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KISS or Keep It Simple, Stupid So That Even Abbott may understand!

When I read this quote from a very rich man the other day, it got me thinking.

“It’s fantastic! The one percent pays 80 percent of all taxes. Fifty percent of the population of the U.S. pays no taxes. The one percent provides all the jobs for everybody else. If the one percent didn’t exist, there would be chaos and the American economy would drop dead. Try being nice to rich people. I don’t remember the last poor person who gave me a job.”

Gene Simmons from KISS, when asked how felt about being part of the one percent.

Actually, I wonder if the poor old man can remember the last time anyone gave him a job apart from being ridiculously well paid for sticking out his tongue.

But it’s this idea that somehow rich people go around creating jobs out of the goodness of their hearts and we should all be grateful to them, that I find most amusing. It’s simply not the way the capitalist system works.

Of course, Gene Simmons has the rather strange concept that if the top one percent didn’t exist that the A’merican economy would drop dead’. To state the bleedin’ obvious, if you remove the top one percent, you’d have another top one percent. That’s the way the percentages work. Of course, it’s the level of wealth that the top one percent own compared to everyone else that has people complaining. Only because while some buy diamond necklaces for their pooches, there are people sleeping in the streets. I know, I know. The USA is a land of opportunity and some people would rather be homeless than take on a second or third job.

However, the more important point is to do with the way the economy works. I’m going to break this down using the KISS principle, so that even Gene and Joe Hockey may understand.

Now, Mr Simmons was once in a band. And it was probably a rich person, or bunch of rich people who owned the record label, so I have no problem with him being as nice as pie to those people who decided that he was worth giving a shot at stardom, even though I suspect that they did it to make money, and not just to be swell guys. However, Gene, it wasn’t just the one percent who went out and bought your records, so one might say if it wasn’t for the 99 percent then you wouldn’t be rich. And I very much doubt if you hadn’t sold records, then those nice rich people may not have continued to give you money.

Leaving that all aside, however, I feel that one must ask Mr Simmons where he got his figures from. “Fifty percent pay …no taxes”? Income tax, maybe, but what about the various other taxes and levies? And when it comes to income tax, how many of those paying “no tax” are using elaborate schemes to make it appear as though they have no income. (Yes, I have no idea either, but I’m not the one ranting about how hard it is to be rich)

If income was more evenly distributed, then the very, very rich wouldn’t have to complain about how much tax they pay because we’d all be paying our “fair share”. The burden of taxation wouldn’t fall so heavily on them, as Joe Hockey likes to remind us.

But soon we may have to simply take Joe’s word on that, because “fears of kidnapping” have the Liberals telling us that we need to prevent the disclosure of the top taxpayers. Mm, I wonder if we’ll have a ban on publication of the BRW Rich List for the same reason.

Consistency has never been the Abbott Government’s STRONG point, even though they are a STRONG government, with STRONG borders and a STRONG plan for Australia’s future which involves jobs and growth and security but which can’t be revealed because of their policy of not commenting on operational matters.

It’s just basic economics they have trouble with. For example, cutting the rate at which our debt is increasing doesn’t solve the problem of increasing debt. Not that the debt is actually too high. However if you’ve run around telling everyone that our debt was already too high when it was a mere $267 billion then saying we’ve slowed the rate of increase doesn’t really cut it. Particularly when your own figures suggest that in 2030, it’ll be higher as percentage of GDP than it was under Labor. (What was it at last count, by the way? It no longer seems an issue.)

But big numbers a long way in the future are scarier than they need to be. When I first bought a house, I dreamed of one day living in a million dollar house. Now, I have every confidence that will happen soon, and I haven’t even had to move.

Which, of course, brings me to the $600 billion hit to the GDP thanks to Labor’s plan to cut emissions by a target which Labor hasn’t yet revealed. A very basic understanding of economic modelling tells one that while it’s rather difficult to be that specific so far into the future, it’s even harder when one doesn’t know the actual number one is using for the model. So, in other words, there is a number for Labor’s emissions target that will produce a $600 billion hit, and it sounds a lot scarier than the smaller numbers. So that’s the one we’ll use. The Liberals number, on the other hand, is so good because it will cut emissions while boosting coal production, producing JOBS and GROWTH, as well as keeping us safe and secure and Santa Claus will visit every household twice a year and not just to leave lumps of coal for the naughty children whose parents are part of the Socialist/Green/Labor collective using legislation to stop the right of the government to ignore the law.

