Trickle-down Tom

By May 30, 2017Australian Politics

Tom Switzer is whining about the latest federal budget, and casting aspersions upon Scott Morrison’s abilities. According to Switzer, Morrison “shows no sign of holding his own in Cabinet and resonating with the conservative movement”. There are many people who think Morrison spends too much time holding his own and not actually doing anything constructive. Switzer continues: “It’s difficult to avoid the conclusion he lacks the nerve and the political muscle to make the unpopular spending cuts that are urgently needed to address runaway debt”1.

The budget was, according to Switzer, a missed opportunity for Morrison to make “his reputation as a bold, visionary treasurer with the courage to rescue and indebted and profligate nation” Instead, Switzer states, he ducked for cover, ran away from the sound of gunfire and aped the opposition’s rank populism. He said the “wholesale raid into Labor territory did not stop at schools” but Morrison “stole Labor’s rhetoric of fairness and pledged to fund other major ALP initiatives and raise taxes on the banking sector”1.

The gall of Morrison even trying to adequately fund schools and, even more appallingly, speaking of fairness! Could it be that the Federal Government is showing the first flickerings of the realisation that the days of trickle-down economics are over; something that seems not to have made it into the Switzer’s Abbott-worshipping mind? Can he not understand that the nightmare of the Abbott prime ministership and Hockey treasurership was simply the last gasp of this failed trickle-down system?

He also whinges about the “dramatically rising” government spending as a proportion of GDP, which in 2015-2016 was at about 26.2%, having risen from about 23.8% in 2007-20082. It is higher (for 2015) in all these countries: USA (37.7%), Japan (39.5%), United Kingdom (42.8%), Germany (44.0%), Netherlands (45.1%), Norway (48.8%), Sweden (50.2%), Italy (50.3%), Austria (51.6%), Belgium (53.9%), Denmark (54.8%), Finland (57%) and France (57%)3. So for Switzer to say that we are in dire straits is disingenuous at best.

Switzer’s assertion of runaway debt also needs to be put into perspective. Australia’s public debt, as a percentage of GDP is certainly much higher than it used to be. In 2007, before the Global Financial Crisis (GFC), it was 9.7%4. In 2016 it was 46.1%. However, Belgium’s is 106%, Czech Republic’s is 40.8%, Denmark’s is 39.6%, Finland’s is 64.9%, France’s is 96.5%, Germany’s is 69.0%, Ireland’s is 77.9%, Japan’s is 234.7%, South Korea’s is 46.1%, New Zealand’s is 34.0%, Norway’s is 32.2%, Spain’s is 99.6%, Sweden’s is 41.4%, United Kingdom’s is 92.2%, Unites States’ is 73.8%5. So Australia’s public debt is not extreme, but it does need to be brought under control.

Switzer also states that ‘we are taxing too much’. This also needs to be put in perspective. In Australia, tax as a proportion of GDP is 25.8%; Austria’s is 43.4%; Belgium’s is 47.9%; Canada’s is 32.2%; the Czech Republic’s is 36.3%; Denmark’s is 50.8%; Finland’s is 43.6%; France’s is 47.9%; Germany’s is 40.6%; Japan’s is 28.3%; South Korea’s is 26.8%; the Netherlands’ is 39.8%; New Zealand’s is 34.5%; Norway’s is 43.6%; Spain’s is 37.3%; Sweden’s is 45.8%; the United Kingdom’s is 34.4%; and the United States’ is 26%6. So stating that Australians are ‘taxed too much’ shows that Switzer is either ignorant or disingenuous.

Switzer then harks back to Robert Menzies’ ‘forgotten people’ speech of 1942 in which Menzies praised the middle class who represented “the backbone of this country”. In fact, Menzies attempted to define the middle class by exclusion. He excluded “the rich and powerful: those who control great funds and enterprises, and are as a rule able to protect themselves – though it must be said that in a political sense they have as a rule shown neither comprehension nor competence”. He also excluded “at the other end the mass of unskilled people, almost invariably well organised and with their wages and conditions safeguarded by popular law” this left those to which Switzer referred: “salary-earners, shopkeepers, skilled artisans, professional mean and women, farmers and so on.” Menzies then stated (and Switzer quoted), that “they are envied by those whose benefits are largely obtained by taxing them”. It is unclear to whom Menzies referred, but I’d bet money that Switzer interpreted it to mean all those lazy bastards who need welfare. Such is the nature of the modern conservative mindset. Of course, Switzer didn’t deal with the tail end of Menzies’ speech, because that would have been anathema. It went: “Individual enterprise must drive us forward. That does not mean we are to return to the old and selfish notions of laissez-faire. The functions of the state will be much more than merely keeping the ring within which the competitors will fight. Our social and industrial laws will be increased. There will be more law, not less; more control, not less. But what happens to us will depend on how many people we have who are of the great and sober and dynamic middle class – the strivers, the planners, the ambitious ones. We shall destroy them at our peril.”7

The destruction of the middle and working classes is precisely what has been happening over the last 30 or so years, with the disgraceful trickle-down economics8 being used as a Trojan horse to extract wealth from the middle and working classes and giving it as tax cuts, subsidies or ‘royalty holidays’ to the wealthy and their corporations. This is so those corporations will continue to donate money to the political parties. The wages and conditions of the ‘mass of unskilled people’ which Menzies said is “safeguarded by popular law”, is constantly being eroded with the most recent examples being the cutting of penalty rates and also by the government and industry lobbying the Fair Work Commission to raise the minimum wage a minimal amount9 and by the increasing casualisation of the workforce.

This ‘hollowing out’ of the middle class leads to a two-tiered society in which those in the lower end have absolutely no prospect of improving their lot beyond the battler level, while those in the upper levels will live a charmed life. At present there is significant disaffection with the status quo where the poor get poorer while the rich get richer. If this continues, disaffection may lead to insurrection.

Sources

  1. http://www.theage.com.au/comment/treasurer-scott-morrison-becoming-a-huge-disappointment-20170522-gwaa7u.html?deviceType=text
  2. https://theconversation.com/factcheck-has-australian-government-spending-as-a-share-of-gdp-been-at-gfc-levels-since-last-election-55170
  3. https://data.oecd.org/gga/general-government-spending.htm
  4. https://tradingeconomics.com/australia/government-debt-to-gdp
  5. https://en.wikipedia.org/wiki/List_of_countries_by_public_debt
  6. https://en.wikipedia.org/wiki/List_of_countries_by_tax_revenue_to_GDP_ratio
  7. http://www.liberals.net/theforgottenpeople.htm
  8. http://www.blotreport.com/us-politics/joke-economics/
  9. http://www.blotreport.com/australian-politics/screw-the-lowly-paid/

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