Prebutting the CIS: Lifters and leaners, yet again

Robert Carling of the Centre for Independent Studies has just released a paper, with the title “Voting for a Living“, an even more offensive reprise of Joe Hockey’s “lifters and leaners” rhetoric of a few years ago. The Oz (no link) ran a report by  with the opening claim

The top fifth of households by ­income are almost entirely supporting the bottom 60 per cent of earners

Of course, this is absurd. The actual CIS paper centres on the fact that 60 per cent of the population receive more in benefits and public services like health and education than they pay in taxes, while the top 20 per cent pay more in taxes than they get back. The claim then is that the parasitic 60 per cent are voting for a redistributive state. That’s a long way from “almost entirely supporting”.

If this sounds familiar it’s because  Creighton made almost identical claims in 2014. I rebutted them at the time, in a piece for the Guardian. The key point is that,  since government spending and taxation must be approximately equal[1], we collectively get back from government what we pay in, whether this takes the form of cash payments or public services. So, if services are provided more or less equally, those with an income below  (above) the mean will get back more (less) then they put in. Add in the fact that, thanks to income inequality, mean income is higher than median, and you get the Carling result automatically.

The current version of the paper extends the 2014 analysis in a couple of ways. First, it has a broader coverage of revenue (including GST) and expenditure (including health and education). Second, it includes a claim that the position of the median household has shifted since the 1980s, from being roughly in balance to being net recipients. However, a closer look suggests that all of this change occurred between 1983 and 1993 that is, under the Hawke-Keating government. And, since there’s no data before 1983, we can’t say much about longer term trends.

The other notable change is that the report is even clearer in stating that there is no legitimate basis for asking high income earners to contribute to society as a whole, for example to reduce income inequality.

Shorter Carling and Creighton:  High income earners pay more tax than everyone else and that’s bad.

All this contrasts strikingly with last week’s rightwing talking points, making much of the relatively limited growth of inequality in Australia due, almost entirely, to the redistributive policies introduced under Hawke and Keating. The Oz was all over this, and one of their sources was none other than Robert Carling

 

fn1. A couple of qualifications on this, which work in opposite directions. Some government spending  is financed by growth in debt and income other than taxes, which means that, on average, by the Carling calculation, we get back more then we pay. On the other hand, some spending categories, such as defence, aren’t included, which goes the other way.

19 thoughts on “Prebutting the CIS: Lifters and leaners, yet again

  1. Carling and Creighton would presumably have objected to the fiscal policies of the Liverpool British government in 1815, generally regarded as the most reactionary in modern British history. It taxed landowners – the ruling class – to pay for a huge war effort, obviously redistributed towards the working class in the Army, Navy and munitions factories. Terribly unfair to Mr. Darcy.

  2. I remember Carling who together with Kirchner wrote an article in the AFR concerning expansionary austerity and had never heard of the demolishing of that stupidity by Daniel Leigh and others from the IMF.
    Definitely a person to take notice of ( sarc)

  3. The Centre for Incoherent Studies is at it again.

    The claim that the rich support the workers is the reverse of reality. The workers support the rich. Indeed, the claim is actually an “oversimplified reverse” of reality. Going a level deeper, the free gifts of the natural world and the activities of machines, machine systems and automated machines, as well as the activities of workers, support all people.

    Instead of follow-the-money studies we need follow-the-real-work studies (both human work and machine work). “Follow-the-money” studies reify (falsely concretise) the money system and thus conflate money and money flows with the real economy itself. Studying the money system in isolation gives a very inaccurate picture of the real economy. In much of the economic system, much of the time, money does not flow in accord with work flows. Money often flows according to ownership law, not according to work contribution effort. Also, money often fails to flow to where work is done. Money does not flow to people who do unpaid work. Women (mainly) do an enormous amount of unpaid work outside the formal economy. Women and men also do a large amount of unpaid work in the formal economy.

    The failure to understand the arbitrary, notional and even ideological nature of money and ownership, as constructed in a capitalist system, is at the root of the simplistic rubbish purveyed by the CIS and the OZ. They operate as propaganda organs for capital in general and plutocrats like Murdoch in particular. This “failure to understand” has a large element of deliberate deception about it. You can be sure that the “masters of capitalism” know they are running a scam system. Their true nature is exposed by the vast array of outright kleptocratic, crony-capitalist scams now occurring: everything from the Libor scandal and the Paradise papers to the behaviour of the Australian banks.

