Tagged: business

Miscreants

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The earth turns, the grass grows, the Press publishes articles with zero analysis or respect for human dignity.

Capitalist society marginalises young people, complains about marginalised young people interfering with the smooth running of capitalist consumption, and thinks the solution is to scapegoat them and hide them away.

Let’s drive away the intimidating, anti-social, miscreant capitalist system from our city centre/world.

Inequality is equality

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Well, I didn’t intend two blogs about Bill English in a row, until I saw this press release, where he cynically manipulates statistics to try and show that inequality is equality. English claims the tax system has become “more progressive” since National’s 2010 tax changes, because a higher proportion of income tax revenue is coming from the richest earners.

He’s ignoring one rather important point about income tax: You pay a lot of income tax if you earn a lot of income.

It’s not surprising that the top 12% of households (and 6% of individuals) are paying proportionately more income tax than they were in 2008, because they’re earning proportionally a lot more money. (The above graph shows the top 10%’s incomes rose from about $85,000 to $100,000 from 2008-2011, while the median income stagnated at about $30,000).

Simply put, the rich are contributing a bigger slice of the tax pie because they’re earning a bigger slice of the income cheesecake. This is not something to be happy about, and certainly doesn’t mean taxes are more “progressive.”

Let’s go back to high school for a sec: A progressive tax system partially offsets inequality by taxing higher incomes proportionally more than lower incomes. Income taxes are typically progressive (e.g. Bill English’s $297,400/yr is mostly taxed at 33%, while his toilet cleaner’s $14/hr is mostly taxed at 17.5%). Sales taxes like GST are flat (15% across the board), but in practice regressive, because they take up more of the poor’s incomes than the rich’s.

National’s 2010 tax changes made tax more regressive – the lowest income tax band (under $14,000) dropped 2%, while the top band (over $70,000) dropped 5%. Company and investment tax dropped too, but GST increased. Basically, in a time when tax needs to get more progressive to help combat inequality, National gave tax cuts to the rich instead.

Nothing about NZ’s rapid slide to inequality, this pro-inequality government‘s policies, or the statistics English misuses can possibly be called “progressive.”

Pathetic justifications for pathetic wages

slavery minimum wageWell, they’ve passed the youth rate bill… Certain workers aged under 20 can now be paid at 80% of the minimum wage; a pathetic $10.80 per hour before tax. This comes a month and a half after a living wage was calculated to be about $18.40 per hour.

One thing I’ve noticed from the Facebook arguments I get myself embroiled in… Every time a debate comes up about the minimum wage, somebody makes the same tired point: if you raise the minimum wage too high, employers won’t be able to afford to provide jobs any more, or people with no skills will be priced out of the market, or workers will be costing employers more than they’re earning them, etc.

That’s of course true, but all it shows is that that the minimum wage CAN be too high, it doesn’t show that (or when) it IS too high.

You can’t just point out that sometimes a minimum wage can be too high and conclude that NZ’s minimum wage in March 2013 is too high (or as high as possible).  That’s not an argument, that’s just pure ideology without anything linking the theory to the present real life situation, therefore it can have no bearing on the present real life situation.  An argument would need to demonstrate that this theoretical danger is likely to happen at current wage levels, here and now… using research and evidence from here and now.

In fact, the evidence shows quite the opposite.  In the terse words of Treasury: the fear about minimum wage increasing unemployment “has not been true in the past. The balance of probabilities is that a higher minimum wage does not cost jobs”.  Increases in the minimum wage have not increased unemployment in recent history (if anything the relationship is the opposite, though it’s not a causal one: minimum wage has been kept low and unemployment pushed up by poor economic conditions and neo-liberal economic policy).

If we accept that it is desirable to have a minimum wage, we accept that it should be high enough to provide a decent living, without being so high that it reduces jobs.  The only matter for debate is where the balance is.  The Living Wage research indicates that our minimum wage is currently failing to achieve that balance, but the problem is not that it’s too high for employers to pay, it’s that it’s too low for workers to live on (and, by the way, John Key agrees).

Now the politicians are struggling too?

tremain comic mp pay

“Should the nation’s wealth be redistributed? It has been and continues to be redistributed to a few people in a manner strikingly unhelpful.”
– Kurt Vonnegut, Timequake, 1997.

Just like every summer, the Remuneration Authority has announced a back-dated pay-rise for MPs, and just like last summer, they’re claiming that we should actually be feeling sorry for politicians, because their pay is rising slower than average wages, and certainly slower than inflation.