$600 billion is a scary number, but for me, the $6 billion hit to the renewable energy sector by 2020 thanks to the Abbott Government’s reduction in its RET is a lot more real and definite. This is also a hit to the GDP, but an unimportant one, apparently.

Of course, all of this assumes that a hit to the GDP is necessarily bad by definition. The best way to think of this is to look at the opposite. If a flood ran through the entire state of Victoria, the overall effect would be a boost to GDP. Even allowing some lost productivity due to the flood, the rebuilding and replacement of goods, as well as services like trauma counselling and medical bills would be an enormous boost to GDP.

Now let’s imagine that we reduce the number of car accidents by 50%. This will lead to a reduction in GDP in much the same way that the flood would lead to an increase.

So should we be concerned that there have been no floods, and that certain “nanny state” governments are doing their best to reduce the road toll? Or is a GDP an imperfect measure of how well things are going?

But perhaps the most revealing thing about the idea of a $600 billion “cumulative hit” is that it relied on modelling done a number of years ago, and if the government used the same modelling it used for its own target, we get a very different picture. The Abbott Government claims that its target of 26% will reduce GDP by between 0.2 and 0.4 percent while a 45% target would only cut 0.5% to 0.07% of GDP.

In other words, using the Abbott government’s own modelling and presuming a 45% target from Labor, our GDP would need to be $10,000,000,000,000 by 2030 for the figure of $600 billion to be correct. It’s currently about $1,500,000,000 so that’s a growth that’d make my house worth more than a billion by then, if its value grew at the same rate.

But hey, I guess with all this focus on jobs and growth that should be no problem.

Although the founders of highly successful Australian company, Atlassian, seem to have a different idea about what the Abbott government should be focussed on:

“The biggest problem with government is it doesn’t understand technology,” Mr Cannon-Brookes told the program. “Technology is going to be the major driver of change over the next 25 years. It has been over the last 25.

Read more: http://www.afr.com/news/politics/national/atlassian-founders-lash-abbott-for-failing-technology-20140525-iups7#ixzz3jaYYsrj7

Don’t they understand that this government has a better plan for the NBN, and that’ll be delivered faster and we’ll all have high speed internet by 2017?

Oh, sorry, we won’t. Apparently there’s no way of extracting coal from the NBN.

 

 

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14 comments

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  1. Wally

    Gene Simmons forgot to mention the top 1% are at the forefront of tax evasion and tax avoidance schemes but like this article points out you wouldn’t want the facts to spoil a self indulgent rant.

  2. Sally K

    Thought provoking article Rossleigh.

    The current government probably wants your house to be worth more than a billion as they believe rising house prices are always good and so why have an upper limit?

    Unfortunately to produce ever increasing wealth disparity is the way our form of capitalism works. I like this film by American economist, Robert Reich, which says the top 400 people in USA own more “wealth” than the bottom 50%, 115million people. (at 6.20 on the video)

    https://www.youtube.com/watch?v=6k9gAogaoKk&feature=em-share_video_user

    To change this requires a coherent system.

    Taxing economic rents (eg resource rents such as land value tax and mining tax) in preference to taxes on productivity (eg income tax, GST) would make capitalism work, as the privatisation of the economic rents of nature is at the basis of the wealth disparity.
    This was the way classical economics, from Adam Smith to Henry George, was going but neoclassical economics became an academic discipline in USA universities funded and controlled by wealthy plutocrats in the late 19th century. They dismissed the concept of economic rent and merged land (nature) with man-made capital so the factors of production became labour and capital, not land, labour and capital.
    Considering the effect of vested interests on the initial denial of harmful effects of tobacco and denial of climate change would you expect economics to develop in ways other than suiting the established order? Economics is much easier to subvert as outcomes are indeterminate, compared to medical science where people get sick and die, even cigarette company executives.

    Karl Firtzgerald of Prosper Australia wrote a report on “Total Resource Rents of Australia”

    https://www.prosper.org.au/2013/12/03/total-resource-rents-of-australia-2/

    At the beginning is his list of 26 sources of economic rent.
    An important one is on p27. – The public owns the airwaves so access by TV stations should be on the condition that a certain amount of airtime be made available for campaign advertising, much reducing politicians need for donations and the power of vested interests.

