At what point will the rich decide they are paying too much tax?
I’ve been thinking a bit about economics lately.
There is something at the heart of our capitalist system that makes me feel a bit uneasy.
I really enjoyed hearing from Dr. Ian Harper at the last arrow residential conference. He is one of Australia’s most respected economists, and also a Christian.
I asked him a question that I had been thinking about for a while: “Doesn’t capitalism mean the rich will always get richer and the poor will always get poorer”?
His answer? Yes. He also pointed out though that despite a continual polarisation in our economy, the standard of living for the poor has been maintained over the last 20 years through our social security system, so net standard of living hasn’t in fact changed.
I was surprised at his answer but it made sense. Every year Centrelink hands out more and more money to more and more people.
It raises an obvious question: How long will that last? How long will the rich be o.k. with subsidizing the poor?
There is a common philosophy I have heard put forward, particularly by people in the top income bracket, that we should move away from the “nanny state” and people need to be made to stand on their own two feet.
The problem is, most of the people I have met who are wealthy, are wealthy for a range of reasons, not just because they are hard workers.
In his book “outliers”, Malcolm Gladwell points out that the truly successful people are not successful simply because of who they are, they are successful because of the opportunities that were afforded them by the people around them, mostly in their formative years.
Ha-Joon Chang, the author of Twenty-Three things They Don’t tell you about Capitalism says:
Equality of opportunity is not enough. Unless we create an environment where everyone is guaranteed some minimum capabilities through some guarantee of minimum income, education, and healthcare, we cannot say that we have a fair competition. When some people have to run a 100 metre race with sandbags on their legs, the fact that no one is allowed to have a head start does not make the race fair. Equality of opportunity is absolutely necessary but not sufficient in building a genuinely fair and efficient society.
I was struck that ANZ bank laid off 1000 people while recording multi billion dollar profits.
Our system measures our captains of industry, not on whether they made a profit but whether it was suitably larger than last years profit. This can be done in two ways, either by doing more business or by reducing costs. The CEO of ANZ said that business growth was stable so thats why they had to reduce costs.
Now there is 1000 more people dependant on social security, and the money they would have recieved is making its way into the pockets of senior executives in the form of bonusses or institutional investors in the form of dividends.
Something is wrong with the basic premise of all of that.
At what point will the rich decide they are paying too much tax and pull the rug out from under our social security system?
In the bible God introduced a year of Jubilee every 50 years that was designed to redress the balance, unfortunately it seems the Israelites never did it, possibly because those in power would be most disadvantaged.
Just a few ponderings…
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6 Comments
Jo otten
Loving the ponderings… Heavy, but real truth and reality !!
Jim van Ommen
Hi Matt,
I think the rich have already decided that, but have not quite got the numbers for a change of government at this stage,. My very sincere prayer is that this will not happen, but that does not mean that I believe all will be well with our present government. We live in a time when extreme right and extreme left no longer win governments, the major parties are canvassing both sides of the road to remain popular, especially with minority governments, they cannot afford to do otherwise.
In politics as in many other walks of life, nothing is black and white, merely shades of grey and I believe we need to be very discerning and choose the best out of a bad bunch so to speak. For me that is an unequivocal support for the party that best addresses opposition to capitalism, remains committed to the concept of a common wealth where we share in equity the resources of the earth, are committed to a culture that fosters equal opportunities for all and care for the under privileged. Extreme capitalism will no doubt go into the same direction as the US, still one of the wealthiest countries in the world, yet 23% of the population live below the poverty line and more people in jail per head of population than just about any other country in the world.
I have no doubt when the liberals have the numbers, capitalism will flourish at the expense of health, education and social welfare in general, because to them social welfare is a dirty word and is always handed out to those who are least deserving. Not only is that a gross misconception but more so a generalisation and justification for their greed and social superiority.
The year of Jubilee is a biblical concept that would never be embraced by any government, but in that context I have often wondered why is it that we take for granted the remuneration system that has existed for hundreds of years without amendment. Yes, we do give increases in accordance with CPI increases, but often on a percentage basis which further widens the gap between the rich and the poor. Can we actually justify from the Bible that positions of learning should be remunerated anything up to 10 times higher than physical labour ? Capitalism thrives on a class system where the worker remains sufficiently
uneducated so as to not rock the boat and is content to work for low wages to enable Australia to be competitive on world markets. In a global recession one would expect for all people to tighten their belts but, as with the ANZ bank, we are dealing with people at the top who consider themselves a cut above the average whose privilege it is to call the tune and exploit. Capitalism represents power and let’s be real, as we all know, power corrupts and can therefore never be the basis on which to form a government. One could argue that there are different kinds of capitalism and they are not all bad. Yes, there are also different kinds of human beings……………but “ not one of them is good”……….. according to the bible. It has been said before; man needs to be protected from man, and although all Christians know the ultimate answer to that protection, until society as a whole is prepared to put in place some basic restraints and principles of this philosophy as distinct from other political ambitions, we will continue our journey in uncharted waters with life boats only for those on the upper decks. ( and those who “ accidentally” fall into one).
Pete Haines
Well written, mate.
jim van Ommen
“People from wealthy backgrounds are more likely than poorer people to break laws while driving, take lollies from children, and lie for financial gain, a United States study says”,
This article was published on the ABC News website on 29 th Feb. 2012 and can still be accessed just by typing in the above sentence in Google.
An interesting article by psychologists from universities in Berkley, California and Toronto, Canada who completed an extensive seven part study on this subject of human behaviour from various socio-economic backgrounds. Their conclusion was :
“It really shows the extreme lengths to which wealth and upper-rank status in society can shape patterns of self-interest and unethicality.”
I thought this would shed some light on the link between wealth and capitalism that I mentioned before. That does not mean that all wealthy people are capitalists, or vice versa, but if the traits mentioned are considerably more prevalent amongst the wealthy, who at the same time represent the upper-rank in our society, it would be rather naïve for us to assume that they would behave more honourable in positions of influence and power.
The important question is; who of us would behave more honorably if we were wealthy, or should I say; more wealthy?
I know, I could have phrased this in the singular but I did want to have a bit of company.
Yes, that eye of the needle…….it’s a worry.
Jim van Ommen
On the news today we hear a mining magnate, just one of them, earning two million dollars every hour in a political climate that predominantly supports a party that wants to reduce the mining tax.
And all of this during a recession when 13 % of Australians live below the poverty line and we reduce our foreign aid budget by three billion dollars.
I had not thought that this was possible in a country that prides itself on a fair go for all, a country that is supposedly part of a Commonwealth.
I wonder where does the church stand in all of this. We may well pray that governments will share in equity the resources of the Earth, but when will we back our prayers with a vote for the party that best addresses these issues ?
Matt Garvin
Yep its a bit sad. Its a shame that the media attention to politics seems largely about either the latest scandal or the latest leadership tensions. It would be a relief to hear someone talking intelligently about what such massive inequality means for our country.