodinos is saying ‘we will consult after the election’.

    The last thing the coalition want at this stage of the election campaign is a public battle with the IPA. But the last thing electors want to see is the coalition ‘crab walking’ on its policies.

    Watch this space !

  2. Jaquix

    Love your description of Murdoch! Yes I was surprised to hear even the IPA come out against the super changes to higher income earners – but had to laugh my head off at the end where they bleat “It shouldnt make these changes because they promised before the election, and they shouldnt break a promise” or words to that effect. Havent the IPA noticed that the govt has done nothing BUT break its promises? Only now its likely to affect “them”, does the IPA come out. Pleasing though that another group comes out swinging against the government, but I imagine, like lemmings, they will trot down to the polling booth and vote for them again.

  3. Alan Baird

    The average wealthy punter must have this continuing hand-wringing conundrum to confront: do I pay some of my money to the IPA (which causes me fiscal agony) or do I watch my nice little earner from the Super rules evaporate because those INGRATES in the Liberal Party have FORGOTTEN who funds their campaigns as my donations to THEM are another source of fiscal agony to me. Who CAN you trust in your efforts to avoid tax and maximise maintenance of welfare for the well-off?
    Oh well, the IPA could threaten to support the Labor Party. Now that would give Mal a genuine shock. He wouldn’t be alone…

  4. Stephen

    Malcolm Turnabout doesn’t need to change his mind. If they do get re-elected the move to Abbott will begin and he and his cronies will change everything to advantage themselves. That is and always has been the objective, Howard was the same but had enough sense and spare funds thanks to the boom and asset sales to chuck the rabble a few bones now and then. Now pickings are scarcer and we the rabble are being left to howl while the chosen ones banquet in marbled halls.

  5. Stephen

    Also when I think about it more this gives Mal Turnabout an opportunity to look like he has a backbone and principles other than self interest and ego stoking. With the opposition to Super changes appealing to the general populace with no long term drawback as the “lifters” know it will never happen under Abbott.
    The classic magicians trick watch my right hand and miss what the other hand is doing

  6. Geoff

    We need a bottom – up style Capitalism if every facet. Many; just want a sustainable roof over their heads. If we can house people at the bottom end; we can solve many issues, especially crime? The Rich can have a Solid Gold toilet if that turns them on. And good luck to them. But push greed too far and you will end up with Growth all right. CRIME… Also with a Bottom up style Capitalism I would reward people whose job it is to clean bottoms. Let’s reward people who do all the Shit jobs. “Those who have to wipe other people’s arses for a living”. These types of people are saints and they should be remunerated accordingly. They literally should be getting a Shite bonus. So fix the bottom end of society and you will have a more harmonious world. The dodgy CEO and politicians can afford to take a small pay cut to make this happen. Bottoms Up; the only way to go.

  7. townsvilleblog

    Yes John, it’s had the gong. There is a world wide movement to replace it, however those organizing the movement have not yet come up with a concrete plan. Anything has to be better than the current system where in Australia corporations are ripping off tens of billions each and every year and not meeting their responsibility to pay their fair share of tax to the host country which in this case is Australia. Of course the money has to go somewhere and it does, it goes to pay executives millions of dollars and with million dollar bonuses. The rest is declared as a dividend for share holders back in the good ole’ USA. The situation is in fact robbery from the Australian Treasury to the tune of tens of billions every year. The LNP will not amend the law and close the loop holes that these corporations work through, so we need a Labor government in July who have pledged to collect “our” money from these parasite basT65ds so we can build Australian infrastructure, fast trains etc.

  8. michael lacey

    Democratic socialist governments have to work within the framework of a capitalist system. The capitalist system has systemic failure built into its structure. Constant boom bust cycles every 3 to seven years, deteriorating to non-existent social structures, employment in crap underpaid jobs, a population with increasing dependence on welfare even with jobs, endless money sucking wars and the neglect of those traumatized by it, an election circus every four years to elect a capitalist, money laundering and dirty dealings by banks that is ignored, a media that is bought and paid for by the elite and I’m told that socialism has failed, well anything would fail in this climate!

  9. gee

    one correction, The latest rot started with Howard. If not for the changes he wrought on the Liberal party, there wouldn’t be the cohort of absolute ghunts that infest it today.

  10. stephentardrew

    Appreciate that John.

