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The patrimonial society comes to Australia

February 7th, 2016

Forbes just released its annual list of the ten richest Australians. Of the top eight, four inherited their wealth. The other four range in age from 75 to 85, suggesting that new heirs are likely to be joining the rich list before too long.

This pattern isn’t yet representative of the Australian wealth distribution as a whole, but it is becoming more so. Piketty’s patrimonial society is not far away.

There are a lot of things we can do to promote a more equal distribution of opportunity and outcomes, but a return to taxes on inheritance (preferably levied on the recipient rather than the estate) would be a good start.

  1. Zucchini
    February 7th, 2016 at 15:18 | #1

    Why not land taxes? Financial assets can be hidden away from the taxman. Land cannot.

    Moreover, land taxes would improve the efficiency of land use, and help making housing more affordable.

  2. John Quiggin
    February 7th, 2016 at 15:24 | #2

    @Zucchini

    Why not land taxes?

    Because 200 word blog posts don’t cover every possible topic. Before posting a “what about” comment like this, it’s a good idea to do a search of the blog on “land tax”. You’ll find it’s been mentioned quite a few times.

  3. Blissex
    February 7th, 2016 at 19:34 | #3

    «more equal distribution of opportunity and outcomes, but a return to taxes on inheritance (preferably levied on the recipient rather than the estate) would be a good start»

    But most middle class people feel like millionaires with their suburban properties and hate the idea of a «more equal distribution of opportunity and outcomes», and also hate inheritance taxes, especially on heirs, as many of them are dreaming of their turn as lords of the micro-manor when they inherit those suburban properties.

    In most anglo-american culture countries the middle classes want a patrimonial society, as they have bought into the dream of a plantation economy where “productive” middle and upper class property owners (and their heirs when their turn comes) live in comfortable luxury thanks to rents and capital gains, while “unproductive” working class and underclass losers toil endlessly for low pay in a race-to-the-bottom competition with immigrants and foreign workers from very poor countries.

    That dream will only end when the middle classes realize that they have been asset-stripping themselves, and that they too will be joining the race-to-the-bottom.

    From H MacMillan’s diary an interesting quote:

    «As a kind of tranquiliser I am taking a course of Henry James! What a world – how quiet and peaceful and happy it was for the “upper and upper-middle classes”. Now it’s a nightmare. Happily, it’s a much better world for the masses, as has been brought home to me most forcibly in writing the history of the inter-war years.»

  4. Ikonoclast
    February 7th, 2016 at 19:59 | #4

  5. BilB
    February 7th, 2016 at 20:05 | #5
  6. BilB
    February 7th, 2016 at 20:14 | #6

    And then there is the Russian “take” on capitalism

    https://www.youtube.com/watch?v=vbucJO3zDCE

    It costs just a quarter of a million dollars to fill the tank.

  7. Jim
    February 8th, 2016 at 08:54 | #7

    Just to reinforce JQ’s point about age and inheritance. If you look at the Forbes list of the young people appearing in the 50 rich list (which includes people in their 50s), only 3 are self made.

  8. BilB
    February 8th, 2016 at 09:58 | #8

    Do not think that people with extreme wealth, 50 million and above, have the where-with-all to move their assets out of the country to avoid inheritance taxes. I know a number of people who have become Hong Kong residents for that very purpose.

    Remember the the resources super profit tax? How well did that work? At that level you are not dealing with amateurs, Paul Hogan aside.

  9. BilB
    February 8th, 2016 at 09:59 | #9

    Do you not think…

  10. Newtownian
    February 8th, 2016 at 10:54 | #10

    There are a lot of things we can do to promote a more equal distribution of opportunity and outcomes, but a return to taxes on inheritance (preferably levied on the recipient rather than the estate) would be a good start.

    Nice idea but is it realistic given we are rapidly moving from a quasi – democratic society to an oligarchical based one where inevitably such a tax would hit ordinary people and not the super-rich? Remember the Golden Rule as the Wizard of Id explained “Them that has the gold makes the rules”. To think we can seriously tax the rich without something tantamount to revolution seems to me wishful thinking.

    So what would this revolution involve especially if it is peaceful/conceptual rather than violent which would defeat the purpose an so is a non starter except to recalcitrant Leninists and Tea Partiers?

    This emergence of a full blown Australian oligarchy reminded me of something our old futurist friend Joseph Tainter pointed out:

    “With the rise in taxes….there were chronic shortages of labor. Marginal lands went out of cultivation. Faced with taxes, peasants would abandon their lands and flee to the protection of a wealthy landowner. By 400 A.D. most of the lands of Gaul and Italy were owned by about 20 senatorial families.”

    . (see TAINTER, J. A. 2011. Resources and Cultural Complexity: Implications for Sustainability. Critical Reviews in Plant Sciences, 30, 24-34.”

    This decline wasnt just about the greedy 0.01%. An interesting phenomenon was the devaluation of the Roman currency over a period of 200 years which can be tracked as the proportion of silver in the coinage.

    Sound familiar, at least trend wise? These days we have no silver in our coinage at all, but having discovered money/value is a far more slippery beast our society responded by developing ‘economic instruments’ not only to maintain the status quo but facilitate wealth transfer to the wealthy evenutally from the public purse through bail outs. But even this hasnt worked as we have seen still continuing an extraordinary devaluation of money via fiat money like the CDSs and separately the way shares in companies now dont reflect assets so much as notional short term value placed upon them by ‘the market’ which can evaporate as in 2008 even though no physical destruction of assets has occurred.

    So this wealth accumulation is a wakeup call but what should be the response i? Tainter’s thesis which is at least worth consideration is problems such as wealth accumulation are an outgrowth of an increasing complex society whereby increased complexity addresses short term problems especially related to economics and sustainability but sows the seeds of further problems in the longer term.

    Tainter’s ideas/analysis are interesting and worth considering because he himself doesnt see a fix either and provides a useful starting point for rethinking the problem which indicates:
    a. There is no simple fix.
    b. Mainstream economists need to start seriously visiting Limits to Growth related ideas.
    c. But conversely neo-malthusians need to also seriously examine their own proposals too.

