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Weekend reflections

November 7th, 2009

It’s time again for weekend reflections, which makes space for longer than usual comments on any topic.

Categories: Economics - General Tags:
  1. November 7th, 2009 at 14:31 | #1

    Just in case any readers missed my post in the other thread. You might be interested in the article we have today at ‘Left Focus’ – on Queensland privatisation. It was passed on by the QLD ETU.

    see: http://leftfocus.blogspot.com/

    Readers are also invited to join our Facebook groups: the ‘Left Focus’ mailing list/support group – and the ‘Movement for a Democratic Mixed Economy’ group:




  2. gerard
  3. November 7th, 2009 at 15:46 | #3

    Those advocating the defeat of the emissions trading scheme (ETS) for ideological reasons now find themselves in common cause with the “filthy polluters”, the big coal companies.
    The Sydney Morning Herald weekend edition of November 7-8 says on page 4 that these coal companies intend to spend millions to defeat the ETS.
    How can this be? After all, the ideological purists tell us the ETS should be defeated because it does not go far enough and/or because the Government has caved in by giving too much compensation to the polluters.
    Yet these polluters will spend millions in the hope of knocking back this compensation by defeating the ETS.
    Perhaps we will see a stampede by the ideological purists to donate to the advertising campaign of the coal companies to achieve their shared aim.
    While I do not really expect this to happen, I suggest it is more likely than these same purists reaching the logical conclusion that if coal companies are spending millions to defeat the ETS then these companies consider the ETS a threat to their long-term interests.
    Let the twisting and the turning of the ideological pure begin as they explain this away!

  4. Highlander
    November 7th, 2009 at 19:16 | #4

    One of the big items of news in the US at the moment is the recent gubernatorial elections, with the big result being the Republicans’ loss of New York’s 23rd District. The fact that they’ve held the seat for decades notwithstanding, the big story here is one of the two Republicans, Dede Scozzafava, dropping out and supporting the Democratic candidate.

    It seems like this may be the beginnings of a potential (and much-needed) ideological reform within the Republican party. Scozzafava is controversial with the Republicans because of her support for abortion and gay marriage: but it seems to me that this should not be controversial for a libertarian, the closest political ideology with which we can affiliate the Republicans. After all, a government ban on gay marriage and abortion is a pretty unwelcome government intervention into personal liberty; but of course, that’s where the Christian Coalition comes in. However, the fact that a Republican would be willing to endorse a Democrat in a traditional Republican stronghold indicates to me that there’s a potential for an undoing of the coupling brought about by Reagan.

    What’s the future of the Republicans? Well, chances are the result of the 23rd District will be swept under the rug and we’ll go back to the status quo. But what we might see (and what I really hope for the sake of the Republicans that we do see) is a break between the Christian and libertarian sects of the GOP, and an eventual reversion to classical liberalism and laissez-faire economic policy, without worrying excessively about “morality”.


  5. Ikonoclast
    November 7th, 2009 at 20:41 | #5

    I’ve been thinking lately that “Wuthering Heights” is the worst english language novel ever written. Thanks to Gerard, I have been reminded that “Atlas Shrugged” in fact holds that spot.

    By the by, I’m not a Bronte hater at all. I think Charlotte’s best novels are brilliant. But how “Wuthering Heights” ever garnered a literary reputation is beyond me. It’s a precocious but preposterous and wooden first novel. If Emily had lived longer she might have written some great novels. I find WH completely unreadable. Yet I have found, for example, that reading “War and Peace” (supposedly a difficult work) five or six times over the last 10 years has been a pure and easy joy.

    With “Atlas Shrugged” I read the first page and a few other pages at random (in the bookshop) and was fully satisfied that it was a pile of completely unliterary and psychopathic drivel.

  6. TerjeP (say tay-a)
    November 7th, 2009 at 21:00 | #6

    I asked this on the ALS blog but maybe people here are better able to answer the question.

    If Kevin Rudd thinks that neo-liberals have pushed the deregulation barrow too far then why does he have a “Minister of Deregulation”? I mean he could have called the position “Minister of Regulation” if it was just about tightening up regulations. Is this more Kevin Rudd double speak? Is he a closet neo-liberal?


  7. SeanG
    November 8th, 2009 at 03:02 | #7

    British Prime Minister Gordon Brown has just advocated a “financial transaction tax”. I have always thought that the Tobin tax is daft. The idea is to dampen speculative capital flows but it is stupid because it punishes everyone for a minority.

    The next problem is that the tax is to pool capital as an insurance fund to bailout banks in the next crisis. We should have a financial system where banks should be allowed to collapse without it causing systemic risk. Instead punishing everyone, we need to get to a position where banks are not so big that if one goes down the entire system follows.

  8. Kevin Cox
    November 8th, 2009 at 05:18 | #8

    @TerjeP (say tay-a)
    The deregulation push probably comes from Senator Faulkner for whom I have a great respect. Faulkner is not about getting rid of rules but of making our systems so that there are ways of automatically following the rules.

    The current moves in the tax office are of this nature. If you report your tax file number with all transactions where tax is involved (interest bearing accounts, wages and salaries, dividends from companies) then your tax return and payments are “automatic”.

    Neo-liberals believe in some rules of behaviour to make transactions efficient such as you shall not misrepresent, you shall honour your promises, etc.

    Most of the rules and regulations we have specify what will happen to people who break the rules. What Faulkner is on about is making it simpler for people to follow the rules. So deregulation comes about by a simplification of rules towards the positive not towards the negative. That is, saying what we can do and if we do it then we are following the rules.

    This would seem to fit well with a neo-liberal agenda.

  9. SeanG
    November 8th, 2009 at 05:27 | #9

    Can someone please tell me what is a neoliberal? It is one of those terms that is coined to create a strawman for every leftie weirdo to complain about. Free trade? Neoliberal. Lower taxes? Neoliberal. Less government interference? Neoliberal. A straw man of the lefts creation…

  10. Kevin Cox
    November 8th, 2009 at 05:42 | #10

    I support the defeat of the ETS because I know it cannot achieve the desired result of a rapid reduction in ghg levels. If it gets through it will stop us looking for non price based mechanisms to achieve the investments needed to reduce ghg emissions.

    Manipulation of prices to achieve desired outcomes has proven time and again to be marginally effective. Just look at the use of drugs and alcohol and cigarettes. Most people do not stop smoking cigarettes because of a price increase. If price was an important factor they would never have started in the first place.