  4. James

    The majority of British revenue raised to pay for the wars came from the excise, which bore more heavily on the middle and poor (beer, candles, salt, cloth and much, much more). That said, neither Pitt nor Liverpool shied from taxing the rich – not just land tax but also the first income tax (2 pence in the pound over 60 pounds, rising to 2 shillings on incomes over 200 pounds – so the threshold would exclude the poorest).

  5. I’ll correct the above: given the lack of party control and the weak hold of PMs on parliament in the period, it would be more correct to say that the upper classes of the time did not shy from taxing themselves. An interesting contrast with the CIS view.

  6. “The actual CIS paper centres on the fact that 60 per cent of the population receive more in benefits and public services like health and education than they pay in taxes, while the top 20 per cent pay more in taxes than they get back.”

    Even if that is true whats their point? Is that a bad thing? What are they proposing? Cut back on health and education?

    They seem to forget that the bottom 60% have options other than “voting”. Pitchforks and guillotines come to mind.

  7. “They seem to forget that the bottom 60% have options other than “voting”. Pitchforks and guillotines come to mind.”.

    Yes, but not until after the football finals and the latest season of Masterchef.

  8. I am reminded of Alan Sugar bemoaning the fact that had to pay UK income tax because to paraphrase “he only drove on a few roads” when attending meetings in the country. Mr Carling totally ignores that the rich get far more out of society than poor people do. The armed forces protects the wealth of the rich from being seized by a foreign power. The police force arbitrates property disputes and in a cruder sense ultimately protects the wealthy from the poor. Financial system regulation is set up to assist the wealthy. Public education helps the businesses of the wealthy since, after all, they didn’t directly pay for their educated workforce. The Reserve Bank implicitly trades off inflation for unemployment and hence is another gift to the wealthy. Favourable depreciation and interest income tax deduction schemes? Not too many people on minimum wage make use of them.

    A common sense mindset would be for extremely high income earners to be thankful that they exist in a time which allows them to keep as much as they can earn (less a nominal amount) without the risk of widespread social upheaval. After all, what is ultimately better: grossing $100m per year (but crying about having to pay $10m tax towards the system that enables your accumulation of wealth), or having nothing because of pure greed?

  9. Smith9,

    Modern history appears to be showing that violent revolution is becoming both less likely and less likely to be successful. This seems to be true at least for developed countries. Representative democracy for all its imperfections and distortions by donations still provides citizens with some recourse. Also, whilst inequality is increasing, a developed country can still maintain even its poorest citizens at a level which keeps desperation lower than is necessary for violent revolution to appear as a viable option. The USA however appears set to break that “rule” if it continues on its current path. At that point, the second modern barrier to violent revolution becomes operative. The state and corporate apparatus of surveillance and violence are now far more effective than in the days of the French Revolution. There is a greater relative difference in the power of weaponry available to the state and to the citizens than was the case at the end of the Ancien Regime.

    Of course, the above is just a theory. I don’t claim to predict possibilities or lack of possibilities.

  10. Wait a minute:

    “The top fifth of households by ­income are almost entirely supporting the bottom 60 per cent of earners”

    If that is true then clearly the correct response is to stop taxing the bottom 60% since that taxation doesn’t appear to be doing anything. This would give the bottom 60% more disposable income at no loss to government revenue since the taxes they currently pay apparently just disappear. The benefits will be massive as without taxation I estimate that probably 70-80% of them will become high paid CEOs and entrepreneurs since it is taxation that makes people decide not to get high paying jobs or cure cancer.

  11. It is sickening to read this guff from the Centre for Independent Studies. Only this week it has been revealed that Amazon in Oz puts its entirely casual workforce (apart from some senior managers) through what sounds like a derivation on the Hunger Games and pays them minimum wage in return. Each employee has a performance target to meet and stopping work to have a wee can result in missing the target and not getting further shifts. Apparently employees to walk 20 km or so in a shift.

    Yet according to the CIS/ News Limited world view, these poorly paid yet obviously hard working employees are leaners not lifters. We are supposed to believe that the lifters are the Execs who pay themselves way too much and I think I can say, without fear of contradiction, are free to wee as and when they wish.

    From The Age:

    “One worker said a colleague advised them not to drink water before or during a shift because going to the toilet outside designated break times would affect their pick rate.

