215 thoughts on “Midweek Message Board”

  1. Alice,
    You are not reading my question properly. The question on private charity I said was legitimately up for discussion. You then asserted (and I have no reason to disagree at this point) that private charity was worse than government support. Fine – this is a debate about the means to support the needy.
    The question I was asking above was different. I am (for example) currently taxed and receive several payments to myself by the government, i.e. I pay tax and then I get some money back from the government, both directly and through several things I do that receive transfer payments from the government to pay for things that I otherwise would have paid for by myself. The cost of doing this is roughly 20% of the total amount taxed.
    Do you think it is a good idea to do this or should the government just stop making these payments and reduce taxation (by about 20% more than the expenditure) to cover the amount they no longer have to pay out?

  4. Andy – you are some micro example here and you have blatantly ignored the big questions on teh rich not paying enough tax and rising inequality and the Business Council calling for yet more infrastructure spending by governments AT THE SAME TIME as calling for more tax cuts.

    Why would I pay homage to your trite little example Andy. You said before yourself – efficiencies can be gained anywhere (private or public). There may be room for improvement BUT the biggest improvement the ATO can make is to have legislation that compels the rich to pay more tax. Simple right now yet you dont answer, I note, whether you agree with that?

    Do you Andy? You can answer me>.

    Im inclined to agree substantially with the following comment made by someone else on a blog somewhere.

    “The greatest economic heist on earth was the imposition of the floating fiat currency/free trade/no taxes on the rich regime. This trio of trouble is at the heart of the present Great Depression.”

    I agree. Its a trio that has enabled the wealthy to grow extraordinarily more wealthy in many (previously advanced) nations and exert greater pressure on governments and all other classes, which is exactly why the rich like and espouse these policies. To my mind, the very first correction required to claw back some of the power and influence of the elites and distribute it via government in a manner that supports sustainable growth and a greater degree of fairness (than exists now) is to raise taxes on the rich.

    The second method is legislate greater protection to labour and protect the right of labour to bargain collectively. This corrects inequality.

    The third is to restrain the speculative activities of the financial system which have run rampant, by banning derivatives and raising reserve requirements and capping the obscene salaries.

    Yet someone who is in government must act for the majority and the health of the economic system, not for vested interest groups and we may as well start with increasing taxes on the rich. We will see another devastating financial collapse if these measures are not taken. I have no doubt. Except it may well be worse, and what happens after that? Civil disruption is entirely possible if we keep going the way we have been. There has been a fundamental and distinct lack of order tolerated (and a lack of sound governance in what we previously thought of as “civilised” societies).Free trade has been allowed to erode the reach of long accepted corporations laws.

  5. Andy – you are some micro example here and you have blatantly ignored the big questions on teh rich not paying enough tax and rising inequality and the Business Council calling for yet more infrastructure spending by governments AT THE SAME TIME as calling for more tax cuts.

    Why would I pay homage to your trite little example Andy. You said before yourself – efficiencies can be gained anywhere (private or public). There may be room for improvement BUT the biggest improvement the ATO can make is to have legislation that compels the rich to pay more tax. Simple right now yet you dont answer, I note, whether you agree with that?

    Do you Andy? You can answer me>.

    Im inclined to agree substantially with the following comment made by someone else on a blog somewhere.

    “The greatest economic heist on earth was the imposition of the floating fiat currency/free trade/no taxes on the rich regime. This trio of trouble is at the heart of the present Great Depression.”

    I agree. Its a trio that has enabled the wealthy to grow extraordinarily more wealthy in many (previously advanced) nations and exert greater pressure on governments and all other classes, which is exactly why the rich like and espouse these policies. To my mind, the very first correction required to claw back some of the power and influence of the elites and distribute it via government in a manner that supports sustainable growth and a greater degree of fairness (than exists now) is to raise taxes on the rich.

    The second method is legislate greater protection to labour and protect the right of labour to bargain collectively. This corrects inequality.

    The third is to restrain the speculative activities of the financial system which have run rampant, by banning derivatives and raising reserve requirements and capping the obscene salaries.

    Yet someone who is in government must act for the majority and the health of the economic system, not for vested interest groups and we may as well start with increasing taxes on the rich. We will see another devastating financial collapse if these measures are not taken. I have no doubt. Except it may well be worse, and what happens after that? Civil disruption is entirely possible if we keep going the way we have been. There has been a fundamental and distinct lack of order tolerated (and a lack of sound governance in what we previously thought of as “civilised” societies).Free trade has been allowed to erode the reach of long accepted corporations laws.

