OZ Voters reject low taxes, labour market deregulation & small govt

[neddy]

http://afr.com/p/opinion/liberals_must_stand_up_for_what_Y9F4yX7VdTpKquFimT15NI

The Liberal Party of Australia is one of the great centre-right parties of the Western world. Unfortunately it is suffering from an acute version of an ailment common to such parties. Its core beliefs - small government, personal responsibility, deregulated labour markets and low taxes - are in retreat.

The charitable view of the Turnbull leadership strategy is that it is avoiding trumpeting unpopular policies such as low taxes, labour market deregulation and smaller government in order not to turn swinging voters off before the worm turns and they seek an alternative.

The principled view is that the alternative government needs to make sure that voters know what it core beliefs are, unpopular or not, because even when the voters inevitably tire of the Labor government, they will not turn to an unknown quantity.

 

[Ash007]

Probably because after 11 years under Howard the Australian public saw how bad having a small government, deregulated labour markets and low tax can be. In a way, Howard's policy is an attempt to make Australian more like America. Thank god he was voted out. Go KEVIN!

http://afr.com/p/opinion/liberals_must_stand_up_for_what_Y9F4yX7VdTpKquFimT15NI

The Liberal Party of Australia is one of the great centre-right parties of the Western world. Unfortunately it is suffering from an acute version of an ailment common to such parties. Its core beliefs - small government, personal responsibility, deregulated labour markets and low taxes - are in retreat.

The charitable view of the Turnbull leadership strategy is that it is avoiding trumpeting unpopular policies such as low taxes, labour market deregulation and smaller government in order not to turn swinging voters off before the worm turns and they seek an alternative.

The principled view is that the alternative government needs to make sure that voters know what it core beliefs are, unpopular or not, because even when the voters inevitably tire of the Labor government, they will not turn to an unknown quantity.

 

[neddy]

It is well-known that the convicts that made early Australia were mostly convicted of left-wing "crimes".

 

[neddy]

The MYTH of our times = that low taxes encourage corporations, employers and entrepreneurs to create high-paying jobs.

The counterintuitive historical truth is that a progressive income tax regime with over 90% for top-bracket incomes actually encourages management and employers to raise wages.

The principle behind this truth is that it is easier to be generous with the government’s money.

In the past, when the top corporate income tax rate was over 50% and the personal income tax rate at over 90%, both management and employers had less incentive to maximize net income by cutting costs in the form of wages. Why give the government the money when it could be better spent keeping employees happy?

In the US, the Reagan "revolution", as inspired by voodoo supply-side economics, started a frenzy of income tax rate reduction that invited employers to keep wages low because cost savings from wages would produce profits that employers could keep instead of having it taxed away by high tax rates.

It follows that the low income tax rate regime leads directly to excess profit from stagnant wages, which leads to over-investment because demand could not keep pace with excess profit due to low wages. Say's Law on "supply creating its own demand", which supply-side economists lean on as intellectual premise, holds true only under full employment with good wages, a condition that supply-side economists conveniently ignore.

To keep demand up, workers in a low-wage economy are offered easy money in the form of subprime debt rather than paying consumers with living wages, thus creating more phantom profit for the financial sector at the expense of the manufacturing sector. This dysfunctionality eventually led to the debt bubble that burst in 2007 with global dimensions.

 

[neddy]

....

Since the widespread acceptance of low income tax rate regime in the US, wages began to stagnate, while the financial elite was keeping luxury-goods maker busy by using the pension funds of workers to move jobs to low-wage economies overseas. As American workers marvelled at the low-price imports at Wal-Mart, and their pension funds were giddy with high returns, their own jobs at home were disappearing as the wages and benefits of those still working fell below living wage levels

The average American wage earner has very little reason to support a lowering of the top rates in a progressive income tax regime if they understand that employers would rather give tax savings to employees in higher wages than pay high taxes to the government, given the same after-tax net profit.

But the Wall Street Journal or CNBC would never tell workers that basic truth. Rather, workers are told that high taxes lead to high unemployment to scare wage earners into voting for still-lower progressive rates that only benefit those who have been oppressing workers with the workers' own pension money.