    The article above is worth considering along with his other works but many of the key arguement are illustrated by the following extracts:

    “Many students of sustainability will find it a disturbing conclusion that long-term conservation is not possible, contravening as it does so many assumptions about future sustainability. Naturally we must ask: are there alternatives to this process? Can we find a way out of this dilemma? Regrettably, as Boulding observed, no simple solutions are evident. Consider some of the approaches commonly advocated:”

    “1. Voluntarily Reduce Resource Consumption….. Societies increase in complexity to solve problems, becoming more costly in the process. Resource production must subsequently increase to fund the increased complexity. To implement voluntary conservation long term would require that a society be either uniquely lucky in not being challenged by problems, or that it not address the problems that confront it. The latter strategy would at best reduce the legitimacy of the problem-solving institution, and at worst lead to its demise.”
    “2. Employ the Price Mechanism to Control Resource Consumption…..This is currently the laissez-faire strategy of industrialized nations. Since humans don’t commonly forego affordable consumption of desired goods and services, economists consider it more effective than voluntary conservation. Both approaches, however, lead eventually to the same outcome: As problems arise, resource consumption must increase at the societal level even if consumers as individuals purchase less.”
    “3. Ration Resources…..Because of its unpopularity, rationing is possible in democracies only for clear, short-term emergencies. This is illustrated by the reactions to rationing in England and the United States during WorldWar II.”
    “4. Reduce Population…..it has the same fatal flaw as the first two: Problems will emerge that require solutions, and those solutions will compel resource production to grow.”
    ” 5. Hope for Technological Solutions….I sometimes call this a faith-based approach to our future. We members of industrialized societies are socialized to believe that we can always find a technological solution to resource problems. …….Consider, for example, the following statements:
    • No society can escape the general limits of its resources, but no innovative society need accept Malthusian diminishing returns (Barnett and Morse, 1963),
    • All observers of energy seem to agree that various energy alternatives are virtually inexhaustible (Gordon, 1981),
    • By allocation of resources to R&D, we may deny the Malthusian hypothesis and prevent the conclusion of the doomsday models (Sato and Suzawa, 1983).

    Our society’s belief in technical solutions is deeply ingrained. The flaw here was pointed out by Jevons (1866), as noted above: as technological improvements reduce the cost of using a resource, total consumption will eventually increase. The Jevons Paradox (also known as the Rebound Effect) is widely in effect (Polimeni et al., 2008), among economic levels ranging from nations to households and individuals, including in many sectors of daily life (Tainter, 2008).”

  11. Mpower
    February 8th, 2016 at 11:02 | #11

    @BilB
    The time is ripe for a resources super poor tax rebate now miners want royalty relief as reported today. The miners sure know how to lobby – should be no problem.
    As for land taxes, you would find both sides falling over themselves to offer reductions. Lease payments on grazing land are a good analogy where they only ever ratchet downwards a drought at a time and the savings get capitalised so you can borrow more and go broke quicker.

  12. Chris O’Neill
    February 8th, 2016 at 11:53 | #12

    @BilB

    Remember the the resources super profit tax?

    Indeed. An inheritance tax is not going to happen for the same reason as the resources super profits tax was trashed – vested interest conning a large number of the not-so-well-off into believing it was a disaster for them.

  13. Ikonoclast
    February 8th, 2016 at 11:59 | #13

    Yep, a trend back to equality is NEVER going to happen under this system. Mpower’s mention of the term “ratchet” is completely appropriate. The system is now geared to ever ratchet wages downwards and to ever ratchet the profit share upwards. The system is geared to ratchet inequality ever upwards. The system is geared to ratchet taxes up on the poor and down on the rich. The system is geared to ratchet up the stress on the climate and rest of the environment.

    There is no end in sight for any of these processes from within the current system. It will push this process until the people break or the environment breaks or most likely both. Those who are still arguing about tax fixes to a grotesquely broken and unequal system are living in the past. There will never be another rapprochement or accommodation with capital anywhere. The historical conditions for such a rapprochement are gone. They were one-off, historically conditioned and are now gone never to return. The dream for a mixed economy compromise has now become a full-fledged delusion.

  14. Chris O’Neill
    February 8th, 2016 at 12:01 | #14

    @John Quiggin

    Before posting a “what about” comment like this, it’s a good idea to do a search of the blog on “land tax”. You’ll find it’s been mentioned quite a few times.

    Indeed mentioned a few times, but no discussion about it by your good self.

  15. Ernestine Gross
    February 8th, 2016 at 13:04 | #15

    Chris O’Neill, the smh of 6/2/16 contains an article on land tax. Specifically on the NSW Labor Left trying to sell this idea on the grounds that such a tax is ‘progressive’. No more has to be said to write off this argument. (Joe Hockey is gone and the rest of us do not confuse absolute amounts with the notion of a progressive tax.) Land taxes, other than council rates, is the lazy alternative to the lazy GST increases. End of story.

  16. Chris O’Neill
    February 8th, 2016 at 13:46 | #16

    @Ernestine Gross

    End of story.

    How much land value do you, your family and friends own?

    Not that I was advocating for a land tax. Check the other thread.

  17. Chris O’Neill
    February 8th, 2016 at 13:48 | #17

    @Ernestine Gross

    End of story.

    How much land value do you, your family and friends own?

    Not that I was advocating for a land tax. Check the other thread.

  18. Ernestine Gross
    February 8th, 2016 at 15:57 | #18

    @Chris O’Neill

    You are free to consult the Land Titles Office.

    To return to this thread, it’s heading alludes to content in Thomas Piketty’s book, Capital in the Twenty-first Century, 2014. It is the role of inheritance of physical and financial assets in wealth concentration that mattered in eras past (patrimonial society) and it has resurfaced in France, the UK, the USA and, as the heading suggests, now Australia.

    So, what do you have to say on this interesting topic?

  19. Ivor
    February 8th, 2016 at 16:23 | #19

    @Ernestine Gross

    This does not make the ALP NSW Left look very good.

    Land is taxed when you buy it (stamp duty), when you hold it (council tax in UK, rates in Aust) and – except for your primary residence – when it is sold (capital gain). The only additional scope for yet more land tax is capital gain on primary residence as part of probate.

    There are various exemptions, but this is the general picture and in places land ownership by foreigners is surtaxed.

  20. BilB
    February 8th, 2016 at 16:27 | #20

    The proper means of maintaining a fair society is with income tax. Do not be fooled to think otherwise.

    The reason why the pointy end of the income pyramid want to transfer taxation to consumption tax is because they know that beyond a certain base level of expenditure the use for money is to create more money in the relative tax free “investment” world both local but safer off shore. If the money is taxed before it hits the bank account this puts a brake on free spinning wealth creation.

    Any family with an income less than 100 thousand will be sucked down by a increased GST with higher mortgages, higher rent, higher bills for every part of their lives, and the option of income magnification through high performing investments (the ultimate cost of which fall on the general populace eventually) never becomes a possibility.

    In a world where the race for wealth has ratcheted up to a billion dollar entry level we must retain the progressive income tax drag for our society to retain relatively homogeneous, and fair.

  21. Chris O’Neill
    February 8th, 2016 at 16:36 | #21

    @Ernestine Gross:

    You are free to consult the Land Titles Office.

    You can suck eggs too.

    So, what do you have to say on this interesting topic?

    What I said on the other thread, as I pointed out above, is relevant.

  22. Chris O’Neill
    February 8th, 2016 at 16:47 | #22

    @BilB

    In a world where the race for wealth has ratcheted up to a billion dollar entry level we must retain the progressive income tax drag

    Of course, the interesting thing is that the vast majority of wealth has not come from income that was taxed but from the capital gain of assets that have either been owned for a long time, have achieved high rates of capital gain with little or no tax, or some combination of both of these.

  23. BilB
    February 8th, 2016 at 17:41 | #23

    I don’t believe that to be true Chris Oneil. Can you sustantiate that claim?

