Easytax redux redux

John Quiggin29 Comments

I got a brief run in the Murdoch press regarding Pauline Hanson’s revived proposal for a 2 per cent tax on all transactions (floated 20 years ago as “Easytax“). I was reported as follows: “University of Queensland school of economics professor John Quiggin said a 2 per cent tax would destroy small business and see a collapse in government ­revenue.” and the story was headlined “One Nation policy would ‘collapse the economy’” The headline is an exaggeration, but the quoted passage gets my opinion right.

Easytax is an example of a “cascade” tax, common in Europe a century or so ago. The point is that the tax rate is applied to the whole value of each transaction along the chain from primary producer to consumer. For a big firm, like Woolworths, the answer is simple: integrate backwards along the chain by taking over your suppliers. Then you pay the tax only once at 2 per cent. Small businesses, who can’t do this, end up paying the tax themselves, on goods that have already been taxed many times. So, they go out of business, and the total value of transactions falls far below the level used in the original calculation that a 2 per cent tax would be sufficient. Hence, government revenue collapses.

It was precisely because this process was happening that the French (the innovators in this field) dumped the cascade tax in favor of a value-added tax (VAT), the same model used in the GST. They were followed by the rest of the EU and then most of the world, except the US, which still relies on retail sales tax (levied only once, but still messy and narrowly-based).

The story also says “A spokesman for Senator Hanson said she had only advocated investigating the policy.” But the fact that such a nonsense idea is still part of One Nation thinking gives the lie to the suggestion of Hanson’s coalition partners in the LNP that this iteration of One Nation is different from the last. It’s just as racist and ignorant as ever. It’s not Hanson that has changed, but the LNP which is now indistinguishable from One Nation.

Why we should put ‘basic’ before ‘universal’ in the pursuit of income equality

John Quiggin30 Comments

That’s the title of my latest piece in The Guardian. There are two key points

First, in terms of effective tax rates and tax paid, any means-tested Guaranteed Minimum Income can be replicated by a non-tested Universal Basic Income, and vice versa

Second, for a number of reasons, it would be better to begin by expanding access to an adequate Basic income (in Australia, the Age Pension is an obvious benchmark) rather than starting with a small universal payment and then increasing it to a level sufficient to live on.

Trumpism in Australia (crosspost from Crooked Timber)

John Quiggin37 Comments

I’ve had this post in draft for a while, not entirely satisfied with it, but on the rare occasion of Australia making the front pages of US papers I thought I should post it on Crooked Timber ready or not. It’s for an international, largely US audience, but readers here might be interested. I posted it just before the apparent confirmation that Bernardi will Bolt.

After the cataclysm of Trump’s election, quite a few US-based friends asked me about moving to Australia. I had, as they say, good news and bad news. First, the bad news. Over the last few years, Australia has had no less than four Trumpist political parties, two of which currently form the government. We may yet get a fifth. The goods news is that, in most respects, they have been surprisingly ineffectual. That’s, partly because of constraints in our political system and partly because of the inherent limits of Trumpist politics.

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“White, heterosexual Christian” isn’t an identity?

John Quiggin24 Comments

At the Oz, Paul Kelly has a piece headlined’ http://www.theaustralian.com.au/opinion/columnists/paul-kelly/donald-trumps-election-a-rejection-of-identity-politics/news-story/147b11c08b64702d3f9be1821416cb72. This is bizarre, given that Trump’s appeal was obviously directed at white, heterosexual Christians upset that the US is no longer being run entirely by and for people like them.

In a sense, it now is. Trump’s Cabinet, like the Republican party as a whole, is overwhelmingly reflective of the identity politics of a former majority unwilling to adjust to the reality that it is now a minority. The vagaries and the biases of the electoral system have given this minority a lot of power, but it is fragile and tenuous. It’s precisely this fragility that is giving Trump’s brand of identity politics its ferocity.

Of course, Kelly’s unstated premise is that “white, heterosexual Christian” isn’t an identity, it’s just the norm against which deviant identities are defined. This is on a level with the kind of low-grade bigot who uses the term “ethnics” to describe people of all ethnicities other than Anglo-Celtic.

The TPP fiasco

John Quiggin19 Comments

Until now, I thought of Malcolm Turnbull as clever but weak, unwilling to challenge the right wing of his party even as they drive his government into the ground. But his handling of the Trans-Pacific Partnership over the last week has left me with the impression that he doesn’t have a clue.

To recap, it’s been obvious for a long time that the TPP was in serious trouble. Both candidates for the US Presidency opposed it, and Trump was particularly vociferous in his denunciation. It’s also important that, within the US policy establishment, the most potent argument for the TPP was that it would cement US leadership in the region, and lock China out.

So, I would have imagined that the Turnbull government would have thought through the consequences of a US withdrawal from the TPP, even if they were surprised by the actual timing. In particular, I’d have thought that Turnbull would have discussed possible responses with Japanese PM Abe when he visited the other week.

So, I was pretty startled when Turnbull floated the idea of bringing China into the TPP to replace the US. At least from the viewpoint of the US and Chinese foreign policy establishments, that would amount to switching our support to China, or least shifting towards neutrality, in struggles about the future of the region. Given the risks posed by an alliance with the US under Trump, there’s an arguable case for that, but it would be a very big move. Turnbull’s floating of the notion seemed like a thought bubble, or maybe a thoughtless bubble.

Even more striking was Japan’s immediate rejection of the idea, accompanied by a repetition of the forlorn hope that the US might come back to the deal. Honestly, how could Turnbull have had a lengthy meeting with Abe and failed to elicit an indication that his proposal would be rejected out of hand?

Finally, as an aside, how about his churlish decision to give an AC to Julia Gillard but not (unless it was offered and privately rejected) to Kevin Rudd? At least Abbott was consistently tribal in his breach of the longstanding convention of making this offer to an outgoing PM (after they’ve left Parliament). With Turnbull it looks like personal vendetta.

Tu quoque, revisited

John Quiggin45 Comments

Slightly lost amid the furore over the alleged Trump dossier was the news that Trump had held a meeting with leading antivaxer Robert F. Kennedy Jr. As is usual, particularly with the Trump Administration, accounts of the meeting differed, with RFK claiming Trump had asked him to lead an inquiry into vaccine safety and Trump apparatchiks denying any firm decision had been made.

This interested me because, on the strength of sharing his father’s name, RFK Jr was, for many years the poster child for those on the right who wanted to claim that Democrats were just as anti-science as Republicans. (I’ve appended a post from 2014, discussing this.) Now he’s eager to work for Trump.

I pointed out the likely emergence of vaccination as a partisan issue in another post. Lots of commenters were unhappy about it, and it’s true that it’s unfortunate in the same way as is the partisan divide on global warming, evolution and just about any scientific issue that has political or cultural implications. But, whether we like it or not, it’s happening and likely to accelerate. The sudden reversal in Republican views on Putin, Wikileaks and so on illustrates the force of loyalty to Trump. We can only hope that, for once, his team’s denials turn out to be correct.

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