This spurious justification completely misses the point that in the worst financial times since (arguably) the Great Depression, those who are earning at a luxury level – and can live without some of their excess – should be asked to sacrifice more than those who are struggling to make ends meet.  Still more so when they are so-called public servants whose pay is symbolically significant.

Unfortunately, it seems that the current government’s stance is pretty much the opposite of this principle – they’re willing to protect a tax system that’s “very generous” to the rich and an environmental policy that’s compassionate towards polluters, even if it means they have to claw an extra $2 from poor people’s prescriptions.

All pay should rise by the level of inflation by default, but as long as politicians are earning more than 99% of their people, they should willingly exempt themselves from the right to a pay-rise in these difficult times, as Hone Harawira has done the last two years.

Better yet, surely this economic climate is a pertinent time to rethink the ridiculous salaries and perks politicians, CEOs and other high-status personages receive?  Underlying the Remuneration Authority’s crude proportionalist argument is the assumption that what everyone earns is what they deserve, but the numbers are making that assumption less and less plausible.

Un-elected public service executives’ salaries are even worse than those of elected politicians, and in the private sector, worse still.  Over the past ten years we’ve had very healthy economic times and then we’ve had a recession, but one thing has remained consistent: CEO salaries have continued to grow and grow, and are getting more and more out of proportion to workers’ pay.

We all know this, so why do we tolerate it?

Bosses’ salaries and child poverty are two of the most extreme symptoms of inequality, which is at an all-time national high.  In order to fix either poverty or excessive salaries, we’ll need a massive mindset shift: we’ll need to stop pretending inequality, poverty and excessive wealth aren’t problems, we’ll need to put to death the delusion that people automatically deserve whatever pittance or fortune they receive, and we’ll need to develop an of the causes and effects of inequality.  And we’ll need to gain more control over our workplaces and government, so that we can attempt to halt the banal and relentless redistribution of our wealth into the hands of a few.

emerson comic dpb mp pay

Brownlee’s latest emission

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This blog is intended to be read whilst listening to the below song.  The above picture made sense in my head, if nowhere else.

Generally speaking, I think it’s a pretty good idea to internalise externalities, by taxing activities and products that impose a social or environmental cost on the rest of the world, and subsidising those that deliver a social or environmental benefit.  So I support petrol taxes, mostly as a way to off-set the environmental damages of burning oil (particularly if the tax income is used for that purpose), and as a way of bringing the price of petrol as close as possible to the real cost (personal, social, environmental; past, present, future).  This will hopefully reduce the use of petrol, as people who have to pay for the full consequences of their transport choices will be more likely to use public transport, cycle, carpool, etc.

So the latest petrol tax increase may have some accidental environmental benefits.  Emphasis on ‘accidental’, because Gerry Brownlee doesn’t mention it in his announcement.   He openly admits what Julie Anne Genter from the Greens exposed last month; that this tax rise is primarily about covering the $1.7 billion short-fall for the so-called “Roads of National Significance” plan.  This is why the Greens oppose this tax increase; it’s not about reducing petrol use, but encouraging petrol use by sinking $14 billion dollars into un-needed, uneconomical highways.

Brownlee probably knows better than to spin this as an environmental measure, because it would illustrate a stark double standard: it would be the opposite of their stance towards business and agriculture.  For these other major polluters (and National’s main backers), they’ve shown compassion in these tough economic times, and given them longer before they have to start paying for the social and environmental costs of their emissions.  The taxpayer can pick up the tab for a bit longer.

There’s another double-standard whereby this government, who “want to cut taxes, not raise taxes” according to the John Key quote in the above Home Brew song, are relatively trigger-happy when it comes to increasing GST and other sales taxes.  Some of these do off-set (or over-compensate for) external costs of harmful substances.  But if they’re just income-gathering measures like in this case, it’s worrying that they’d rather earn income this way than by putting income tax back up, or by introducing capital gains or financial transactions taxes.  Sales taxes tend to be regressive; disproportionately hitting the poor, while the latter are progressive; disproportionately hitting those with disproportionately high incomes and wealth.

IrishBill at The Standard points out another double standard, particularly pertinent to Brownlee; they’re happy to levy the ordinary motorist to pay for their idiotic motorway plans, but they’re not willing to implement a temporary, progressive levy for the Christchurch rebuild (because of the fragile economic climate, of course… not because of their priorities, choices and philosophies).

Actually, all of these double standards reveal a lot about the political philosophy underlying this government… Ordinary people are able to tighten their belts, while the rich need financial assistance.  We all have to make sacrifices, apparently, but on a religious level, these are sacrifices to the gods of the neo-liberal market capitalism, and on a material level, they’re sacrifices to the rich.  “Socialism for the rich, capitalism for the poor” indeed.