  24. John Quiggin
    February 8th, 2016 at 18:54 | #24

    @Chris O’Neill

    Indeed mentioned a few times, but no discussion about it by your good self.

    Perhaps you should take the advice I gave, before commenting. Or you could read the post immediately below this one, which includes the observation

    That’s before we get to the elephants: superannuation concessions (also supported by the Grattan report), corporate tax avoidance, land tax and higher income taxes for (say) the top 5 per cent of income earners (reflecting elite opinion, the Grattan report suggests cutting these rates). All of these are hard, but not obviously harder than the GST. (emphasis added)

  25. John Quiggin
    February 8th, 2016 at 19:00 | #25

    As a general observation, Chris, I find your comments to be frequently rude and snarky. Please tone them down.

  26. BilB
    February 8th, 2016 at 22:30 | #26

    Actually, Chris Oneil, when I read that more carefully, I think you are more likely to be right. I skip over thd capital gain aspect.

  27. BilB
    February 8th, 2016 at 23:05 | #27

    One other tax I have not noticed being discussed this time around is a financial transaction tax. Shock horror to even suggest it.

    Thd fact is that we have had financial transaction taxes for years. These are applied to EFTPOS transactions and Credif Card transactions, and they are not small commissions either. Worse yet, who benefits from this hidddn extertion?……….. The banks do!!!

    So when the banks gasp at the difficulty of charging a transaction fee on behalf of the government rememder that they have no trouble doing the same for their own superprofit.

    So my tax restructuring plan?

    1. Increase the top tax bracket to half where it was in Howard’s time.

    2. Apply a universal adjustable levy to all imported goods and services.

    3. Apply a financial transactions tax.

    4. Apply a capital gains super profits tax.

  28. Chris O’Neill
    February 9th, 2016 at 00:04 | #28

    @John Quiggin

    Perhaps you should take the advice I gave

    I did actually. I typed land tax into the blog’s search box and it came up with 3 matches in your articles (including the post immediately below this one) and they were all just mentions of the term (as I said). My problem is that I think it deserves more than just mentions.

    For example the fact that introducing a new land tax causes an immediate capital loss to the value of the land that becomes taxed and that this is likely to make the owners fight it tooth-and-nail. An economic rent tax on economic rent from the starting date, on the other hand, would not produce an immediate capital loss.

  29. Chris O’Neill
    February 9th, 2016 at 00:09 | #29

    @Ernestine Gross

    Land taxes, other than council rates, is the lazy alternative to the lazy GST increases. End of story.

    Judging by the quality of that argument, sounds like someone with a substantial interest in land.

  30. dedalus
    February 9th, 2016 at 04:58 | #30

    Wealth. Well it’s only money. Is it so terrible that the rich 1% have > 90% of the “wealth”? That depends on what they do with the wealth, and whether it impacts on the living standards of the 90%.

    If the 1% place their money in offshore bank accounts and buy Itallian villas and super-yachts with their small change there is no detrimental effect on the 90% simply because of that alone. The supply of money is more or less infinitely elastic, and so the solution is quite simple: increase the money supply.

    Here is where I see the sense in continual government deficits. By injecting money into the economy by deficit spending, the value of money is decreased beyond the normal rate of inflation effects.

    Ask yourself this: what would the rich prefer: scarce money or plentiful money? The latter injected into the economy benefits the 90% and disadvantages the 1%.

    The current problems have a lot to do with the trend since the early nineties towards government surpluses. This reduces the money supply and squeezes the lower and middle classes. The 1% of course love it.

  31. dedalus
    February 9th, 2016 at 05:32 | #31

    Advocating for government deficits to be the norm is obviously a tenet of MMT. However, the main argument put forward by MMT proponents, being the mantra “governments with sovereign currencies can never go broke”, is far too crude. Naturally, no one is going to swallow that. Obvious truths are the hardest to accept. No problems, the argument can be made more intuitively.

    There are a list of indicators that indirectly support the MMT thesis. Together they build a strong enough case to counteract neo-liberal groupthink. Here are a few:

    **USA and Japan, numbers 1 and 3 largest economies, have always run deficits and have massive so-called “debts”.

    ** Government “debt” after WW2 was really MASSIVE. Are we still paying it off? Are you joking?

    ** Private sector debt is true debt, government “debt” is not. Private sector debt greatly exceeds government “debt”.

    ** Money decreases in value over time. Therefore so does debt. Therefore, so does “debt”. This is the key point: Debt is not the same as “debt”.

    ** People intuitively know that you have to go into debt to “get ahead”. Debt is a good thing. If debt is a good thing, then obviously “debt” is an even better thing.

    ** Debt is subject to sanctions: the bank can foreclose on your house. “Debt” by contrast is sanction-free: short of another nation invading or bombing us, no entity can ever “force” the repayment of a government’s “debt”.

    In effect, government “debt” is like a 500-yr mortgage. Even better. The mortgagor of government “debt” is the government itself.

    Obvious when you think about it.

  32. Ikonoclast
    February 9th, 2016 at 09:00 | #32

    I wonder why Prof. J.Q. won’t address the question of the etiology of wealth inequality and only addresses the question of the symptomatic treatment of it.

    I am open to being proven wrong. Maybe Prof. J.Q. has addressed this issue (in which case he can link) or maybe he is about to address this issue. I certainly hope so because I get the impression that he is avoiding the issue. I certainly don’t think social-democratic debate has gone far enough if all we are going to talk about is redistribution after maldistribution. What is needed is some analysis of why the system maldistributes in the first place, whether this is avoidable and in what ways it might be avoidable.

  33. Ernestine Gross
    February 9th, 2016 at 09:09 | #33

    @Chris O’Neill

    On a previous thread I made a detailed argument why I consider an inheritance tax to better target policy objectives than land tax. My argument is related to the notion of ‘patrimonial society’ as exposed in Piketty.

    The owner of this blog is Professor John Quiggin, not you. You may not have noticed that he systematically goes through various taxes even though he spellt it out for your benefit.

    He was one of the first if not the first economist who pointed to ‘tax expenditure’. After a very long time, tax expenditure items, as identified by Prof Q, are now explicitly on the tax reform table of the current government. You ought to dip your lid rather than making demands on what should or should not be ‘discussed’. Yes, the Financial Systems Review (Murray Report) should be mentioned in this context, too.

    You also ought to dip your lid to a government and an opposition who, regarding GST, have shown to be capable of going beyond your method of discourse (presumptions, prejudgements, innuendos, personality politics, playing the player rather than the ball with a lot of empty talk).

    Until proven otherwise, I’ll adopt a working hypothesis about your posts, namely ‘no content’.

  34. John Quiggin
    February 9th, 2016 at 10:28 | #34

    @Chris O’Neill

    This is getting tiresome and insulting. I’ve been banging on about land tax, and the political obstacles to it, for decades. Here’s a recently published piece you could easily have found making exactly the point to which you refer.

    http://www.smh.com.au/comment/appetite-for-house-price-rises-outstrips-concern-for-equity-20150612-ghmbez.html

    Happy to accept your apology, or to bid you farewell.