  3. Florence nee Fedup

    No one never got that rich without great number low paid workers at the bottom using their skills to make something to sell.

    Takes labour plus capital to create wealth.

  4. jim

    My question is just how can the public trust the LNP on anything? now that we’ve all seen their true colors?.

  5. Kaye Lee

    My father, who was a teacher, always said he aspired to having a tax problem.

    On the NBN, it’s kind of surprising that more hasn’t been made of the announcement that NBN intends to spend almost $40 million to attract and train another 4500 workers in existing telecommunications technologies, in order to help its delivery partners accelerate the build of Australia’s national broadband network.

    The national broadband network company listed a range of occupations needed to meet its requirements including telco copper cable jointers, lines workers, cablers, telco technicians and electrical linesworkers.

    The company is also after school leavers and construction workers in its bid to double its current minimum deployment work force to 9000, so it can meet its objective of providing all Australian homes, businesses and communities with access to high-speed broadband by 2020.

    Read more: http://www.itnews.com.au/News/407325,nbn-to-spend-40m-training-4500-network-workers.aspx#ixzz3jbNPG7zS

    Are they embarrassed because they are behind schedule and over budget?

  6. Grant Moss

    In 1968 Robert F Kennedy made the following observation which seems more relevant today:

    “Too much and too long, we seem to have surrendered community excellence and community values in the mere accumulation of material things. Our gross national product … if we should judge America by that – counts air pollution and cigarette advertising, and ambulances to clear our highways of carnage. It counts special locks for our doors and the jails for those who break them.(…)

    Yet the gross national product does not allow for the health of our children, the quality of their education, or the joy of their play. It does not include the beauty of our poetry or the strength of our marriages; the intelligence of our public debate or the integrity of our public officials. It measures neither our wit nor our courage; neither our wisdom nor our learning; neither our compassion nor our devotion to our country; it measures everything, in short, except that which makes life worthwhile. And it tells us everything about America except why we are proud that we are Americans.”

  7. Sally K

    Professor Joseph Stiglitz says what causes inequality is monopoly rents and capital gains on land. He will be making himself very unpopular with the parasites like Gene Simmons.

    If you do not have the 18 minutes to watch it go from about 7.00 on the video.

  8. Felicitas

    And if we don’t believe the 99%, here’s one of the one-percenters on the subject

  9. jimhaz

    [It’s currently about $1,500,000,000 so that’s a growth that’d make my house worth more than a billion by the]

    s/b 1,500,000,000,000 … but whose counting. $600b was always a massive propaganda based amount with no basis other than over 100 or so years.

  10. Florence nee Fedup

    Opposite to above. If the rich kept producing jobs that the consumer can;t buy, all we would have is over production. A term I heard often as a kid, that the great depression was caused by over production. Could never understand what they meant, even as a kid knew the goods were needed, people going without, problem was no money to buy them

    All suffered.

    Truth could be that the wealthy ripping off the poor leads to destruction for all.

    It is not them and us, that many at the top believe but we.

  11. eli nes

    The rabbutt got in by claiming a labor debt crisis and with the loony green’s help has doubled the debt? The rabbutt got in claiming the price on carbon was a tax costing australian women $550 to do the ironing. He now pays billions of taxpayer dollars to the companies that used to pay us. The rabbutt got in telling people that gillard did nothing in government and was soft on illegals. How wrong am I to have such idiotic ideas.
    The rabbutt is loved by the army, navy and airforce for the new equipment and wars. He is adored by the police for his home-grown terror stand.
    He is back in with the Indigenous hierarchy and has proven his qualifications as PM by being for jobs, jobs, jobs, economic development and shows his honesty.and commitment by repeating the new slogan over and over. Such a ploy is reinforced by his merry men being bound to repeat the same words after him.
    Such tactics worked in 2013. Will they work 2016??? For this old cynic, beginning with a landslide win in canning by-election, QED, is a certainty.

  12. corvus boreus

    eli nes,
    When you repetitively drone the ‘loony greens’ trash talk, you sound like the murdoch press braying slogans.
    Enough with the sledge-tags.

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