  11. jimhaz

    I still see the neocons winning the battle. 80% of the population are either brainwashed by the ‘economic growth at any cost’ blackmail tool or simply greedy. In my view the ALP right are also neocons in their own way – just more moderate, and the ALP left tends to be impractical or inconsistent. I will never let go of the fact the Bill Shorten is friends with John Roskam and there is also the toffy GG relationship and the crawling to the US ambassador from Wikileaks. He is a sycophant to business in waiting.

    But yes, I’ll still vote ALP.

    [The word “Frugality” is one of the most beautiful and joyful words in the English language]

    Prior to the executive contract system for senior public servants and neo-con pushes for outsourcing and privatisation, the public service used to be frugal. Not the case anymore. This is part of the reason govs keep lifting user pays charges.

  12. nexusxyz

    The ‘framework’ of regulation that neutered the excess of capitalism has been rolled back. Time diminishes the lessons of history doesn’t it? ‘Markets’ will never be self-regulating and will always run out of control. That is why the experience of the 20’s and 30’s resulted in banking regulation.

    The rolling back of the regulatory framework of the finance industry, removing the walls between, retail, commercial, insurance and investment banking has been a profound disaster. Neoliberal economic theory and its bullcrap of ‘trickle down’, the ‘wealth creators’, etc. has also been a cover for firstly, money printing to both stop the ‘zombie’ banks collapsing in the US and elsewhere and secondly to provide a cover for the massive transfer of wealth to the bankers and 1%. The excess of money has also ushered in a breed of politician and business leader that is highly sociopathic and psychopathic including the LNP scumbags. The majority of the West is now trapped in a ‘financialised’ world where the answer to everything is to moronically create more debt. This simply kills value and makes the overall debt problem worse.

    Now the idiot economists and business academics have no idea to get out of the mess they have created. They have no idea how to firstly, put the financial demon back in its box and secondly, create economic well-being. There is an alternative that will deliver competitiveness to an economy which is the prerequisite for sustaining and creating new industries, creating jobs and balancing trade.

  13. Steve Laing -

    Another great article. And completely correct. How can we dismantle the status quo, to return to a system that is more equitable, but without a revolution that will inevitably result in disaster.

    We have to dismantle the apparatus from within. We have to have an orderly plan to move away from the power blocs which are political parties, that are far to open to being taken advantage of. Voting Labor will provide a temporary fix, but unless they change the system, it will be again replaced by another government of wreckers, because Labor will not dismantle the components that ensure that our current democratic process can be gamed.

    Ban political parties. Make the process of selecting your local MP more like a job recruitment process, where we, the electorate, review the capabilities of the candidates against a series of selection criteria, and decide who is most able to add value. Make ALL of the MPs actually undertake constructive work, and ensure their electorate know exactly what they’ve been working on, and how they’ve been voting. Make the buggers accountable to their employers (i.e. us!). It really isn’t as hard as people think it is.

  14. Klaus

    Here is how kaputt the IPA is. This morning on ABC Breakfast, the bloke from the IPA seriously said that there is big disgruntlement around, regarding the changes to Superannuation. He added words to the effect (not a quote) that the 15% taxation on retired people is the difference whether they have a $1000 Dinner or not.

    WTF??? A $1000 dinner? Where are these people coming from? In which world do they really live? John Lord is 100% right. They don’t know what they say or do, other than looking after the top 10%

  15. paul walter

    We have the benefit of the historical record. Not even Marxists deny the emergence of capitalism, quite the opposite, they see it as part of the formation of human civilisation.

    Capitalism is like the T Ford, a marvellous improvement on horse and cart, but obsolete in our era, if you think of the waste involved in much capitalism and its view of human nature, its general metaphysics, should now be open to revision.

    I think of the suffering of the billions who have never benefitted from it.

  16. diannaart

    Thanks, John

    “The poor will be looked after by the drip down effect from the rich”.

    Could any words reveal the lazy contempt by ring wing fascists like Thatcher than the above mentioned words?

    Lazy, because there is no plan to ensure anything trickles anywhere at all.

    Contempt, because there is a vacuum of care for people on low incomes or poverty.

    These same people like to sermonise on working hard, yet are indolent towards any mention of social responsibility.

    Really have had a gut full of these parasites.

    Parasites, because they only take, never put back.