  35. John Quiggin
    February 9th, 2016 at 10:32 | #35

    Again, Ikonoklast, Google is (or ought to be) your friend. I’m getting annoyed by people who seem to think that because their search skills aren’t what they should be, they are free to accuse me of ignoring issues.

  36. Ivor
    February 9th, 2016 at 11:01 | #36

    Many workers have small investment properties, and presumably many landlords make just a normal living out of rents.

    Up to a certain point, this creates no problem where the underlying asset is not capitalised.

    The problem arises only when, beyond providing land owners with a normal living or retirement fund, the property is used to extract monopoly rents. It then becomes Capital and all the problems Ikon refers to emerge (ie original maldistribution).

    You only get patrimonial society from causes – not symptoms.

  37. Ikonoclast
    February 9th, 2016 at 12:03 | #37

    John Quiggin,

    In that spirit, perhaps this is a good link;

    http://democraticmixedeconomy.blogspot.com.au/2011/07/marxism-without-revolution-class.html

    I will assume this is still a summary of your comprehensive view of these matters unless further searches by me uncover a more recent and divergent view. To this article, we could add “The Mixed Economy is Back – and it’s Here to Stay” from 2010.

    In brief, I would say an analysis of class without fully considering the issues of ownership of production is an incomplete analysis. In turn, implicitly positing the private ownership / public ownership dichotomy as the only ownership possibility set is somewhat limiting. For example, a cooperative ownership / public ownership model is also possible. A tripartite model is also possible with private ownership, cooperative ownership and public ownership all controlling significant sectors of the economy. (Mentally underline “significant” in that sentence.)

    Also, in your text you mention “democratic welfare state” and “democratic parties”. These are the only mentions of democracy. Admittedly, in a short article or two, you cannot mention all you would wish to mention for the comprehensive treatment of a large subject. The representative democracy conception of democracy is very limited. Without exploring and implementing workplace democracy comprehensively we are not and will not be a real democracy. Workers need to be in control of productive decisions, not an elite of private owners, managers and representative politicians. This is what is still lacking from mixed economy / representative democracy analysis IMO.

    Any suggestion that workers cannot manage enterprises would be entirely equatable to suggestions that workers should not have a vote in representative democracy (since they aren’t smart enough) and that neither should they or their children (compared to the offspring of the elite) be given a tertiary education. Of course, there are stupid workers one would not put in charge of a lemonade stand. Equally, there are many workers who are smarter than their bosses under the current system. Academic workers for example are smarter than their current managerialist masters.

    Full democracy, including workplace democracy, will unleash the greatest degree of distributed intelligence. It is often argued, quite incorrectly, that private ownership and markets mobilise distributed intelligence best. This argument falls down on a number of points. Production decisions in our economy are decided in the firm, enterprise or transnational company by an “aristocracy” of owners and managers. They base (some of) these decisions on market data and this market in turn makes “decisions” or indications by the “vote of money” (and by all sorts of corruption and market manipulation). Since money or wealth is so unevenly distributed this amounts to the rich minority having many votes and the poorer majority having far fewer votes. There is no real sense in which market and corporate decisions are democratic. There is also no real sense in which such decisions properly mobilise the distributed intelligence of the entire population.

    It is clear enough from the re-emergence of the patrimonial society that wealth and power (as “money votes” and executive power) in the current system are not earned meritocratically. The very fact that an hereditary elite can re-emerge so powerfully from this system indicates the systemic nature of the problem. The elite are the message. The system is the problem.

  38. John Quiggin
    February 9th, 2016 at 12:30 | #38
  39. Ernestine Gross
    February 9th, 2016 at 13:03 | #39

    “There are a lot of things we can do to promote a more equal distribution of opportunity and outcomes, but a return to taxes on inheritance (preferably levied on the recipient rather than the estate) would be a good start.”

    As per previous thread, I agree. In the meantime I looked for examples where inheritance tax is levied on the beneficiaries rather than on the estate and is progressive, while making allowances for family relationships (motivation for work and saving).

    Germany has an inheritance tax system which comes close to the theoretical properties mentioned.

    A short article, sufficient to illustrate the progressive nature of the inheritance tax is in: http://www.expatica.com/de/finance/Inheritance-tax-in-Germany_108115.html

    A more comprehensive explanation of the system is in:
    http://www.schweizer.com.au/articles/German_Inheritance_Taxes_%28SK00131316%29.pdf

    But the system is not considered adequate. A German Court has ruled the Government must legislate by July 2016 measures which deal with the undue concentration of wealth in family enterprises:
    http://www.wsj.com/articles/top-german-court-requires-changes-to-inheritance-tax-law-1418816243

    It is going to be intresting to see what the German Government comes up with regarding family enterprises (not listed companies). An example of a ‘large’ family enterprise is Aldi. Another one is Lidl, both are in discount (no frills) supermarket business. Every so often one of them goes bankrupt, eg Schlecker; http://www.ft.com/intl/cms/s/0/93529f6e-4769-11e1-b847-00144feabdc0.html#axzz3zdSDSUGI

    I must stress here I am not suggesting the German inheritance tax system is a model for Australia. The structure of ‘the economies’ differ. Other tax laws differ. For example, while both Germany and Australia have an agricultural sector with family businesses, there are, to the best of my knowledge no agri-businesses corporations in Germany, while there are in Australia. Moreover the size of the holdings are vastly different. These means potential buyers of family farms are likely to be very different (neighbouring farmers buying parcels of land vs large international agricultural corporations). Agriculture is not an export sector worth mentioning in Germany, but it is in Australia. Both Australia and Germany have a manufacturing sector. But there the situation is the other way around regarding their importance for international trade.

    The July 2016 expected legislation is going to be interesting because it is widely known there are a lot of family manufacturing enterprises, which do employ a lot of people across a wide variety of skills. What criteria is the government going to develop to discriminate between family enterprises for the purpose of inheritance tax? My first best guess is that the size of the enterprise, measured in terms of say turnover, or number of employees isn’t going to be the only criterion. Others could involve the active management, technological skills based, of off-springs.

    How much inheritance tax has been collected? I can’t answer this question as yet even in an approximate sense. I understand the tax goes to the States (Federation). I haven’t found as yet a data set which provides the aggregates. I haven’t spent much effort on this as yet.

  40. Ernestine Gross
    February 9th, 2016 at 13:06 | #40

    JQ, I submitted a post on the topic of inheritance tax on the recipients containing several links. It is in moderation. Would you kindly liberate it? Thanks in advance.

  41. Julie Thomas
    February 9th, 2016 at 13:06 | #41

    @John Quiggin

    It doesn’t look like the article is still available at Jacobin.

