Day 30 NaBloPoMo: Tax, benefits and Will Hutton

I can’t get the Will Hutton book out of my head [Them & Us]. I’ve been reading a few pages every night before I go to sleep and he says a lot of things I’ve been thinking for a long time.

The book is about the outcome of the past 25 years of democratically elected government in the UK. It is a critique from a position which is outside the two major parties there- neither Conservative nor Labor, and it’s certainly not in line with those new Democrats who are sharing the helm currently. The theme of the book also matches what has happened in Australia- the left has gone so far to the right, its difficult to tell what they’re in favour of!

I see the crux of the problem, (and WIll Hutton seems to see about the same), as loss of a sense of being a nation or community of human beings. People have become divided into Them and Us- it doesn’t matter if you are the rich Them or the Poor The [or one of the 'Us'es]. People don’t think of themselves as being part of a whole that includes a whole range of people who, by living under the same government in the same, undivided country have tacitly agreed that the government should try to balance things out between the haves and the have nots. We don’t need any government if we’re going to keep things amongst Us, or they are going to keep everything amongst Them.

Campaign against universal health care

Imagine if a road gets built to the houses with rich enough people to pay for it, but not to the houses who have nobody with enough left over to contribute. In a mixed neighbourhood, which most are unless they are gated, the road would be full of gaps as it passed the houses of the less wealthy people. When the well-off were considering it together, they thought it would work quite nicely, but then they discovered that the nice people next door who had come to their Christmas barbecue for the last 20 years didn’t have enough money left over from their food, mortgage and bills to contribute to road-building. What an affront- they’re certainly NOT going to invite them next year!

We elect governments because they can organise building a road with no gaps by balancing out the contributions of everyone through taxation. Then we are all happy to have a smooth road to drive on, whether we drive a new Lamborghini or an old Volkswagen.

In Hutton’s book he says we have forgotten the real meaning of fairness, so that different groups of people think their ideas are fair, but the ideas of others are not. Everyone protests about possible solutions to funding things by saying “it’s NOT FAIR”. When governments and big polling companies like Gallup and Nielsen do surveys to ask people who should pay taxes and how much according to their current income and jobs, they are really looking for clues to what people might accept from the government.

I think those polls have been asking the wrong questions by not including all the players in the fairness scenario. They tend to ask people “Should people on high salaries, like company directors and medical specialists be asked to contribute more to funding the… (whatever system, eg. health, roads, communications, electricity supply, unemployment benefits), than people on low incomes, eg. cleaners, road labourers, laundry staff.”

I think they should be asking people what the balance should be among contributions by Them, Us and the government itself. Then the pollsters might see that many people, who answer that well-off people should not have to contribute too much more to taxes than they do already, will nominate that the GOVERNMENT should do more instead. What they’re saying is that they don’t understand where a country raises its revenue in order to pay for services for all of us. Personally, I’ve spoken to a lot of people over the years who say “the government should pay for better roads” and “the government should use the health money better than it does” or “the government should pay all the expenses for my grandma’s hip replacement because she’s been a good wife and housekeeper all these years”. People seem to think the government has a magical pile of money that keeps being topped up, no matter what public cause it is spent on; they don’t seem to realise that a government can only expect to collect a fixed amount of revenue from the citizens of the country every year and must borrow the rest on the open market when things are not balancing up in the short term. Then the government has to keep up services the next year AND pay off the loans at the same time- like some people take out a second housing loan for an investment property, but then have to find the money to keep paying off both loans even when they’re not getting rent from the investment.

So the idea of fairness being subjective doesn’t work in the real world of politics and government- it should be something that most people can agree on, or at least not grumble too much about, and it needs to apply to everyone and everything. If you think it’s not fair that your government only pays $X per week as unemployment benefits, you had better rethink your stance on not asking rich people to pay proportionally MORE in tax than poor people. They’re certainly not going to be able to raise all the extra from poorer people, as although there are far more of them, the poor are more likely to become unemployed and need the benefits paid to them instead, because the rich are feeling the pinch! The rich are going to resist mightily becoming unemployed themselves! But if they do become unemployed, most have investments which can pay them a “wage”- but the investment then starts to fall in value, which they’re not very happy about.

On the other hand, the leftists who are currently rather unpopular, think it is natural for the rich to pay heaps more tax, until their incomes are much closer to the poor. This used to happen in Sweden where the richest paid 98% of their raw income in tax! I’m not sure how it works there now- please comment!  I certainly think that the income of the highest paid person in a country should not be much more than about 7 times the lowest standard wage. If only there was a way for a government to enforce this- then they’d say it was a dictatorship, not a democracy- it’s all too hard!! If you ask most high salary earners in the current economic climate whether they deserve what they get (eg. the CEO of the Westpac Bank in Australia) they say of course they do as they are the ones who have attracted the big investors to their funds and they have developed systems for making sure everyone who uses their bank pays decent fees for the service. Many other people, including me and Will Hutton, say that NO ONE is worth 100s of times the salary of the lowest paid worker in their organisation. For instance, there is the Westpac CEO who earns around $10m per annum and her lowest paid worker, say a lower grade clerk with 2 years experience would earn $33 800. The CEO earns 296 times the salary of the clerk. The bank says their CEO is a great manager and earns her salary. I’m sure the clerk is good at her job, too. Is this fair? I don’t think so and I think something needs to be done about it. It’s case of extreme Them and Us and it’s just NOT FAIR!!

I really get on my soap box when people talk about paying for health care. Lately lots of people, whether journalists, doctors, members of the public or economists have been saying in horrified tones that “they’re going to start RATIONING in health care”.