  7. @Andrew Reynolds
    She said yes, Andy, her reason being that it doesn’t matter that a whole heap of money just got wasted, just so long as everybody gets the same amount.

    In short, it doesn’t matter if the pie gets a lot smaller, just as long as everybody gets the same (smaller) slice, regardless of the role they played in making the pie. So they don’t mind suffering from a smaller slice of the pie as much, just as long as everybody better off than them gets punished as well. It’s called cutting off the nose to spite the face.

  8. Or, as the great Morrissey once said, “we hate it when our friends become successful”.

  9. Alice,
    What a diatribe from a simple question – and one you have still failed to answer.
    I will try again – maybe making it a little more “macro” will get a meaningful response:
    How, exactly, can it be efficient or useful to take some money from the majority of the population, throw away 20% (or so) of it and then hand it back to those people as transfer payments, subsidies or in other forms?
    This is what the current system (which you appear to be defending) is doing. Surely it would be vastly more efficient if everyone earning below a certain threshold (and it could be pitched at about the median wage) paid very little or no tax at all and then, from the taxes levied on the wealthier members of our society or other possible sources of revenue, like a GST, some transfer payments were made.
    (Note here that I am not necessarily advocating this, just looking at efficiency).

  10. @Andrew Reynolds

    Andrew

    Plainly if your account of transfer payments were an adequate description of transfer payments, it would be pretty loopy. But plainly it isn’t, as the term “transfer” suggests. The state takes money from one group of people and hands it to another group — and not at a 20% overhead either.

    Nor is it even necessarily the case that taking someone’s money and handing it back to them at some later stage is irrational. That’s essentially what brokers do. It might be an exercise in risk management. Up until the early 1970s, there was a system in place called the Ever Normal Granary which operated on this basic principal with corn, for example. The system stabilised corn prices and ensured that the producer got a fair price for his grain, and that both producers and consumers were protected from the worst of price volatility and that inventories were neither too large nor too small.

  11. NB … the Ever Normal Granary system operated in the US … my apologies for leaving that out …

  12. @Fran Barlow
    No, Andy’s referring to “churn”, the process by which money is taken from the middle class and returned to… the middle class. This takes the form of family tax benefits, baby bonus/breeding incentive and other such entitlements, and the “administration fee” from taking your money and giving it back to you amounts to some 20%.

    That the state thinks itself justified in taking a portion of somebody’s income for “safekeeping” is a little too paternalistic, even for someone such as yourself. Originally people saved for unexpected contingencies, and it’s disturbing that people have not abrogated so many vital matters (health, education, retirement planning etc) to the state, and simply focus on expanding their CD collection and home theatre system.

    By the way, social spending as a percentage of GDP has risen from from 7% in the 1960s to about 18% as of the beginning of this decade, which begs the question: what are you loopy lefties complaining about? All this talk of market liberalism and Howard’s Brutopia, and all we’ve really been doing is rolling out the socialist program of which you’ve always dreamed!

  14. @Sea-bass
    Of course no one in their right mind would believe Sea Bass’s take on what I said.

    I certainly dont agree (and said nothing at all about) “everyone getting the same amount” (as interpreted by the fish) Well thats what reading the Telegraph for too long, subscribing to the IPA, or hanging in Catallyx does to you! I guess the economic subtleties and meaning of the word redistribution are just too hard for some to get their head around eh Sea Bass??.

  16. @Andrew Reynolds
    Fran answered it for me Andy and corrected you more than adequately. I grew too impatient to bother with the details you were demanding on some elementary micro issue. I shouldnt have to explain it Andy. You should know.
    Now Sea Bass apparently doesnt like JH’s generous family tax benefits. Thats funny – I wasnt fond of his middle class welfare either (or his tax deductions for super or his charity deductions rorts for the rich). Thats not redistribution. Thats theft of tax funds to keep yourself voted in by people who never needed the kickbacks. That was John Howard and we will be cleaning up the mess he made of public welfare and other systems for years to come.

  18. Sea-bass dealt with that more than adequately – so it looks like you think that forcing funds off someone and then wasting a chunk of it before handing the remains back to the same person is a good thing to do.
    Do you still call yourself an economist?
    .
    As for your question, perhaps instead of taxing some people more you could try stopping waste like that identified above would be a good start – unless you are in favour of deadweight loss, as you have said you are.
    Personally, that is where I would start.

  20. @Sea-bass
    Sea Bass

    says “Originally people saved for unexpected contingencies, and it’s disturbing that people have not abrogated so many vital matters (health, education, retirement planning etc) to the state, and simply focus on expanding their CD collection and home theatre system.”