  42. Ikonoclast
    February 9th, 2016 at 13:42 | #42

    I was able to access the article “The Light on the Hill: A Reply to Seth Ackerman” – John Quiggin. It seems to be still there for all. Sometimes if you delete all your internet search history and tracking cookies, some sites will let you in again. They might be tracking free visits and then wanting to implement paid visits or at least subscriber visits. In that case they stop your visits until you delete your search history and tracking cookies.

    The Jacobin article is interesting. I don’t want to repeat what I said above so I will try to be brief and make new points. I can understand “many small steps” advocacy and even accept that that might be the best way to go. However, I would expect a manifesto statement somewhere which describes not a final vision, which is impossible, but a comprehensive vision placed out at the limits of prognostication and advocacy so to speak.

    Then again, maybe some wily advocates of “many small steps to an eventual radical change” may not want to be entirely candid about their full vision. In that case how do they share those larger and deeper ideas thus attracting the generally like-minded and those persuadable to a sustained co-operative effort toward goals beyond near goals?

  43. Moz of Yarramulla
    February 9th, 2016 at 14:12 | #43

    Ikonoclast :
    “many small steps to an eventual radical change” … how do they attract the generally like-minded and those persuadable to a sustained co-operative effort toward goals beyond near goals?

    Often by being who they are and supporting the incrementalists. There are quite a lot of poly and non-binary-gender people supporting same-sex marriage, for example, even though a lot of the pro-SSM campaigners explicitly exclude them from the debate (and often try to stop them supporting it). It’s not because they’re going to be affected by SSM much, but because they see it as a necessary step on the way to marriage equality and eventually to marriage based on consent.

    It’s a case of (loudly) supporting the bits you agree with, which quietly mentioning to those you’re supporting that you want to go further than they do. Often very quietly, so as not to frighten the bigots who have been persuaded that this one small step does not presage the end of the world. Also, not arguing with those who want to make nasty comments about the radical changes. For example, I’d rather not derail this thread into an SSM discussion, I’m just using it as an example.

  44. Moz of Yarramulla
    February 9th, 2016 at 14:14 | #44

    @Moz of Yarramulla
    So it’s entirely possible to say “I support inheritance taxes” and also caveat that with “… as the most likely progressive change to the tax system in the near future” and continue working towards a sustainable, equitable tax system in the more distant future.

  45. Julie Thomas
    February 9th, 2016 at 15:31 | #45

    @Ikonoclast

    I can’t go to the site; I get this message

    “This webpage is not available

    ERR_SSL_VERSION_OR_CIPHER_MISMATCH”

    Any suggestions?

  46. Ikonoclast
    February 9th, 2016 at 15:47 | #46

    @Moz of Yarramulla

    I take your points. Some clearly play a much more subtle game than I do. I am a blunt and simple man.

  47. Ivor
    February 9th, 2016 at 15:57 | #47

    @Ikonoclast

    Blimey, thanks for the link.

    “Marxism without revolution” what a mess, but I will have a better read asap.

    It is an old post, and I am sure that blogging authors want to be held to what they claimed some 5 years ago.

  48. Chris O’Neill
    February 9th, 2016 at 16:02 | #48

    Ivor:

    The problem arises only when the property is used to extract monopoly rents

    but of course, that is what is happening with valuable land such as in Sydney and Melbourne and, less reliably, in other big cities. Every landowner in those markets has monopoly ownership of their piece of land. Monopoly characteristics exist when there is a finite supply viz, land near a particular location (location, location, location).

  49. Ikonoclast
    February 9th, 2016 at 16:03 | #49

    @Julie Thomas

    ERR_SSL_VERSION_OR_CIPHER_MISMATCH

    Technoblog says (I will put the FIX information first);

    FIX / SOLUTION FOR THIS PROBLEM

    – Try non-secure non-encrypted website version, if available* (e.g. http://example.com – no s letter after http) – My comment: Try this fix last as it might be slightly risky.

    – Upgrade to Windows Vista or newer Operating System, if possible.

    – Use Firefox browser for these particular websites.
    My comment: Try this fix first. Firefox is great!

    – In Chrome 40 there was a temporary solution to manually over-ride minimum SSLv3 version support by visiting chrome://flags hidden internal settings, but this feature is removed in recent Chrome editions and no longer works.

    *Note: many websites today exclusively use secure HTTPS versions, redirecting you automatically to https and no plain http version is available at all.

    General Info:

    “- This error occurs only in websites which use SSL encryption and HTTPS secure protocol for access and information exchange (e.g. when URL address starts with https://example.com)

    – Additionally, it only occurs in websites that use SSL certificates with SNI (Server Name Indication) and ECDSA (Elliptic Curve Digital Signature Algorithm)

    – Specific components in latest SSL certificates are not supported in older operating systems (like Windows XP) in browsers such as Internet Explorer and Google Chrome.

    – Firefox seems to ignore the mismatch errors and websites will work just fine (other less known and popular browsers may or may not work, as well)”

  50. Ikonoclast
    February 9th, 2016 at 16:07 | #50

    @Julie Thomas

    I got “trick moderated” so here is another attempt at reply.

    ERR_SSL_VERSION_OR_CIPHER_MISMATCH

    Technoblog says (I will put the FIX information first);

    FIX / SOLUTION FOR THIS PROBLEM

    – Try non-secure non-encrypted website version, if available* (e.g. – no s letter after h t t p) – My comment: Try this fix last as it might be slightly risky.

    – Upgrade to Windows Vista or newer Operating System, if possible.

    – Use Firefox browser for these particular websites.
    My comment: Try this fix first. Firefox is great!

    – In Chrome 40 there was a temporary solution to manually over-ride minimum SSLv3 version support by visiting chrome://flags hidden internal settings, but this feature is removed in recent Chrome editions and no longer works.

    *Note: many websites today exclusively use secure HTTPS versions, redirecting you automatically to https and no plain http version is available at all.

    General Info:

    “- This error occurs only in websites which use SSL encryption and HTTPS secure protocol for access and information exchange (e.g. when URL address starts with h t t p s)

    – Additionally, it only occurs in websites that use SSL certificates with SNI (Server Name Indication) and ECDSA (Elliptic Curve Digital Signature Algorithm)

    – Specific components in latest SSL certificates are not supported in older operating systems (like Windows XP) in browsers such as Internet Explorer and Google Chrome.

    – Firefox seems to ignore the mismatch errors and websites will work just fine (other less known and popular browsers may or may not work, as well)”

  51. Julie Thomas
    February 9th, 2016 at 16:42 | #51

    Thanks Ikon, different browser fixes the problem. Apologies for the interruption.

  52. Chris O’Neill
    February 9th, 2016 at 17:11 | #52

    John Quiggin: “Here’s a recently published piece you could easily have found”

    I did exactly what you advised above John:

    it’s a good idea to do a search of the blog on “land tax”.

    Should I apologise for exactly following your advice? (Or believing I’m exactly following your advice.)

    Also: “making exactly the point to which you refer”

    That’s not true. I pointed out why owners would actually have some justification for opposing a new land tax (instant capital loss) and that an alternative based on economic rent did not have this problem. Your smh article did not mention these points.