    To think that increasing the price of one sort of energy through “artificial means” means that people will find now invest in ways to reduce ghg is wishful thinking. Most people (including the people who think pollution is bad) will find ways to manipulate the artificial prices – be it taxes or trading – so they can make more profits and/or pay less for energy.

    There are other reasons for opposing the ETS than those you suggest.

  11. SeanG
    November 8th, 2009 at 06:59 | #11

    I listened to Professor Q on youtube in a Whitlam Institute talk (and Q&A later with Keen and Debelle).

    One thing which I thought was funny was when ProfQ said that the US/UK is leading Australia with higher taxes. The UK recently put up the tax for the highest earners by 10p on the Pound. They estimated that this would raise just a bit over £1bn, other economists and organisations have said that this is an overestimation.

    The problem is that the increase in taxes have such a negative impact on a country where there is a great flow of people (such as the UK with the EU next door) and with a complex tax system that creates the incentives for people to leave the tax system altogether.

    The next problem is the philosophical problem. Why is it that people who have worked the hardest and over the longest period whether it be in school, university and/or the business environment must be the first to be punished by a political decision from people in parliament who were too lax in the first place?

  12. Michael of Summer Hill
    November 8th, 2009 at 09:29 | #12

    Update, Update, Update, one of Turnbull staffers, Mr Tudehope, has resigned amid a Liberal Party factional spat portraying Liberal MP Alex Hawke as an enraged Adolf Hitler in a video clip. Stay tuned as this story has legs.

  13. nanks
    November 8th, 2009 at 09:41 | #13

    Where do you get the idea that the richest people have worked the hardest and over the longest period?

  14. SeanG
    November 8th, 2009 at 09:43 | #14

    Do you reckon a company executive who earns millions is lazy and only gets there by working 9-5?

  15. November 8th, 2009 at 09:46 | #15

    Kevin Cox at 10: Well, you have begun the twisting and turning. You do not address the issue I raise that those advocating the defeat of the ETS now have a common aim with coal companies. Nor do you address the point that if coal companies are spending millions to defeat the ETS, then they must consider it a threat to their interests.
    You say you oppose the ETS because if it gets through it will stop the search “for non price based mechanisms to achieve the investments needed to reduce ghg emissions”
    I wonder who will make the investments to reduce greenhouse gas emissions if price mechanisms (such as an ETS or carbon tax) are excluded.

  16. nanks
    November 8th, 2009 at 09:53 | #16

    SeanG :
    Do you reckon a company executive who earns millions is lazy and only gets there by working 9-5?

    that’s not the point – where is the evidence that the richest have worked hardest and over the longest period? You seem to have that idea as a fundamental claim. Fine, but where is the evidence that can take that claim further than a statement of faith.

  17. SeanG
    November 8th, 2009 at 09:56 | #17

    Take it as a statement of faith.

    Is it fair that hard working and successful people should be taxed more?

    Why is it that success should be punished via higher taxes?

    No statements of faith – just a couple of questions for you to answer.

  18. nanks
    November 8th, 2009 at 10:12 | #18

    I’ve got other stuff on but as a simple point for now – you accept there is no justification for a belief that income is related to how hard and long you work. Then you ask “Is it fair that hard working and successful people should be taxed more?” That’s mixing two things together again – ‘hard working’ and ‘successful’ (by which I guess you mean rich). But you have already noted that they don’t together – by your admission of faith. So that question is poorly framed.
    Onto the next one – “Why is it that success should be punished via higher taxes?”. Well it isn’t unless you really mean success and rich are the same – they aren’t to many people but are to some people. But, taking successful as meaning rich how are they punished – in what way do they suffer material loss – ie in what way is someone financially worse off for earning 100 million compared to if they only earnt 32k? They aren’t. There is never a point at which earning huge amounts of money and paying tax gives you less money than someone earning less. So there is no punishment. Only sophistry by the greedy.

  19. SeanG
    November 8th, 2009 at 10:38 | #19


    I like the way you avoided the first question. By stating that success and hard-work are not related you have avoided the truth that on the balance of probabilities, they are related. By trying to use every trick in the book to avoid addressing the question you show that you cannot answer that question.

    If I work hard and am successful, why should I be paying far more tax than others as a percentage of my income?

  20. nanks
    November 8th, 2009 at 11:24 | #20

    seang – I’ll never respond to a post by you again.

  21. Michael of Summer Hill
    November 8th, 2009 at 11:48 | #21

    SeanG, nanks is correct. There is no tax system more equitable than progressive taxation for a flat tax is discriminating.

  22. Salient Green
    November 8th, 2009 at 12:06 | #22

    SeanG said “If I work hard and am successful, why should I be paying far more tax than others as a percentage of my income?”

    Governments tax to raise revenue to govern. It wouldn’t be very smart to tax those who can’t pay now would it?

    And another thing for free, those who are wealthy and successful are only so because there is a Government which taxes to provide services and infrastructure to support the very customers who are very often fleeced by said wealthy and successful.

    One more lesson. If you are going to tax something it is better also to apply it to something you want to discourage or regulate, such as naked greed. Clearly many wealthy and successful people succumb to naked greed and rationalise away how they got there and their responsibilities to those mechanisms.

  23. gerard
    November 8th, 2009 at 12:40 | #23

    The same company executives whose idea of “work” is speculating on real-estate and investing other people’s money in bullsh!t financial instruments then getting the government to come and clean up their mess, while they still continue to receive bonuses on public money, and their customers, the “high net worth” individuals that hedge funds advertise for, most of whom were born into wealth and never had to work a day in their lives – they don’t even need to do the “work” of picking out stocks over morning coffee, they just invest their millions in the managed fund and receive ample returns, no risk necessary since they are the beneficiaries of ruling-class socialist bail-outs, then have the gall to whinge about those little taxes they haven’t managed to dodge through the Caymen Islands, this fraction of money that goes to the government mostly so it can protect their own wealth, like it would be better off spent on an extra yacht, a six-figure platinum watch, a seventh house… while millions starve and die for want of medicine, they should be lucky all their getting is a higher tax rate and not the guillotine quite frankly

  24. Michael of Summer Hill
    November 8th, 2009 at 12:53 | #24

    Gerard, that is the problem when a board of directors subscribes to a philosophy that rewards executives regardless of performance. In respect to AIG, the giant insurance company paid executives that were not worth a crumpet $165 million in retention bonuses which nearly brought down the company and a $170 billion federal government rescue bailout.