    Actually I think you will find its mortgages.

    He also says

    “By the way, social spending as a percentage of GDP has risen from from 7% in the 1960s to about 18% as of the beginning of this decade, which begs the question: what are you loopy lefties complaining about? ”

    Unemployment and underemployment…

    and the muddle headed righties wonder why social spending has risen??? Hello??…(while the even richer righties…oh I hate myself for sinking to the same level as Sea Bass..but he asked for it…. have been trickling moet down their throats and into the urinal while asking for more labor flexibility?)

    Life’s tough, Sea Bass, when you are holding the whip and ripping everyone else off, including the ATO.

  21. Oh, and in your dream world of super-high income tax rates, what would inspire people towards greatness in the absence of adequate remuneration?

  23. @Sea-bass
    You have done it this time Sea Bass.
    What you are saying is, there is no possibility of “greatness” without money?? Ill leave it there. Goodnight.

  24. @Alice
    Unemployment? Yeah sure. Voluntary unemployment if anything, since people can just sit back and wait for the Centrelink cheques to roll in. Yeah sure, a social safety net is one thing, but what we have here is a social beanbag – or even better, a social hammock tied to the tree of moral decay and swaying in the breeze of rampant egalitarian mediocrity.

    And why is labour flexibility such an issue if unemployment is such an issue? Maybe these dole bludgers should try getting a job before they take the next step of worrying about labour flexibility, you know, cross that bridge when they get to it perhaps?

  25. Alice,
    Let’s see – according to the ABS (if I have read this correctly) that means (using June 2008 numbers) you would impose a supertax on anyone earning over $1079 per week (income at the top of P80 (page 16 of the link), or about $56,108 per year, with “out of control” people daring to earn the lofty heights of $1,360 per week, or about $70,720 per year.
    That means that the lowest paid Australian lecturer in economics is “out of control” as I understand they earn somewhere slightly north of $70,000. Our host here is definately, and massively, “out of control” as a good professor is paid considerably more.
    So – can we now dub you “out of control” and “deadweight loss” Alice?

  27. @SeanG
    Rubbish Sean – Ive barely even read Marx and my view isnt disposed towards communism either. Im on the side of balance these days and yes I do believe in redistribution and the need for higher income taxes on the rich (particularly now to correct large deficits that in part been generated by wasteful wars and handouts to private financial institutions and pink bats because the two former got transferred around the world). Neither view makes me a “lefty” as the term you sort of people like to bandy about. Try getting your heads around the concept of “sensible policy”. It does, however mean giving up on your holy grail of minimum to no governments, extreme deregulation and trickle down. They have a word for views like yours Sean. “laissez faire” except to me its just plain “lazy” and is biased toward the minority elite, and its been proved not to work many times since the 19th century. Decent economists with something of value to offer humanity have always had to fight this view Sean. Im sorry you are a carrier.

  29. I think we should move to next midweek message board. You three (Sean Andy Seabass) are a week behind but thats nothing new LOL!!!

  31. Alice,
    As a “…decent economist…” (I presume you meant you) does that mean you are “out of control” (i.e. earning over $70,000 per year) and/or in favour of deadweight loss? You seem, at the moment, to be both.

  32. It seems to me that anyone earning between 100% and 125% of average full-time adult ordinary time earnings for an ordinary working week (about $1197 last time I looked) can be called “very comfortable”. Above that until about 150% they are “well off”. Above that they are rich.

    That puts me in the “very comfortable” category, though not quite “well off”. Frankly, I think my taxes are a little low and I’d be happier with a higher threshhold for taxpaying and a higher rate from about 60K, with less deductibility for Medicare. Naturally I think those above my paygrade should also pay more on their margins and/or receive less benefits.

    It might be more efficient of course to simply raise the G&ST to about 15% and supply those at the bottom of the scale with compensating services and plus raise the threshholds and make low income payments payments.

  33. oops … should read …

    It might be more efficient of course to simply raise the G&ST to about 15% and supply those at the bottom of the scale with compensating services and plus raise the threshholds and make low income payments.

  34. @Andrew Reynolds
    Look Andy – just bear with me for a minute and Ill check the ato website – I suggest we start levying higher income tax rates on at least the top two percent ie income in excess of 112,000 per year. The top 0.5% earn incomes in excess of 233,000 per year – they can certainly handle it. I think we could even just do with the top 5%. Ill let you off those earning less than 100,000 a year.

    Now is that, is is that not a fair compromise Andy?

    Fran – not its not “more efficient” to raise tie GST or do I have to take up and explain another equity argument with you????????