    You tolerate all sorts of comments from people who agree with you John. Not so for those who dissent who you apparently believe deserve to be bullied. A very tilted playing field indeed.

  53. Ikonoclast
    February 9th, 2016 at 17:38 | #53

    @Julie Thomas

    No interruption. I am struggling to have original thoughts today or else the pseudo-original thoughts which I fondly imagine are original. A little technical problem paper-trail is a pleasant diversion at such times.

  54. Ikonoclast
    February 9th, 2016 at 17:48 | #54

    @Chris O’Neill

    I dunno. I think J.Q. is tolerant of dissenters. I dissent quite a bit. “Tolerate” has a range of meaning after all. J.Q. tolerates me but he still gets rather cranky with me and shows it from time to time. Usually, if I am honest with myself I can see I have provoked such a reaction. However, I am trying to acquire the ability to contest ideas (when I think they need contesting) without being personally annoying about it. Clearly, I have a long way to go.

  55. John Quiggin
    February 9th, 2016 at 20:04 | #55

    Chris, I’m tired of this. I provide this blog for free and don’t appreciate wasting my time dealing with ignorant and lazy comments like yours. Please take a week off commenting, and don’t come back unless you’ve decided to change your attitude.

  56. February 10th, 2016 at 00:15 | #56

    @BilB

    I think there is a defeatist mentality when it comes to taxing the rich and large corporations. Make the appropriate laws, provide the funds to enforce them, and enforce them.

  57. BilB
    February 10th, 2016 at 01:50 | #57

    Defeatist mentality? John Brookes?

    It ia purely practical. John Howard at a time of huge surplus gave very generous tax cuts to the top income earners. The Rudd gave them the second stage of those cuts, honouring an election promise (totally unlike LNP election pledges). Now those surpluses are gone and the budget is in significant deficit. It is only natural that some of those tax handouts to the high income earners are reclaimed to the treasury.

    Top income earners understand the practicality here. When there businesses are in a slump they call on their staff and workers to reduce hours, trim entitlements, and even take hourly rate reductions. They understand the necessity to contribute more during this time of reduced treasury income.

    I had a long discussion today with a long time friend who as an economist was an aid to a minister in the Whitlam government, after that was a successful representative for IBM, established a highly successful business producing financial software for many of Australia’s leading companies, and when he needed to retire Macquarie Bank organised a buyer for his business. ie highly regarded. I asked him what was his taxation rejuvenation plan.

    1. Address the larger of loopholes in the superannuation.

    2. Increase the top tax bracket.

    3. Rework capital gains taxation removing negative gearing.

    3. Cause multinationals to pay tax for the proportion of their business in this country.

    4. Apply a financial transaction tax.

    5. Remove the diesel rebate for mining and farming. Increase the tax on petrol.

    6. Reinstate the Carbon Price.

    If a party cannot run a surplus with those options available then they have no place being in Canberra.

    I was just reading an article where Morrison was saying the only reason for considering raising the GST was to be able to give tax cuts. ie eliminate progressive taxation altogether. WTF!

  58. Ikonoclast
    February 10th, 2016 at 08:02 | #58

    @BilB

    Experience to date has been that the LNP and ALP will never implement those measures. While either of those parties govern, the necessary changes will never occur. More concerning, Greece’s experience shows that even when the standard governing duopolies are thrown out, the new “left” party is still helpless. The reasons why such a “left” party with a full mandate still demonstrates complete helplessness and subservience to the global capitalist system would bear some analysis.

    Australia has signed the TPP but still has 2 years to ratify it IIRC. Given the current political duopoly mindset in Australia, it seems likely it will be ratified. Do we (the people) imagine that any tax measures more effectively taxing corporations will have any chance after the TPP comes into force? No. The people will continue to be impoverished. The super rich will get richer each year, on say a 5 year rolling average. Matters overall will get worse each year until something breaks. The people or the environment or both will break. Only at that crisis juncture can the system be changed.

  59. Ikonoclast
    February 10th, 2016 at 08:18 | #59

    As an aside from this topic, I mention a reference J.Q. and others might be interested in.

    Necessary Conditions: Theory, Methodology, and Applications – Edited by Gary Goertz and Harvey Starr.

    Chapter 6: Necessary Conditions in Case Studies: Preferences, Constraints and Choices in July 1914 – by Jack S. Levy.

  60. Ernestine Gross
    February 10th, 2016 at 10:16 | #60

    @BilB

    One of the roles of a progressive inheritance tax is to counteract the ossification of the wealth inequalities created by the ‘naive market’ ideaologies (neo-liberalism, neocons, whatever the preferred label), which have dominated policies for at least 20 years. It is not a total substitute for all other tax laws that need revision.

    There seem to be some people though, who talk ‘market’ and ‘competition’ and ‘lifters and leaners’ while aspiring to be little kings and queens with privileges and power.

    If the entire business sector would be populated by such people, nothing would work any more for quite some time. Since this is not the case, your argument is credible.

  61. Ivor
    February 10th, 2016 at 10:25 | #61

    If you read Piketty’s book closely enough (a bit tedious) you will see that his analysis is not simply based on patrimonial society but more precisely on patrimonial capitalism. But his actual discussion is mostly on trends and misery within the finances and reality of patrimonial society.

    Patrimonial society is the result of patrimonial capitalism. The obvious point (which I have yet to see in Piketty) is that if capital/income ratio increases and the rate of profit remains relatively stable – then the share of income going to Capital must increase. Piketty only shows that it does increase.

    Picketty, concerned with Capital labour shares, explicitly assumes there is a “right split” between Capital and labour. He even suggests that he finds that labor’s share may increase over the long run [p42]. This contradicts his findings that Capital’s share increases. Both cannot increase.

    His solution is of course – regulating Capital, and that is why everyone is invited or tempted to argue over taxes and fixate on public debt, to fight austerity and cuts to welfare state – not pursue revolutionary changes to the mode of production.

    Piketty then concentrates attention away from the labour Capital split and focusses on trends of his Capital / income ratio driven by unfair ownership of Capital.

    The worsening Capital Income trend is only possible because of the worsening underlying Labour Capital split.

    Piketty wants a tax on Capital and presumably would support social ownership. However this still maintains the central contradiction and socially owned enterprises can still operate as capitalists.

    We need a mode of production where averaged “r” is not greater than “g” irrespective of who owns it.

    As Corbyn and Sanders probably realise – this is socialism. You cannot have capitalism if r = g.

    Socialism is one policy completely missing in Piketty’s 600 page tract on addressing the problems of capitalism.

  62. John Turner
    February 10th, 2016 at 12:12 | #62

    @BilB
    A financial services tax, especially if it applied to international financial transactions has the advantage of putting a bit of grit into the system making speculative financial transactions less attractive.

  63. John Turner
    February 10th, 2016 at 12:21 | #63

    @Ikonoclast
    Ultimately I presume there must be some limit to this ratcheting up of inequality which otherwise is self defeating on a number of fronts. Ultimately some level of consumer demand must be maintained otherwise the whole capitalist system will collapse, those who benefit from its existence will surely not allow this to occur. Just as scary is the social disruption/societal breakdown that will inevitably occur if inequality continues apace. Even the super rich will not be able to protect themselves if the situation reaches that point.