  25. November 8th, 2009 at 13:17 | #25

    @Salient Green

    “Governments tax to raise revenue to govern. It wouldn’t be very smart to tax those who can’t pay now would it?”

    The latter sentence is wrong in general, because there are cases where the former sentence isn’t true and/or other reasons apply. For instance, colonial governments often applied chartalist principles to establish a cash economy, e.g. in Madagascar and in British African colonies. With that, those who couldn’t pay were burdened in other ways pour encourager les autres.

  26. Salient Green
    November 8th, 2009 at 13:59 | #26

    P.M.Lawrence, all my life, the government has collected small amounts of tax from me because that’s all I could afford, and has collected much more from other people who could afford it. This seemed pretty smart to me and now you tell me it’s wrong?

    I also noted during this time that various governments used those taxes to govern, that is, provide services and build things, and you tell me this isn’t true? I must’ve been dreamin’.

  27. Alice
    November 8th, 2009 at 14:21 | #27

    @Michael of Summer Hill
    Moshie – I also now note that the federal govt has given money to the state govt to bail out James Hardie (who claim the GFC means they dont have enough in their fund for asbestos victim payouts). This after they shuffled their structure to make damn sure there was never going to be enough in that fund. That just goes to show that the entire tax structure is simply ignoring the immoral way that companies can use offshore structures and parent companies and transfers to avoid their responsibilities. This bailout just goes to show that the problem of collecting taxes lets the least deserving avoid taxes and the most deserving of tax reductions carry the burden.

    No its not smart to tax those who cant afford to pay inorder to fund the avoidance of those who can afford to pay. Its immoral as well.

  28. Alice
    November 8th, 2009 at 14:29 | #28

    Sean – there isn just no end to the whinging fro lower taxes from the freedom fighters is there? Well, when you manage to collect some of the tax you have been letting the rich get away without paying…you might just get your tax reductions for the more deserving. Why should ordinary people carry companies (that are disgusting) like James Hardie and use tax havens and offshore structures to hide behind?.

    Clean the blatant avoidance in corporate taxes up and the unethical mess of over concessions, tax reductions and tax perks given to the wealthy over the past three decades, Sean and Ill personally ask the ATO give you a tax cut so you can stop whinging for more and more and more tax cuts.

  29. Alice
    November 8th, 2009 at 14:35 | #29

    @Michael of Summer Hill
    Moshie – they sacked the wrong person. Alex Hawke IS an enraged Adolph Hitler or an enraged bull ant..I havent decided which but he acts like both. He belongs to the Taliban wing of the liberal party.

  30. Kevin Cox
    November 8th, 2009 at 16:33 | #30

    Use your imagination.

    There are other ways of encouraging investment than raising prices of competing products. You can reduce the cost of investment. You can change the investment evaluation techniques from discounted cash flow analysis to long term total value returned. You can combine both. Do the sums and you will find that investing in saving energy and producing energy without burning limited supplies of fuel will give a much greater total return on investment – and that is what is investment is all about. Investment is NOT about production. It is about the creation of wealth or productive capacity.

    Not only do economists fixate on prices as the driver of investment but they fixate on output as the measure of wealth. The measure of wealth is our current productive capacity NOT how much we produced yesterday.

  31. Kevin Cox
    November 8th, 2009 at 16:56 | #31

    Those who consume more should pay more taxes because they are more of a drain on our community resources than those who consume less. There is a causal link between income and consumption.

    Taxes are not something taken from you. Taxes are used to provide community services. The government is not something divorced from the population.

    We are in this together. We are not isolated individuals in a zero sum game. If we work together we will all get wealthier. If you are not prepared to work together and share with others then go to some other planet. This nonsense that because I earn money I am entitled to spend it all without contributing to our common wealth is a barren idea.

  32. jquiggin
    November 8th, 2009 at 17:22 | #32

    Despite winning a governorship or two, I think the Repugs are on a path to long-run oblivion. In a two-party system, they will always win if the Dem alternative is bad enough, but the proportion of voters identifying as Republicans is at an all-time low.

    One possible way back from the abyss would be for individual states to break with the RNC. They could even run their own Presidential candidates, with their electors potentially holding the balance of power in the Electoral College.

  33. SeanG
    November 8th, 2009 at 18:46 | #33

    @Kevin Cox

    That is one hell of an argument for higher sales tax.

    We all have to work together. Unfortunately not everyone wants to work. Some work harder than others. What you want to see are those who work hard (and those who just work) to pay for those who are not working either by choice or not. Most people would prefer helping those who are prepared to help themselves but not to pay taxes to the people who are deliberately workshy.

    We are forgetting the middle man in the form of the government who takes a slice of everyones tax revenue and gives it to themselves.

    Why do you think if one political party promised higher taxes and more spending on government services, and another on lower taxes, that the lower taxes people win? People hate looking at their pay slip and see so much taken from them.

  34. SeanG
    November 8th, 2009 at 18:57 | #34

    @Salient Green

    You have an almost Marxian view of wealth – there are two groups with the very rich and everyone else.

    In the real world, things are not as simple. You have small business owners, managers of companies and the self-employed who are all paying one of, or the highest, tax band. Many of them understand why they need to pay more tax. What they dislike is when cloistered individuals in universities state that they should pay more tax because the government (not known for being efficient under the best of times) cannot afford money to build infrastructure project (in ALP constituencies) or to afford to run the unreformed public services (with the unions refusing to reform).

    The problem is that tax hurts. It hurts people who risk money or to strive and struggle to make it. Advocating (like ProfQ and many others on this board), that the rich should pay when you have a broad interpretation of rich, is the cause of many of the lefts foibles in the past. I know people who are genuinely rich. I also know people who are in the top bracket who earn good incomes. The difference in material wealth is astronomical. Yet leftists think that both are rich. In absolute terms, of course, but not in relative terms.

    I dislike it when someone says to me that after all my effort and struggle that I must pay out more tax because there are hundreds of thousands or millions whose incomes are derived from the government. I dislike it, when the government says that taxes should be put up because of their profligacy.

  35. SeanG
    November 8th, 2009 at 18:58 | #35


    Have you ever met Alex Hawke?