Health Rationing Video

Maybe this sounds devastating to you as well! But come back to earth people- given the above model of the government collecting a fixed amount in taxes, then dividing the booty between different areas or portfolios, roads get a pile and health gets a pile. The pile is fairly limited, although with unexpected windfalls in other areas, a government can “top up” health from say- mining taxes. If you have a fixed amount and you have to estimate how much each citizen will use from the pile in an average year, you are RATIONING the health dollars.It has always happened and it always will- why are people getting so worked up NOW, when health spending is the highest it’s ever been? You tell me.

 

I’ll leave my rant on so-called rationing of healthcare to another post! Come on, get stuck into me!!

Day 18 NaBloPoMo: I’m with Michael Moore

Anyone who hasn’t seen Michael Moore’s ‘Capitalism: A love story’ should stop right now, go out and get it! And if you haven’t seen his ‘Sicko’- you need a good smack!

 

I have long held a lot of the ideas Michael Moore puts across in his documentaries and it doesn’t win me a lot of friends, but a nice small and strong group of fiends- fiends for fairness and real democracy! How many people wouldn’t like a country where the rich and lucky happily give up some of their cash and privileges so the majority can have the basics as their right? How have Australians come to live in a country, once known as ‘the land of the free’, that pays bank chiefs $10 m salaries for them to charge people with no income like me huge fees just to have a bank account. On the other hand it hands out cheap housing loans and Platinum Visa cards to medical and dental graduates as soon as they’re out the university’s door! This is NOT democracy!

 

We’ve seen how traditionally respected, highly skilled and valuable jobs such as airline pilot have been down-graded so much in the USA that I wouldn’t be game to board an American plane. I know Australian airline pilots are still paid very well (well, not at this minute, but generally)- and they work long hours, keep fit and healthy, endure long and exhausting medical check-ups, have to work very long hours while highly vigilant, are trusted with the lives of hundreds of people per flight and must project a calm and non-combative image even while dealing with emergencies. I expect them to earn more than a production-line worker at a car factory- but in the USA, the factory worker may earn more than the pilot!

 

What troubles me now, having seen Michael Moore’s doco is that the situation in Australia is apparently catching up with the misery of the American majority. The massive number of mortgage foreclosures in the USA is definitely being followed by a large increase in them in Australia, particularly amongst farmers.  There are also the people here who have been too long out of work, or who have had their wages and/or hours reduced so that they must sell their homes because they can’t meet the mortgage repayments. These poor people are hard-working and earnest- they deserve to own their own homes, but they are being forced to move out and rent, in an already overloaded rental market.

 

As I said in a previous blog post, there is a huge gap in affordability between the people on low incomes or the dole and the rents demanded for supposedly expensive properties. The rents are expensive because the properties are owned by other people who are paying off the high mortgages on them while trying to collect a bit extra on the rent. When a single person can only afford to rent a room in a boarding house and consequently have no possessions (or they would have to rent storage space in the hope they could acquire a home in the future to place them in), there is a serious and widening gap between the haves and the have-nots. I don’t like it at all, and I constantly see myself, in my mind’s eye, as one of these people who have sunk towards the bottom in these unfair economic times. How would you like it if you suddenly had no income, or just the minimum, after many years on a salary, yet you still had to pay your share of a contemporary mortgage? Rents are appalling for anything other than grungey old houses with bad wiring in less-than-attractive areas. Families on the dole, with kids at school, can barely afford a roof over their heads if they are not in public housing. In many families, kids will grow up and leave home while their parents try to pull themselves out of their economic woes to acquire a house that is in good condition, with enough room for all of them. I know there are now second and third generation unemployed families where the social order has broken down and they are trashing their public housing because they don’t care any more. Their kids don’t see any value in education- what good did it do their parents?- so they drop out of school. Then they aren’t even in the running for the small number of scholarships to tertiary institutions because education is no longer free in Australia, as it was when I started university.

 

I am still hearing that the US government has not wrested the health system from the grip of private insurance companies, as they said they would when Obama came to power. Although they said that everyone will be covered for basic health care, there are still all those insurance companies able to collect fees from private citizens and thus will charge a decent amount extra so they can pay their own employees and shareholders. If the government covered everyone for the basics the administration would take far less of the money than through thousands of companies in private hands. Australia still has full cover of the health essentials but the insurance companies are also guaranteed an income because they have made EXTRA insurance compulsory here (or else you have to pay a higher percentage of your tax for health- suits me).

 

What Barack Obama said first up:

“Everyone understands the extraordinary hardships that are placed on the uninsured, who live every day just one accident or illness away from bankruptcy. These are not primarily people on welfare. These are middle-class Americans…”

 

I think Australia is almost as crazy as America for this- the government “subsidises” people for part of their private health insurance (so it is partly paying for them) while it takes more from the poorer people who can’t afford the private premiums! Nutso! That’s not democratic!

 

Anyway, as Spotrick just said to me- I’ll have to stop midstream as I’m becoming too angry to go to bed!

 

Some people think I am a real commie for my views on what a democratic government ought to be able to do for it’s citizens, but I don’t really believe in public ownership of everything- like China and Russia used to enforce. I only believe in equalising the benefits able to be accessed by both the rich and the poor through the government taking some control over incomes and prices in limited areas. Many of my acquaintances don’t think the rich should in effect subsidise the poor- they want the poor to “work just as hard as me and get the same rewards”. My view is that we are a society where we play our parts and shouldn’t expect to be “greedy” and keep all our own income for ourselves when confronted with others who are just not as lucky- whether in health, education or cash. A society just won’t work where there is a big divide. They won’t start the revolution without me- that’s a promise!