    “There’s a water cooler in the corner, but nobody uses it,” they said.

    Amazon said workers were allowed to use the toilet “whenever needed”.

    Two workers said employees were reluctant to report injuries for fear of not getting shifts on the physically demanding job, where workers are told to operate at “Amazon pace” – just below running speed – as they cover 20 kilometres on foot each shift.”

    ***www.theage.com.au/business/workplace/in-amazon-s-hellscape-workers-face-insecurity-and-crushing-targets-20180907-p502ao.html

  12. I suppose the question I always ask as to these class disparagement issues is, how do you actually measure and compare the existential stress of someone at the bottom compared to someone at the top. I am tired of bourgeois victimhood entitlement theologies and the sort of slur Prof Quiggin indicates.
    I am not rich, in fact, am on a pension, yet do not begrudge the wealthier person her or his income if gained through honest toil, or a struggler the chance of some sort of life without sneers or persecution even if they seem mundane people through birth or and (mis)fortune.

    What is this then that drives this downward envy thing with some wealthier people? Why not just feel blessed at having a quality mind, interesting work and a substantial income that probably makes a job less problematic and leave a poorer, less bright individual to their lousy uncertain wage or dole, without the vile, self-valorizing excoriation?

  13. Paul W. I share your existential pain yet…
    We may have read the same words but for me, your writing is replete with slur… and below may be taken as a slur, or as in dialogue, a request for clarity by revealing my reading of the words and articles.
    class disparagement issues
    Slur.
    at the bottom compared to someone at the top
    Slur.
    bourgeois victimhood entitlement theologies
    20 years study… and a slur.
    a struggler
    Slur
    sneers or persecution 
    Slur
    mundane people through birth
    Slur
    quality mind, 
    Reverse slur
    less bright individual 
    Slur
    lousy uncertain wage or dole
    Correcly slurred
    vile, self-valorizing excoriation?
    Slur

    Here is another slur… by Robert Carling http://www.cis.org.au/commentary/articles/the-storm-in-the-inequality-teacup/
    “not least by touring rock-star economists such as Piketty and Stiglitz — notwithstanding the different context.” I regard this too as a slur, but what do I know.

    I’d be happy to hear how you link your slurs to the 20 /60 tax in the post.

    Another slur… i have worked (ignorantly before reading this) 70 weeks of my working life for tax concessions, negative gearing and transfer pricing budget support. And my biggest slur, being insurance for banks without due, in my opinion, return. A slur on me in my opinion yet one I accept and reserve my right to write about with or without slurs.

    Every difficulty slurred over will be a ghost to disturb your repose later on. – Rabindranath Tagore

    Politics calls for robust debate and criticism, but this should never descend to personal and demeaning slurs – Kim Beazley

  14. Tax vs direct benefits received don’t reveal the full picture – the pluses on balance sheets that come from utilising labour are obvious ones, but there is the very existence – abundance – of people who can read and write and have various skills, healthy enough to be productive, that prior taxpayers ‘gift’ to future commerce. And there are the social programs that are pressure release valves that prevent the costs of anarchy from getting out of hand and eating away commercial opportunities and accumulated capital. Progressive taxation helped make those commercial opportunities and promoted the opportunities that entrepreneurs took advantage of; getting rich or just getting high incomes is, to a large degree, made possible through those contributions.

    It’s not a perfect system by any means but is far more effective and efficient than societies and economies that accommodate the desires of those on higher incomes to not pay tax; that seems well suited to maintaining the existing advantage of the already wealthy but will not do much to promote new wealth creation or opportunity. When every employer can hold wages to the barest minimum the spending power that drives so much economic activity will be suppressed and where taxation is held to the barest minimum the availability of healthy, eductated labour will decline.

    Accommodating the natural inclinations to pay lowest wages and least tax becomes self defeating; the best circumstances and those where those inclinations are moderated.

  15. I may have been flattened by the iron(y).
    Apologies Paul and all…. Reading up on irony I found litotes via wikipedia; “In rhetoric, litotes is a figure of speech that uses understatement to emphasize a point by stating a negative to further affirm a positive, often incorporating double negatives for effect.”

    Rog. Thanks for the link on poverty & stress. I will use this in a submission to ‘our less than existential govt.’ Litote?

  16. All is revealed.. my apologies, had my Irony detector switched off (red face).

    Oh well..onward and upward..ever upward.

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