  36. Ikonoclast
    November 8th, 2009 at 19:47 | #36

    SeanG, since you pay enough tax to whinge about you must be a PAYG (pay as you go) employee. You can’t possibly be a competent small or large business person or a tradesman or a contractor. Because if you aarev ny of these and you are half smart or have a half smart accountant you would be paying stuff all tax right now. Very few of those people pay any significant tax because they have an enormous number of tax lurks, tax deductions, negative gearing strategies, trusts etc.

    I still recall a year that I (as a government clerk) payed more tax than PBL (Packer’s Company). I know that I did because PBL paid ZERO tax despite good earnings that year.

    So if you want to get rid of welfare and socialism FOR THE RICH then I’m with you all the way!

  37. Salient Green
    November 8th, 2009 at 20:42 | #37

    SeanG #34, I believe the term is Marxist and most likely the ‘two groups’ was not his view and it isn’t mine. If you are going to descend into that sort of nonsense I will take the same route as nanks and never engage you again.

    I am self employed in my own orchard business in the MD Basin. The highest income I have ever made was as a plastics toolmaker when I had to work 60hrs and travel 1000km a week to earn $60,000 pa. That was 15yrs ago.

    I am a two time loser to economic rationalism and the free market. Toolmakers and Orchardists are in decline due to pressure from cheap overseas labour. Others won, all by the decisions made by Government. The Government gives and the government takes away. Those who make money under certain government policies should be bloody grateful because others like me have invested a lot of training and a lot of money only to have it taken away by government decisions and very few get compensation.

    By all means challenge the government on wasteful practices but there should be no sympathy for those who can only see their salary in terms of what tax was taken out rather than how fortunate they are to receive a larger than average income. It’s all about attitude.

    So, those that can pay more should pay more, AND, they should grizzle about it if the government is not using the money in the best practical way. However, I have a special sort of disgust for those who earn millions while avoiding tax and ripping off ordinary people.

  38. Alice
    November 8th, 2009 at 20:44 | #38

    Yeah – that little weasel got kicked out of the Macquarie students union for some filthy behaviour, nepotism, vote rigging of Asian students, likely pilfering. He is a crook and nothing less (mafioso type player) – Alex Hawke also used to be labor and he swaps sides whereever there is a buck to be made and he gets a promotion. If you are stupid enough to get sucked in by Alex Hawke Sean…all I can say is there is one born every minute.

  39. Alice
    November 8th, 2009 at 20:54 | #39

    Sean – welcome to the Taliban mafia wing of the young liberals (trained in boot camp) by Alex Hawke. Why he isnt in jail (along with Victor Ma) I wouldnt know except that maybe it was because Steven Schwarz was on the board at MQ along with another right winger Mayrice Newman – you know – the one who used to head up the ASX (private version) and then got a board oistion at the ABC thanks to JH, despite teh fact he would have liked to privatise the ABC to Rupert Murdoch if he had half a chance under JH – and he was pushing – in fact Im surprised Maurice didnt gather up a posse to privatise JH).
    The government is asleep at the wheel letting these maladjusted extremists loose on public boardsl.

  40. Alice
    November 8th, 2009 at 21:02 | #40

    Sean – Ill second Ikono. Its a great point for the whingers who keep on and on (and on..about wanting tax cuts). I

    If you think you are paying too much tax you are obviously not working hard enough to make yourself rich so you dont pay any.

  41. Alice
    November 8th, 2009 at 21:04 | #41
  42. SeanG
    November 8th, 2009 at 21:27 | #42


    I’ll give a little bit away – I am a chartered accounant (not practicing but by professional qualification). So I know two things: 1) I can very easy set up shop and offer tax, management and accounting advice and 2) I earn enough now to keep me happy so I have decided to not take the risk… yet (also because I have vesting shares which I will lose 🙁 ).

    If you look at SMEs, they all try to minimise tax but the most popular way is to use cash. However, you refuse to ask why they try to minimise their tax base.

  43. SeanG
    November 8th, 2009 at 21:31 | #43

    @Salient Green

    The wonder of the free market. Sometimes you win, sometimes you lose.

    Not everyone who pays the top bracket is a millionaire. Yet again falling for the trap of characterising those who earn more than you do as being filthy rich and unconcerned about other people. You are like Alice; a black-and-white view of the world where there is the very rich and the huddled masses.

    Do you think that a successful small businessman should be forced to pay more tax? Do you think that it is right that they get over $100k and should be forced to pay ever-more-tax because they took a risk and it worked? What kind of culture are we creating where those who are hard-working and are successful are the first to be vilified for daring to dream and to achieve?

  44. SeanG
    November 8th, 2009 at 21:36 | #44


    I am not a Liberal Party member Alice, I am not a member of the Taliban (both of the Liberal and Afghan varieties) and I am not a religious nutter who believes that the world is only 5000 years old (or something like that).

    I asked a question. All the news reports say that he has split the right wing of the Liberals and that he is leading the moderate side of the right wing. So when you come out with a “he is the most evil person the world has ever known” I wonder if you have actually met the guy.

    Do you work at Macquarie University?

  45. SeanG
    November 8th, 2009 at 21:39 | #45

    @Salient Green

    Two points – yes it is Marxist (nor Marxian – I was rushing to get this post done) and I said “almost”.

  46. Monkey’s Uncle
    November 8th, 2009 at 22:08 | #46

    Sean, there are a few reasons why steeply progressive taxes on higher-income earners make sense to some.

    For many it is all about envy. They simply cannot stand the possibility that someone else has more than they do. And so taking more of it away by any means is more than justified. It doesn’t matter if this reduces incentives and impedes economic growth. It is better to have less to go around than risk someone else getting a larger share of the gains.

    Also, one of the things that left-liberals often dislike about a market economy is that it tends to reward people they consider to be unworthy or inferior. For example, a tradesman or a miner or a guy who runs a home maintenance franchise can make a lot of money while someone with a philosophy degree or an aspiring artist struggles to get work. The solution is therefore to confiscate more wealth from those who get their hands dirty and give more to those who aspire to be more refined cultural elites. That is, they would rather that material success only go to those they consider more deserving, rather than those the market tends to reward.

    Seriously Sean, once you start to look at things a certain way, it all makes sense. If you’ve read How to Win Friends and Influence People, you will know that looking at things from other people’s perspectives is the key to success. However wrong you may think others are, to them their views make perfect sense.