  64. Ivor
    February 10th, 2016 at 14:05 | #64

    @John Turner

    Yes there is a limit to inequality and ineffective final consumer demand will lead to collapse but only after a raft of countervailing tendencies have been exhausted.

    We are still in this stage now although some have argued that around 2015 is a watershed point.

    I am not aware of any capitalist who has a policy that will surely not allow this to occur.

  65. Ikonoclast
    February 10th, 2016 at 14:38 | #65

    @John Turner

    Certainly, there are limits and it is self-defeating on a number of fronts. However, capitalists are not an homogeneous class so different segments have competing interests. Some operate purely selfishly and shortsightedly, and among the rest there is no consensus on how to manage the system best overall. In many ways they and orthodox economists don’t understand the system except how to game segments of it. It is clear that orthodox macroeconomics is in disarray. J.Q. has said as much himself. See his own post on this blog – “The state of macroeconomics: it all went wrong in 1958.” – January 5th, 2013.

    Opinions vary on which branches of heterodox economics might offer any solutions. I would favour an eclectic mix of ideas from Socialism (including elements of market socialism), Thermoeconomics and Functional Finance. I think something coherent could be synthesised from these elements. This is just my own view of course.

  66. Ernestine Gross
    February 10th, 2016 at 14:52 | #66

    I did read Piketty’s book closely, over a period of a few months. Be careful, Ivor, putting words into Piketty’s book.

    Piketty proposed, as a conceptual solution, a wealth tax (both physical and financial wealth). He is quite careful to discuss the limitations in practice. He is very explicit to distingush his work from that of Marx.

    His conceptual framework of ‘wealth’ is consistent with that in Radner’s mid-1970s model of an economy with a sequence of commodity and secuties markets. He used various data sources, trying his very best to use accounting data consistently. He used a version of the notion of ‘payback period’ (see Finance literature) together with macro-data to relate income to wealth data, sub-classified by ‘capital’ and ‘labour’. This is, IMHO, an original and very clever approach, nobody seems to be talking about.

    The much focused on relationship between r and g belongs to macroeconomics.

    In contrast to Radner’s model, where the finiteness of natural resources is in (the Arrow-Debreu type general equilibrium) model, albeit in an admittedly very abstract fashion, Piketty’s work does not deal with the importance of natural resource constraints. This is, IMHO, not a criticism of Piketty’s work but a fact that ought to be recognised. To this extent, Piketty’s work does reflect both, the limitations of macro-economics (growth mantra) as well as the mindset of financial capitalists (and, if you like, the Old Testament).

    Not long ago, I checked my intuition as to who within a society is interested in ‘economic growth’ (ie GDP growth) with an ex-colleague of mine who became a banker. He agreed it is private banks and the government who are interested because they generate net debt. Only if GDP grows is there a chance of being repaid (even if we ignore the pile of debt in the form of derivatives), nevermind who in the process goes bankrupt and who doesn’t.

    Piketty does give examples of aspects of past ‘patrimonial societies’. The point being that wealth concentration becomes fixed and even enhanced via inheritance. Given we have income taxes (and and and), which did not exist during the past patriomonial societies referred to by Piketty, and the data on Australia shows there is still a chance to counteract a ‘patrimonial society’, an inheritance tax seems to be a rather logical way to proceed.

    I am somewhat puzzled why the very interesting topic of JQ’s thread, as well as the previous one, receives so little coherent attention by so many commenters.

  67. Ivor
    February 10th, 2016 at 15:47 | #67

    @Ernestine Gross

    You now need to provide an example of putting words into Picketty.

  68. Ikonoclast
    February 10th, 2016 at 16:46 | #68

    @Ernestine Gross

    “I am somewhat puzzled why the very interesting topic of JQ’s thread, as well as the previous one, receives so little coherent attention by so many commenters.”

    I am puzzled why capitalism always has to be saved even at the risk of a humanly uninhabitable biosphere. It is clear that it is a system predicated on endless growth. Since endless growth is impossible, then endless capitalism is also impossible. You checked your intuition and your banker friend told you it was banks and the government who are interested in (endless) economic growth. You friend is mostly right. It is capitalists and governments who are interested in economic growth.

    Since endless capitalism is impossible, the real question is what new system must we develop? Asking any other question misframes the problem. Current tax problems are system relative problems and end when this system ends. They are not the real issue.

  69. Ernestine Gross
    February 10th, 2016 at 16:47 | #69

    @Ivor

    I know you can do better than point scoring. “Be careful” is not the same as “you have”.

    But, if you want a word, here it is: Picketty. (smiley)

  70. Collin Street
    February 10th, 2016 at 16:52 | #70

    > Patrimonial society is the result of patrimonial capitalism.

    Oh FFS.

  71. Ernestine Gross
    February 10th, 2016 at 17:08 | #71

    @Ikonoclast

    A minor point first. The banker agreed with my intuition. He did not tell me what it is.

    As to ‘new system to be developed’ (assuming the label you attach to the current one is meaningful), go for it, if you like.

    I am aware there are a lot of people in this world – 7 or 8 billion. Do you really believe I am interested in spending my time pretending I can develop a ‘system’ for all these people who, upon my relevation of the new system will bow and do as I say and, to make the project even more fantastic, all future generatons? To be quite clear, I am not interested.

    So, what is your opinion on the relevancy of a progressive inheritance tax and what properties of such a tax would you suggest?

  72. Ikonoclast
    February 10th, 2016 at 17:44 | #72

    @Ernestine Gross

    I will play a straight bat to that.

    1. Why be cryptic? Why not reveal your intuition?

    2. New systems are developed by humans all the time. Some by individuals. Some by groups. Some by societies. To be sure, there are both conscious design efforts and unconscious and inadvertent “design”, “evolution” and “fortuitous and unfortuitous discoveries/accidents” produced by large groups. If I were proposing that I was going to design and implement a large new political economy system all by myself, that would indeed by delusional. However, I am not aware that I ever claimed all the ideas I express are my own or that I claim I am the only person thinking along these lines or that I think I can do it all by myself and convince 7 billion people. Such implicit jibes are gratuitous.

    3. “What is your opinion on the relevancy of a progressive inheritance tax and what properties of such a tax would you suggest?” – It’s a system-relative post hoc remedy. I am not interested in keeping a patently failing and doomed system on life-support. I align myself with those who have enough vision to advocate system change.

  73. John Turner
    February 10th, 2016 at 18:21 | #73

    @Ernestine Gross

    In reading the exchange between yourself and Iconoclast I rather agree with Ikonclast that a complete system change is needed. As you say, there are around 7 billion people on this planet, around 1.5 billion have what might be termed first world levels of consumption requiring between .75 acres and 1.2 acres of arable land per capita to sustain it. With falling levels of arable land due to rising urbanisation and around 3 billion people in China and India aspiring to the same levels of consumption, it is fairly obvious that the present trends are not sustainable even with the existing population levels let alone the 9 to 12 billion the world population may actually reach.

