CV19 Offensive Policy
Do you remember those big white sinks they had between two classrooms in primary school? They were used for washing things like paint brushes after art class, and sometimes mouths after recess or lunch time. If you happened to have what some call a potty mouth, and a teacher was standing within earshot, then you inevitably found yourself standing in front of one of those big sinks, leaning over the sink washing your mouth out with soap, the teacher standing in the doorway behind. Yep, it really did happen.
What I’ve learnt since then is not just that some words are considered offensive, but continual use of such words limits the growth in your vocabulary. The more you swear the less you need to think of a better descriptor. Simplifying language simplifies the thinking. Not unlike politicians who use euphemisms. Which is why it is sometimes necessary to use direct language to cut through the …. BS.
What’s got me worked up?
Morrison has announced a cut in the company tax rate and Industrial Relations (IR) reform as a necessary part of the package of reforms to manage the economic recovery from the pandemic. Let’s set aside for the moment that the Liberal party has nominated IR reform as a solution to every problem of the last 30 years. Instead, let’s call out the euphemism IR reform for what it is.
Class warfare!
Labor is usually the party accused of class warfare, and told to wash their mouths out, when they propose policies to achieve a redistribution of income. But the policies proposed by the Liberal party of company tax cuts and IR reforms will most certainly result in a redistribution of income – upwards – and is clearly an attack on people on lower incomes.
The result of IR reforms will be to lower the cost of labour – that means wages. There is no mechanism built into this solution for those wages to eventually rise again.
My view is that reducing wages and employment conditions is a form of trickle-down economics, in that the benefits clearly accrue in the first instance to people on higher incomes, as typically they are not targeted in IR reforms. The cut in the company tax rate is in line with trickle-down theory as it also benefits those who are already wealthy.
The assumption underlying trickle-down economics is the idea that if you implement policies that make rich people richer, increased spending on their part will see their wealth eventually trickle down and make everyone better off. The main policy used to achieve the increase in wealth for the rich is tax cuts on higher incomes.
Did someone just say Morrison is implementing trickle-down economics; in the face of an impending depression?
Stop me now, or I’ll be tasting soap again.
The transmission mechanism for the coronavirus, how it can pass from person to person, we now understand. Economists also talk of the transmission mechanism, how a change to a policy in one area eventually leads to changes in other areas of the economy. There is no transmission mechanism for the trickle-down theory; it doesn’t work.
Morrison is saying that these policies are essential for Australia’s recovery but I dispute that assessment. Businesses are not struggling to expand due to restrictive labour laws; they’re struggling to survive due to an enforced contraction of demand causing liquidity issues. Reducing the ability of people to jointly negotiate higher wages or improved conditions will not resolve the fundamental causes of the economic crisis caused by the pandemic.
On the government side in the class warfare are the directors of listed companies. During this quarter company directors had decisions to make on who should wear the cost to their company of the economic slowdown: shareholders or staff. There are companies that are still paying dividends while requesting their staff to take pay cuts. This decision is clearly in the interests of the wealthy at the expense of workers.
Interest rates are at historically low levels, real wages have not grown for many years – cost is not the issue – demand is. Stimulating aggregate demand is the place to start the economic recovery; not cutting pay and conditions.
Trickle-down economics doesn’t work in theory and hasn’t worked in practise, but Morrison has announced it as part of his recovery solution, so you know what that means don’t you? We’re all ….. pardon my French.