  47. SeanG
    November 8th, 2009 at 22:16 | #47


    I should not have asked the question! Look at the responses!

    I particularly like Kevin’s response: “Those who consume more should pay more taxes because they are more of a drain on our community resources than those who consume less. There is a causal link between income and consumption.”

    If we think of community resources like public hospitals and schools then the answer is no.

    Maybe Kevin was thinking of material goods. But we all know wealthier individuals have a lower MPC than those who are poorer and the save more of their money. So by taxing them more and redistributing it to poorer people – aggregate consumption increases therefore causing a higher total drain on our “community resources”.

  48. Monkey’s Uncle
    November 8th, 2009 at 22:30 | #48

    Sean, it’s notable how selective these arguments tend to be. When it comes to government fiscal stimulus, the argument is that giving money to low-income earners boosts demand faster and is therefore better. Yet that seems to be ignored whenever it doesn’t suit the argument.

    Of course, if you increase taxes and redistribution, it means more people are able to consume more than they produce. It also means that the economically active have less incentive to produce as much. So how this can possibly help in reducing the demand on our scarce resources somewhat escapes me.

  49. SeanG
    November 8th, 2009 at 22:34 | #49

    MU, it is unfortunate. They believe that we are consuming the earth’s precious resources but want us to consume more out of a bizarre notion of equality – as if that has ever been achieved or even tried without bloodshed, gulags and social destruction.

    It is like Atlas Shrugged.

  50. Kevin Cox
    November 9th, 2009 at 01:42 | #50

    Yes in general consumption taxes is the preferred method. However, it does not matter how we tax as long as it simple, universal and difficult to avoid. People who do not pay taxes are free riders and we all hate free riders. A potential solution to the free rider problem is to ban people who are found to cheat from any benefits of from public spending. If you are found to have paid less than your share of taxation then you are excluded from future benefits by say twice the amount. That can be done by such things as increasing the cost of say driving on roads paid from the public purse.

    In the same way as free riders on taxation we also hate free riders on work. Surely the criteria should be how much people contribute according to their ability. If, because of things beyond my control I am disadvantaged in some way or other but I work as hard as I am able then surely I should be compensated as much as the person without the disadvantage?

    If I decide to stop contributing because I have been able to accumulate wealth and yet I am still able to contribute then surely I should not get as many community resources.

    I suggest you read “Filthy Lucre by joseph heath” http://www.amazon.ca/Filthy-Lucre-Joseph-Heath/dp/1554683955 where the argument that taxes are “consumed” by governments is put to the sword. This notion you put that government consume taxes is nonsense.

    You are wrong with respect to people wanting to pay less taxes. People DO NOT mind taxes if they believe that they pay their fair share and they get back a fair share in return. People mind paying taxes when it is obvious the system is unfair and some people are abusing the system.

  51. Kevin Cox
    November 9th, 2009 at 02:24 | #51

    @Monkey’s Uncle
    MU you say that people support higher taxes for the rich because of envy. That is a blinkered view if ever there was one and is not backed by research. The way it works is that we envy others if they have more than us but this is highly dependent on how much we have. The more we have the more we envy others who have more. This is the root cause of sky rocketing executive salaries.

    We tend to envy people’s wealth if we doubt that they earned it. So most people do not envy those who they think deserve their wealth.

    You both appear to have a view of economics as a finite pie and that consumption of resources equates to prosperity and wealth. The reality is that wealth is an ever expanding pie and it can be one where we increase wealth while consuming fewer resources. Your assumptions lead you to erroneous conclusions about motivations and that we should not distribute resources to the poor because they will only consume them.

    To give you an example of why you are wrong and to illustrate how we can increase wealth while consuming less take the case of the education of women.

    Enriching women through better education and more security limits human consumption while increasing wealth. The reason is simple. If a woman has more resources she is not compelled to have babies as a form of productive output as she has other sources of revenue and security. This works just as well for teenage mums as it does for third world countries.

  52. Freelander
    November 9th, 2009 at 07:09 | #52

    One way of looking at the tax question is that the rich are not being taxed any differently to anyone else. After all the tax that is collected from a person’s gross income is not their’s, otherwise they would get to keep it. It is simply part of the government’s tax revenue. The only sense in which it is a particular taxpayer’s money is the way in which you might talk about a library book as being your library book before you return it to the library. Looking at it that way, there is nothing to envy.

    Another way to look at it is as a user charge charged by the rest of society on those lucky enough to gain significant benefits from that society. As the rich are benefiting substantially what is wrong with an enterprising (and fair) society charging them hansomly for accessing those benefits.

    An easy way for the rich to avoid having to handle part of the government’s tax receipts is simply to earn no income or move to a jurisdiction that doesn’t have income tax. But before they do that we should charge them for the various benefits that they have accumulated from our society and are departing overseas with.

  53. gerard
    November 9th, 2009 at 07:24 | #53

    It is like Atlas Shrugged.

    a Randian, what a surprise. Your arguments here are a perfect follow-up to slate article posted at #2.

  54. SeanG
    November 9th, 2009 at 07:37 | #54


    Have you ever read Atlas Shrugged?

  55. SeanG
    November 9th, 2009 at 07:41 | #55


    You assume that the rich benefit by chance rather than hard work, studiousness or risk-taking that others are not prepared to do. If it was by coincidence and not by hard work then I would agree with you, but since so many people who earn good incomes get there from hard work, dedication, long hours and putting their own money at risk – why punish those who succeed and who create the companies who provide the employment for the vast majority of people?

    You say that they owe society: what happens when they no longer bother to put in the effort?

  56. Alice
    November 9th, 2009 at 08:16 | #56

    Sean – take the rose coloured glasses off. Alex Hawke is a self interested prat. As I said …they sacked the wrong person but what would you expect from the liberal party?


  57. gerard
    November 9th, 2009 at 08:19 | #57

    Have you ever read Atlas Shrugged?

    No… I just skipped through for the hot violent sex! when I was a teenager, I borrowed it from a friend whose dad – a rabid Rightwinger – had it on his bookshelf. sorry to admit that I didn’t have the patience of an officer Barbrady, although I’ve read enough to know that it is wholly without literary merit. at the time I didn’t realize that the author was a mentally deranged speed-addict who idolized serial killers, but the solipsistic contempt for humanity that is the common denominator of her morally abject followers would have made that information unsurprising. anyway, since your Randians believe that selfishness is the highest virtue and don’t feel sorry for anyone else, don’t expect anyone to feel sorry for you when you’re riding the “taxes hurt” whaambulance! If you don’t like living in a civilized society then you’re welcome to Go Galt.