    It may be more efficient but its not progressive Fran. You know that. I know that. In light of rising inequality which is pretty blatant and has been getting much worse under free market and de-regulation and trickle down idolatry, its obvious the redistribution system is failing on any progressivity measures.

    You seem to be of the “one penalty for all” school Fran and you are not considering progressivity properly.

  35. @Fran Barlow
    Fran

    “It might be more efficient of course to simply raise the G&ST to about 15% and supply those at the bottom of the scale with compensating services and plus raise the threshholds and make low income payments payments.”

    Its not enough Fran. That and raise taxes by a lot on people earning at least over the top 0.5%.

    They can well handle it and you would be amazed exactly how much over that threshold they earn. Heaps more.

  38. @Andrew Reynolds
    P80 – you fool Andy! P80 is the 80th percentile. The 8th decile. I suggested the top decile (top 10%). I also suggest the 9th decile (top 20 %) but I wanted to think about that. You dont listen.
    Top 10% go for it. Top 20% needs thinking about.
    St no stage did I meven raise decile 8.

    Jeez Andy – lets twist again like we did last summer?? Im used to you!!

  39. @Andrew Reynolds
    P80 – you fool Andy! P80 is the 80th percentile. The 8th decile. I suggested the top decile (top 10%). I also suggest the 9th decile (top 20 %) but I wanted to think about that. You dont listen.
    Top 10% go for it. Top 20% needs thinking about.
    At no stage did I meven raise decile 8.

    Jeez Andy – lets twist again like we did last summer?? Im used to you!!

  40. @Andrew Reynolds
    P80 – you fool Andy! P80 is the 80th percentile. The 8th decile. I suggested the top decile (top 10%). I also suggest the 9th decile (top 20 %) but I wanted to think about that. You dont listen.
    Top 10% go for it. Top 20% needs thinking about.
    At no stage did I even raise decile 8.

    Jeez Andy – lets twist again like we did last summer?? Im used to you!!

  42. Alice, AR said he was too busy to post on his own ozrisk website. But I find him banging on busily here. Methinks he’s lost a debate or two on his own website and is looking for soft targets here. Keep him occupied whilst I go to work on his site.

  46. Umm, Alice – have a read of the stats again. You have mis-read, methinks. The figures given are for the tops of each decile – i.e. P80 means that the cut-off for the top of the 80th percentile is the figure given, so exactly 20% are above that – the same for the P90 figure (which is why there is no P100 given).
    Oops – try again. I am confident the figures I have given are correct.
    Don’t worry – I made the same mistake first time I read them.
    .
    ABOM,
    Try again as well – I have posted a piece on ozrisk recently.

  47. Ummmmm Andy,

    For starters you are reading the mean income for people in that percentile P80. Its not “after that” number as a cut off Andy. That is the mean not the upper boundary. Anyway, this entire income distribution ABS publication which you have linked to isnt even likely to include the incomes of the wealthiest in this country because they are subject to privacy laws. Even the ATO does not publish them. You only have to read this document you linked to. It shows that the P90/P10 ratio has done nothing but rise over the past ten years, just as it has been rising since mid1970s. The top decile now commands 40% of total income. Then look at mean equivalised disposable income for the top quintile – 1,646in 07/08 up from 1124 in 02/03 a fairly hefty rise by comparison to any other quintile. So after tax this group is even better off Andy??, with a share of total of 40%. The wealthy are doing very nicely Andy by any measures and you clearly didnt read your own link too well.

  49. Alice,
    If your explanation is correct, why, at the head of the table, does it say “Income per week at top of selected percentiles”, not “Mean income per week of selected percentiles”? Perhaps an admission of error would be a good step – intellectually honest at least. You could then (assuming you earn over $70,000) class yourself accurately as “out of control”. We have established you like deadweight losses as well.
    As for “subject to privacy laws” that is arrant nonsense. There are no privacy considerations in this document as the ABS also publishes income by CCD – down to the level of 221 households. I know – I have seen the data and the bank routinely use it.
    Two errors. Any more? You fixed one of your own. Oh, yes – or was it just by accident that you missed the simple fact (again, from that table) that every single income group is now doing better than they were in 1995/96? Every single group. Yes – the top groups are doing relatively better, but what are you trying to achieve, Alice? Everyone having the same or everyone doing better?
    Careful – try to make a few less mistakes this time.

  50. Oh – and a little retraction and apology for calling me a “fool” when it was you that was wrong would probably not be out of order, either. The “fool”, if anyone here was one, was you.

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