    As suggested by others in this thread the levels of complexity involved effectively render a solution within the present capitalist paradigm impossible to achieve. We are on the road to a major disruption in every sense of the word and in every sphere of human activity.

    Seen in this context to talk about the subject of this thread I.e the advent of a patrimonial society in Australia seems somewhat surreal however, since individually I cannot do anything about the inevitable collapse of the present system, I am happy to discuss the mundane issues that affect my living in the here and now.

    Reading the various comments it would seem to me that there is a reasonable consensus that to tackle income inequality and the concentration of wealth does require both higher and more progressive rates of income tax AND the introduction of inheritance taxes. Other taxation measures also suggested above – clamping down on tax avoidance by multinationals, financial transaction taxes, reintroduction of carbon pricing, stronger capital gains taxes should also be in the tax mix to tackle the problem of the increasingly concentration of wealth and income in the hands of the few.

  74. Ernestine Gross
    February 10th, 2016 at 18:45 | #74

    @Ikonoclast

    I wasn’t cryptic. I spelt out my intuition with which my ex-colleague who became a banker agreed. It seems you overlooked it, which can easily happen.

    I believe this is the only matter I need to respond to.

  75. Ernestine Gross
    February 11th, 2016 at 02:56 | #75

    Here are some estimates on taxation revenue (and donations to charities) that could be raised from ‘death duties’ in Australia.

    http://www.smh.com.au/business/the-economy/call-for-death-tax-on-super-rich-families-20160208-gmp3du.html

    This taxation item seems to be moving on the table.

  76. Ivor
    February 11th, 2016 at 09:36 | #76

    While taxing wealth after it has damaged society is not the solution, it is a desirable moderating reform.

    However I would hope this was targeted at wealth that was obtained from exploitation of workers and not wealth that was earned by individuals own labour.

    This is most relevant in the case of family businesses where the wealth nominally owned by a deceased person may in fact be the wealth earned by surviving partner and children.

    So provided a inheritance tax was not a blunt tax over a single threshold irrespective of the political economy involved, then maybe more than Costello’s 5 billion could be raised.

    I see no need to allow exemptions for gifts to charities.

  77. Ikonoclast
    February 11th, 2016 at 12:02 | #77

    J.Q.,

    Can you point me to what you regard as your “manifesto work” or comprehensive statement of your full political-economic position. I think it’s a reasonable request. It would certainly assist me to understand and place in context individual pieces of your policy advocacy.

    Alternatively, you can just point me to a label. Your blog strap-line suggests you are an advocate of social democracy. A simple definition of social democracy is that it “refers to support for political democracy, regulation of the capitalist economy, and a welfare state”.

    However, if you did the latter, I would be left wondering why you regard social democracy as the “best of all possible” economies. You might be right. You might be wrong. But I would be left wondering about your deeper reasons for the adoption of that position. Your “manifesto work” or comprehensive explanatory work would enlighten me about your reasons. It might or might not convince me overall but it could certainly enlighten me about possibilities and benefits in social democracy I am either overlooking or dismissing out of hand. It might also offer convincing reasons why socialism cannot work.

    My ideas on many matters are in considerable flux at the moment. I am not as undeviating and fundamental as I might appear to be.[1] I tend to appear dogmatic when I argue my position(s) as best I can. In fact, I am always seeking dialogue and refutations which I do take seriously if I find them cogent and convincing.

    fn 1. I was reading an old article (circa 1930s) in which a British Socialist boasted that his group or party had “never deviated” on a particular point of doctrine. He was indeed essentially referring to what is properly called doctrine. I thought, “Nothing scares me more than people who never deviate.” A certain amount of flux and uncertainty in one’s position and feelings is necessary in confronting – or cooperating with – complex, ambiguous reality. Fuzzy logic considerations alone would suggest that a level of flexibility (ability to deviate, re-think, re-cast, admit personal error and so on) is adaptive.

  78. Blissex
    February 14th, 2016 at 22:06 | #78

    @Ernestine Gross

    «He agreed it is private banks and the government who are interested because they generate net debt. Only if GDP grows is there a chance of being repaid (even if we ignore the pile of debt in the form of derivatives), nevermind who in the process goes bankrupt and who doesn’t.»

    I hope that here «the government» means in understood to mean “the middle classes”, because even more so than the wholesale speculators («private banks») they are the main generators of net debt, to be paid later by someone else with «growth».

    One major example that has come up recently is the suburban and exurban sprawl, where the middle classes want low density housing with high cost urban infrastructure, but don’t want to pay the high taxes that result from sharing a lot of infrastructure among a few properties, and therefore have financed the building cost with debt, and don’t pay for the maintenance costs, because “growth” will solve it all.

    http://www.newgeography.com/content/004788-voting-with-your-feet-aaron-renn-s-new-donut

    The same applies to pensions, where the middle classes are massively undersaving and hoping that a strongly patrimonial society with capital “growth” of 8-12% a year will sort it all out.

    The sociologist C Crouch has called the resulting policy “privatised keynesianism”, common in anglo-american political systems. It is the situation where the property-speculating middle classes vote themselves the ability to borrow ever larger amounts of net debt, and an implicit government guarantee on it.

    An USA commentator summed it up as:

    «Rather than workable solutions, my party is offering low taxes for the currently rich and high spending for the currently old, to be followed by who-knows-what and who-the-hell-cares. This isn’t conservatism; it’s a going-out-of-business sale for the baby-boom generation.»

    So the main drivers of the (nominal) “growth” are in effect *the voters*.
    And “growth” in effect is an euphemism for “upwards redistribution”.

    So it is a big political problem to persuade the middle classes to cut significantly their standard of living, which is presently fueled by growing private and government debt, and wishful thinking is not going to make it happen.

  79. Blissex
    February 14th, 2016 at 22:16 | #79

    @John Turner

    «the subject of this thread I.e the advent of a patrimonial society in Australia seems somewhat surreal»

    Well, it has happened over the past 30 years, in Oz, the UK, etc: the property speculating middle classes have created a patrimonial society, where those who own property in classy Sydney etc. suburbs have seen r > g (and significantly so) for decades, and their heirs are just waiting for their turn as lords of the suburban micro-manor and the stream of rents and tax-free effort-free capital gains.

    Most voters in Australia, the UK, etc. want property price growth to be significantly higher than wage growth for example, and they got their wish for decades. There is nothing surreal about that, it has happened and continues to happen.

    Can you imagine the crucial property owning middle classes voting for a government with policies that result in wage growth higher than property price growth?

    And if not them, who else is going to be have the votes to return a parliamentary majority?

  80. Ootz
    February 14th, 2016 at 23:07 | #80

    Blissex, perhaps the middle class would come to the table if the obscenely wealthy were able to show real leadership with regards to fair wealth distribution and sustainable economic growth.

Comments are closed.