  58. SeanG
    November 9th, 2009 at 08:37 | #58


    That’s really good, Alice. I am not a member of the Liberal Party so why should I care?

  59. SeanG
    November 9th, 2009 at 08:39 | #59


    It is not well written and Rand’s sexual views come across quite explicitly.

    Read it before you criticise it because it is very interesting. Imagine a world where those who put so much effort in, who take pride in their work, are punished and forced to give to society because there are those who need it more than they do (although these people are just business owners who slid up to politicians) and whatever they do someone holds them back from achieving their goal.

    Sounds a lot like what you want to do to every high achiever.

  60. Monkey’s Uncle
    November 9th, 2009 at 09:47 | #60

    Kevin, I may have misinterpreted you slightly. I take it you are drawing a distinction between finite resources (such as land, water etc.) and infinite wealth (that is, the ability to add value through using resources productively and combining them to create more value).

    I certainly don’t believe economics is a zero-sum game. On the contrary, with the right incentives you increase the size of the pie. With the wrong incentives you reduce the size of the pie.

    The irony is that the more the size of government increases, the more it actually becomes a zero-sum game or a negative sum game. Whenever governments redistribute resources to one section of society, they must take more from someone else. The government cannot make the pie bigger, despite the wishful thinking about demand and multiplier effects from some. Indeed, by reducing incentives the government will make the pie smaller. Which means society ends up becoming a competition among different sectional interests for a share of diminishing economic output. This must erode social cohesion as well.

  61. Freelander
    November 9th, 2009 at 10:12 | #61


    I make no such assumption. When they no longer put in the effort? They continue to benefit from society like others in their position do. ‘no longer put in the effort’ Sounds suspiciously like the Atlas Shrugged nonsense. The rich are not rich all by themselves. Their wealth is a product of the society in which they live. No one ever became wealthy all by themselves. Reality is not a Randian wet dream.

  62. November 9th, 2009 at 10:36 | #62

    @Salient Green

    I didn’t tell you that what the government did to you, those times, was wrong (in an engineering sense – I’m not talking ethics just now); it worked. I’m telling you that – as a matter of fact, with historical precedents – there are times and places when taxing those who can’t pay works.

    Likewise I made no comment on whether governments use taxes to govern (though you really shouldn’t think of that as “provide services and build things” – they also smash things and cause harms, as they think fit). I pointed out that they don’t, or don’t have to, use taxes to raise revenue for those things, and that they sometimes do those things without using revenue for them. In an advanced economy, taxes only appear to go to governing; actually, spending goes to that and taxing goes to keeping inflation from rising as a consequence. This is partly from how fiat currencies work, and partly from using consolidated revenue with no hypothecated taxes (meaning, there is no link from tax to particular activities). In less developed countries, including the colonial cases I mentioned, some government activities are carried out more directly still, using forced labour or collections of consumables in kind, so money isn’t involved and revenue isn’t used but only other resources. Tax revenues – by definition in money – are bypassed.

  63. Donald Oats
    November 9th, 2009 at 11:30 | #63

    One of my work mates from a few years back suggested that income tax should not only be progressive, but shouldn’t allow any work deductions – period. If no work related tax expenses can be claimed, that immediately simplifies a chunk of tax law, the tax form itself, and reduces the number of necessary tax audits to ensure compliance. I’m in basic agreement with this.

    It could be taken further though by a tax law that only allows expenses to be deducted against income derived directly from the capital and/or production that has generated the expenses. For example, if the current negative gearing of investment property was under this rule, then expenses generated directly in making the income/profit from renting out the home may be only be deducted from the rental profit/income of that property. Boy, wouldn’t that put the cat among the pigeons?

    A phased reduction of negative gearing would be sensible too.

    However, we have what we have, and I don’t object to people taking legitimate work expense deductions, or deductions related to sole owner, or other single person business activity, as that is how the tax system stands at the moment.

    Company tax should be simplified too. This is probably more important than salaried people’s taxes, as the bigger companies may reduce their taxes to ridiculously low levels, given the numerous accounting/financial strategies available for dodging tax. If the company tax could be simplified, it might be possible – I don’t have robust figures so I’m yet to form a strong opinion – to actually reduce overall company tax rates a bit, as fewer big companies would have the luxury of avoiding or “minimising” their taxes.

    As an aside, I sometimes feel like I’m the only person who didn’t receive the stimulus cash bonus: IIRC, my tax return had no income tax due to my taxable income dropping below my claimable expenses – I made a few charity donations, which are declarable as deductions, and bang! That was enough to take me over the threshold and to miss out – believe me, I checked afterwards with the ATO to see if I was able to get the bonus, but the answer was a polite and firm “No.” Them’s the breaks 🙁

  64. Sea-bass
    November 9th, 2009 at 11:36 | #64

    I think you’ll find that a lot of professionals already “go Galt” on a regular basis, in the form of salary sacrifice. Especially in the medical profession, you’ll find neuro surgeons performing a few operations a week and then going off to play golf. Sure, they could be doing more operations, but what’s the point when you’re paying effective tax over 50%?

    But they have no right to be well remunerated, since, according to these people, wealth is collectively owned by society regardless of what an individual does to actually increase it. Sure, I could devote 5-10 years of my life studying medicine or engineering, but why don’t I just sit back and wait for the share of the ever-shrinking pie to which I’m entitled?

    Speaking of objectivists, Wikipedia founder Jimmy Wales identified himself as one: http://www.youtube.com/watch?v=qxxddBY-Vwo

    I wonder if Gerard, Freelander and co. will continue to use Wikipedia, even though it’s affiliated with evil objectivists (oh, the horror!)

  65. Freelander
    November 9th, 2009 at 12:44 | #65


    The real reason they “go Galt” is because they are paid so generously for doing unnecessary operations that they don’t really need to work a full week. The most powerful union that has remained untouched by reform is the medical union. Their work pratices are far worse than the warfees ever were.

  66. Freelander
    November 9th, 2009 at 12:45 | #66


    Wealth is collectively created by society. Only delusionists think they did it all by themselves. There are no self-made men, or women.

  67. Alice
    November 9th, 2009 at 13:16 | #67

    You asked Sean G.

