2 comments

1. sdrawkcaBMay 27, 2014 at 1:35 pm

   I think this is political grandstanding.

   A basic tenant of economics is if you do not pay the true cost then its inefficient.

   Note that I mention economics and not the political economy. Economics is a behavioural science based on incentive and the political economy is a game of power played at the expense of its citizenry.

   Its fair to make the good people of Townsville pay their way. It is equally fair to make say Gina, pay for the massive environmental degradation her mines cause – amongst others things. Its also fair to have Tony pay for his own daughters design education instead of passing that over to others to subsidize.

   If the labor party was fair dinkum, it would be seeing to the fair and proper payment for labour and removal of all false subsidies; particularly corporate externalization.

   I would think that if they did, income distribution would contract to a point where the most wealthy earns about 10 times the least. The minimum wage would double. Government would get out of all of its non-core functions and those functions remaining, it would do very well.

   Of course it takes effort and dedication to redefine the system. Far easier for the ALP to do the standard opposition thing which is snipe from the side.

   Glossary
   Corporate externalization is where a corporation gets to make profit but pass over its stuff ups to others to fix up; usually the taxpayer. An easy example is any oil spill. They are never cleaned up to the point of leaving the place how they found it. Three others are smoking, sugar, and alcohol where the health/police budget cleans up the mess.

2. DCMay 27, 2014 at 2:55 pm

   sdrawkcaB very good points you make. If I could expand on just one point you made “if you do not pay the true cost then its inefficient.”

   Possitive externalities to some forms of economic activity which by the same logic can justify some subsidies when there are benefits to 3rd parties not just the person paying for the product. For example, education benefits the individual as well as the community they live in as does healthcare. Both of these things would be out of reach to low income families without subsidies and leaving them without preventitive healthcare or hope to find work will cost the government more in the long run but many subsidies should be means tested. Scientific research also has 3rd party benefits as does public infrastructure. But at times the benefit is not evenly spread.

   But I completely agree with what you are saying about negative externalities like oil spills and CO2 emissions. I think that until the day arrives when we can say that the human race has learned to harmonise its economic activity with the natural environment, all the revenue the government needs to function should be raised by taxing the kind of economic activity that is unsustainable. To me that would mean no income tax at all for the majority of working people.