  17. Arthur Plottier

    I cannot see any solution until the theory in economics it is changed from his roots, the teaching in Universities.
    As long us we continue with the present system of measuring GDP and pure numbers instead of quality of life growth it does not matter if we are under right or left governments, the situation will continue.
    The proof of that? Brasil, Argentina among other countries which went trough with governments with both ideologies.
    I just wonder how will be Cuba if it not went trough the USA blockade, perhaps they were close to have a system equal for all?

  18. Backyard Bob


    “The poor will be looked after by the drip down effect from the rich”.

    Could any words reveal the lazy contempt by ring wing fascists like Thatcher than the above mentioned words?

    What about the lazy contempt of left wing bloggers for their readership? John has reached a new height of intellectual dishonesty in this article with that “quote”. John has misquoted and blatantly distorted Thatcher’s words so often it’s insulting; but for him to now quote his own false “paraphrasing” of her words as though they were an actual quote is just too much. It’s treating the readership like morons and I object to it in the strongest possible terms.

    I am no such moron and I will not be treated like one by this author. John’s oft’ used version is this:

    “There is no such thing as society. There are only individuals making their way. The poor shall be looked after by the drip down effect from the rich” (paraphrased).

    This is NOT a paraphrase of what she said. It is an utter distortion. I have had enough of it. Thatcher may have been a political harridan, but this sort of rubbish is unacceptable to me.

    Google it. Or read this and make your own judgement about the nature – and context – of what was actually said.

  19. helvityni

    “The word “Frugality” is one of the most beautiful and joyful words in the English language, yet one that we are culturally cut off from understanding and enjoying and a consumption society has made us feel that happiness lies in having things, and has failed to teach us the happiness of not having things”.

    It’s a pity our youngsters don’t even know the meaning of the word ‘frugality’. Sigh.

  20. Arthur Plottier

    Every time that the name of one of the worst society carrion, Margaret Thatcher is mentioned my blood boil. It has nothing to do with lefty bloggers, it have to do in which side of human decency we are.
    This individual who supported and considered herself a friend of one of the most brutal fascist, criminal, drug dealer in history it is not in my book as an example to bring regarding her political, social en economic views.
    Tomas Moulian said the dictatorship in Chile with the neoliberal model created “consumer’s paradise” but a “citizen’s wasteland.”
    That was one of the things that Thatcher admired as well from her friend.

  21. cornlegend

    I don’t know if it’s a blessing or a curse but we have no Liberal candidate in my Electorate of Whitlam
    This is a safe Labor seat so I have my residential address with AEC listed in a marginal seat where we have a property.
    This parachuted in Lib lasted about a week in Whitlam

    ” ‘I don’t need to be a sacrificial lamb’: Mosman-based Liberal candidate for Illawarra seat quits
    In a stunning decision more than a fortnight into the election campaign, former merchant banker Carolyn Currie withdrew from the race, saying she felt like a “general with no troops” and had received no assistance from Liberal members in the area.

    “It is very hard leading a group of people that have disparate motives in a dysfunctional organisation into a battle where what I’m trying to achieve is an optimum outcome for everybody,” she said.

    Dr Currie claimed the three local branches did not even want a candidate to stand in the first place.

    “It’s very difficult for me to mount any sort of reasonable campaign without any troops, as any general would know,” she said.

    “I don’t need to be a sacrificial lamb travelling very steep inclines that are yet to be fixed.”
    Former Liberal candidate Carolyn Currie

  22. Jessie

    Backyard Bob so what was the actual quotes ?

  23. Backyard Bob


    I provided a link. The context was welfare dependence, not trickle down economics (which of course was how Thatcher saw things and it’s not hard to find actual quotes of her speaking to that). She was speaking to a classic conservative view of “government handouts” which says that people ought look to themselves first, then to family, then to neighbors – i.e. firstly to non-abstract social relationships etc etc etc. here’s the link again:

  24. diannaart

    Apologies ByB

    I was unable to return to your comments any sooner.

    As for your outrage at misquoting Maggie and your attempt to paint leftie bloggers with the same attitude of “laissez-faire” economics – this is a poor attempt to shift blame and the point of my argument. If you disagree then please give reason as to the beneficence of said economic philosophy.

    Irrespective of what Margaret Thatcher said or didn’t say, she was one of the progenitors of “piss on you” economics. Nor does attempting to claim that leftie bloggers have the same impact upon the people of the world as has this dismal system of economics foisted upon us by Thatcher & Reagan, the impact still punishing the poor decades later.

    My statement remains valid.

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