  68. Freelander
    November 9th, 2009 at 13:37 | #68


    I don’t think ‘Objectivists’ are necessarily evil. Even if they all are, they can come around and mow my lawn if they do a good job and I might even give them some money for it.

    As for Wikipedia, it is a most unRandian creation as it violates the virtue of selfishness.

  69. Sea-bass
    November 9th, 2009 at 13:52 | #69

    Society is not some “blob”, it consists of individuals pursuing their own self-interests, it just so happens that the only way to satisfy this self-interest is by offering a good or a service for which somebody else is willing to trade their own produce. Perhaps you might still argue that wealth is collectively created but it by no means follows that it should be collectively owned.

    No one makes it on their own, true, they rely on the inputs of others, and thus others are paid for supplying these inputs at their market price, not whatever arbitrary price confirms to your moral judgements about what is worthy or not.

    And if you get out of bed each day and seriously believe that you aren’t motivated by your own self-interest, you are the one who is deluded. And irrational, like most people who preach radical egalitarianism – but when it comes to the crunch, and you have to make hard decisions, I’m willing to bet you will go with what is in your own self-interest. It’s like what they say about the Soviet system, that even though the political ideologues preached the gospel of equality, when it came to their own children they did all they could to cheat the system and give their kids a better life. Much like the PM of this country, who preaches the virtues of the public school system and ends up sending his own kids to the most exclusive private school in Canberra.

  70. Sea-bass
    November 9th, 2009 at 14:04 | #70

    Freelander :@Sea-bass
    I don’t think ‘Objectivists’ are necessarily evil. Even if they all are, they can come around and mow my lawn if they do a good job and I might even give them some money for it.
    As for Wikipedia, it is a most unRandian creation as it violates the virtue of selfishness.

    Do you even understand the difference between selfishness and greed? Rand’s idea of selfishness is rational self-interest (and many difficulties may have been avoided if she had used this choice of words). What astounds me that people who throw a tantrum about Rand preaching “selfishness” cannot muster the same self-righteous indignity at the mention of Adam Smith and the invisible hand of the market. The two concepts are very similar.

    On a moral level, “selfishness” refers to acting in such a way that is consistent with one’s moral principles, and the “evil of altruism” lies in sacrificing oneself for a cause in which one does not believe eg. fighting an unjustified war of aggression in the name of King and country. That is, one can still give to charity to educate poor African children if one holds education and the pursuit of knowledge in great esteem.

    Rand and objectivism can be (and have been) rightly criticised by serious scholars for many reasons, yet the best criticisms show a deep understanding of her philosophy (and economics). The criticisms here, by contrast, come from those who have read a few pages of her books and seem to be determined to put their utter ignorance on display.

  71. Alice
    November 9th, 2009 at 15:37 | #71

    Sea Bass – Rational doesnt exist when it comes to human beings. It only exists in faulty economics models and it certainly doesnt exist in aggregate even if it does, or ever did exist on all occasions for some individuals, which I doubt, on a micro level. One persons rational is another persons irrational. There is no way to measure a persons rationality – so its an assumption only.

  72. Jarrah
    November 9th, 2009 at 17:16 | #72

    “Rational doesnt exist when it comes to human beings.”

    Maybe that’s the case with you, but don’t cast aspersions on the rest of the human race 😉

  73. gerard
    November 9th, 2009 at 17:18 | #73

    Seabass, seems you’re quite sensitive to Rand being called out as the second-rate Anton LaVey that she was, and obviously mentally ill to boot. We’re all so ignorant we can’t see the shining brilliance of Randian philosophy (“and economics!”) through the haze of her poor writing skills, luckily you’re here to educate us, it’s almost altruistic of you to sacrifice your time like this.

    As for Wikipedia, I don’t mind what Jimbo believes, he seems to have done a good job of keeping his political views outside the project, and I’ll assume that as little of it has been written by him as by myself anyway! so I’ll continue using it, in fact I’ll use it right now


    In late 2005, Wales edited his own biographical entry on the English Wikipedia. Writer Rogers Cadenhead drew attention to logs showing that in his edits to the page, Wales had removed references to Sanger as the co-founder of Wikipedia. Sanger commented that “having seen edits like this, it does seem that Jimmy is attempting to rewrite history. But this is a futile process because in our brave new world of transparent activity and maximum communication, the truth will out.”

    yep, certainly sounds like the type of narcissitic @sshole that would be attracted to Objectivism. although to his credit he does describe the US Libertarian party as “lunatics”

  74. Alice
    November 9th, 2009 at 17:53 | #74

    Im casting “irrational” on you and Sea Bass and Sean G …oh and Andy Reynolds….! The lot of you freedom fighters want to cling on to the “rational behaviour” assumption…like drowning men to a liferaft with a massive hole in it.

  75. Sea-bass
    November 9th, 2009 at 18:20 | #75

    Don’t worry Alice, I certainly don’t assume rationality of other people, especially not the sort of people I meet here. Nonetheless, it would be nice if more people aspired to act rationally on a day to day basis.

  76. Alice
    November 9th, 2009 at 18:41 | #76

    As ever an idealist Sea Bass. Whats wrong with just taking people as you find them….. without expecting rationality? Your standards are your standards. You act rationally then. You cant control how other people act. Thats the hidden weakness ..and people just dont act rationally.

    There is nothing you can do about irrationality Sea Bass…think of all those murders that wouldnt be committed if people rationally thought about the jail sentence.

  77. Freelander
    November 9th, 2009 at 18:45 | #77


    The only point on which I agree with you is that Rand had nothing original to say (or have I misinterpreted you). As the Slate article intimates, she was a sad product of a sad time (one of many) in Russian history. Her philosophy, constructed from a mishmash of others ideas which she had picked up in her youth, was ultimately the product of emotion rather than clarity of though. She was, somewhat deluded, somewhat nasty and somewhat pityful. When her toyboy ditched her, her cult became even more bizarre.

  78. Freelander
    November 9th, 2009 at 18:52 | #78


    Yes. I agree. The real attraction of the libertarianism is that it provides a ready made pseudo-philosophy for those suffering from narcissistic personality disorder because the sufferers like to think well of themselves, which is somewhat difficult to do given their behaviour. Interestingly Rand had the type of background that can result in this disorder. She and her heroic characters are simply dripping in narcissism.

  79. nanks
    November 9th, 2009 at 19:04 | #79

    re rationality, the work of Gerd Gigerenzer http://en.wikipedia.org/wiki/Gerd_Gigerenzer attracted me as an undergraduate. Should be read as well as the more popular Kahneman and Tversky.

  80. Jarrah
    November 9th, 2009 at 20:48 | #80

    So you say rationality doesn’t exist, then call some people irrational… do you even know what you’re saying?

    I say rationality does exist. Not perfect, permanent or ubiquitous rationality, but it exists, and it’s the best way to think about human behaviour, on average, in aggregate.

    What else would you use? Irrationality? That equals unpredictability, and thus any disbeliever in rationality (on average, in aggregate) automatically loses any ability to analyse or understand human behaviour. Do you really want to place yourself in that category?

    I bet you $100 that you behaved very rationally today. This morning, did you put your socks on before your shoes? Then did you use the most convenient and/or quickest route to work/study/shopping? Did you decide to pay for rent/bills/groceries at some point?

    And even common examples of “irrationality” prove to be otherwise when examined more closely. Hidden/intangible benefits (ie lottery tickets) and future discounting (smoking) are just two reasons why something that is rational can appear irrational.

  81. Alice
    November 9th, 2009 at 20:58 | #81


    you say “So you say rationality doesn’t exist, then call some people irrational… do you even know what you’re saying?”

    I know what Im saying Jarrah. Do you know what you are saying???

    Completely irrational. Which is what I was saying about you…and as for today, I had a very bad day with Stata (and the dictates of empricism) and got grumpy with my boss who had very little to do with it.

    Whats rational about that?. Havent you heard of kicking the cat after work ?- well if I was rational I would have.

  82. Freelander
    November 9th, 2009 at 21:01 | #82


    The lottery tickets and smoking future discounting discussion is simply defining them as rational. If you have an all encompasing definition of rationality so that any behaviour, is, by definition, rational, then all you can find is rationality. But you have defined the problem away and simply moved to the realm of metaphysics. That is, you are not saying anything at all meaningful about reality.

  83. Alice
    November 9th, 2009 at 21:06 | #83

    Id like you to mail me the $100 dollars now Jarrah because I won the bet, unless you were gambling without any convinction which seems a bit irrational.

  84. Alice
    November 9th, 2009 at 21:15 | #84

    Im trying again – the moderator got me but for the life of me I cant see any rational reason why.

    “Id like you to mail me the 100 dollars now Jarrah because I won the bet, unless you were gambling without any conviction which seems a bit irrational.”

  85. SeanG
    November 9th, 2009 at 21:42 | #85


    Of course. The rich get rich because they sleep in all day and expect society to provide without giving anything back.
    Supply and demand – having a product that people want and selling them it. Hard work – getting ahead of the pack. Risk taking – investing and starting something from scratch.

    You say that none of those matter?

  86. Freelander
    November 9th, 2009 at 22:40 | #86


    You seem to want to get rich by taking everything society has to offer, and more and claiming it all as your own, and claiming you did it all by yourself. No one starts anything from scratch. How about a bit of humility?

  87. SeanG
    November 10th, 2009 at 03:31 | #87


    You do realise the concept of supply and demand? I have a skill/good that I can provide and you want to purchase it. Saying that it is taking from society ignores reality because individual initiative contributes to society and determination, risk-taking, commitment provide those goods which you purchase and the services you require.

    By your logic anyone who wants to succeed is scum although it is individual drive that has spurred humanity forward for millenia.

  88. Freelander
    November 10th, 2009 at 09:20 | #88


    You did it all by yourself. Good for you. Have you heard of supply and demand? The rest of society supplies you with essential protection and confers on you property rights yet you seem to think they should do this for free. The rest of society put you in a position where you could earn but you don’t think they should get anything for that. A very narcissistic perspective.

  89. Kevin Cox
    November 11th, 2009 at 02:49 | #89

    @Monkey’s Uncle
    Yes I do distinguish between activities that increase wealth and activities that decrease wealth. In other words I see a difference between investing and consumption. Our system of measurement – money – makes no difference between the two and so we get this absurd situation that the more we consume the wealthier we apparently get.

    This failure of our measuring system to distinguish between consumption and investment has lead us down the path of an unsustainable future so we have the system trying to maximize consumption as a measure of success rather than maximizing wealth (or future capacity) as the measure of success.

    It has lead us to make it more financially expensive to invest in a new asset than it is to buy an existing asset. This has lead to the bizarre situation where the cost of building a new piece of infrastructure like the new Cotter Dam for Canberra is going to be double the cost of construction because we insist on paying for investments from savings not from the new wealth the investment creates.

  90. Jarrah
    November 12th, 2009 at 15:58 | #90

    I don’t think you do know what you are saying. First you claim rational humans don’t exist. Then you attempt to insult certain humans by saying they aren’t rational. That doesn’t make any sense. It is, if you’ll pardon the pun, irrational.

    And so sorry, but what bet? Are you now confusing me with someone with whom you had a bet, as well as confusing rationality and irrationality?

  91. Jarrah
    November 12th, 2009 at 16:13 | #91

    Of course it isn’t. The examples were to show that behaviour that appears superficially irrational can in fact be rational. The lottery ticket is irrational if you expect to win, but may be rational if you take into account the hidden benefits of, say, daydreaming about the winnings. Smoking is irrational if you only count the long-term costs – like disease and reduced lifespan – but may be rational if you also count the short-term benefits and weigh them against each other accordingly.

    I’m not trying to say all gambling and drug-taking is rational, I’m only trying to show that things aren’t cut-and-dried.

    Look at it this way. Human behaviour is either random, or non-random. If non-random, what determines it? I put it to you, and particularly to Alice, that rationality is an important driving force. And I don’t mean a Borg-like hyper-rationality that exists only in undergraduate microeconomics models, but one born of genetics and culture, and which says that humans make cost-benefit analyses.

    In other words, incentives matter. Or – people pursue their self-interest. Always bearing in mind that this is on average, in aggregate, lest you accuse me of ignoring obvious irrationalities.

    It’s up to you and Alice to substantiate the wildly ambitious claim that people aren’t rational, if you dare. But be warned – if by some miracle you can put together a coherent case, it automatically means that you must abdicate from discussing public policy. To regulate and influence behaviour, a rational population is a prerequisite!

  92. Jarrah
    November 12th, 2009 at 22:38 | #92


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