Left wing loopy, right wing rabid

Andrew Dickens writes about how reality is often far more complex than some commentators, journalists and politicians make out – Simple Answers, Complex Questions.

If there’s anything I’ve learnt in the years covering politics and economics it’s that not all left wing ideas are loopy and not all right wing neo-liberal thoughts are rabid.

The problem is both sides exaggerate both the benefits of their own ideology and the deficiencies in the opposite. In fact they exaggerate only their side of the argument and dismiss the rest out of hand meaning that both sides propose unbalanced and hence fundamentally flawed proposals. And then we call each other names. This is why talkback and parliament exists. Let’s face it. We’re tribal.

Forums like this often get tribal too. I don’t think tribalism should be suppressed, but it should be kept to a reasonable degree of jousting.

Politicians and the media give sound bite solutions to major problems while the people who actually have to fix them sit there in a world of grey. When it comes to health, education, law and order, the environment and the taxes to pay for it there are no simple answers no matter what some MP or media commentator tells you.

I agree that many political and social issues are complex and often with no simple solutions, but both media and politicians do their best to make it sound simple. However this often comes across as stupid.

Nowhere is this more evident than in the debate about poverty in New Zealand. One side screams there are 300 thousand kids in poverty. The other argues there are 100,00 people in hardship.

One side argues that the rich are deliberately creating the poor and uneducated and unemployed so they can become richer. The other argues there’s plenty of work and opportunity and free education out there and the poor are poor because they’re lazy and beneficiaries.

To me, there’s a little bit of truth in both those statements but it’s not one or other.

A common criticism of this sort of consideration is that it is fence sitting, beige, wishy washy. Considering the complexities of issues is none of those things.

Professor Gary Hawke, the author of the Hawke Report into tertiary education in the 80s, and I were talking about free universal tertiary education on the radio the other day and I said it was a simple political decision by the voters.

He’d love free universal tertiary education but it’s an inefficient use of taxpayers money. 50 per cent drop out so half the money is thrown away.

He favours spending more but targeting it to those people with ability and need. This is not the policy of either the left or right. But I think he’s probably right.

But targeted funding isn’t so easy for politicians to market as a policy. It’s sensible but more complex.

Nowhere is this more evident than in the debate about poverty in New Zealand.

One side screams there are 300 thousand kids in poverty. The other argues there are 100,00 people in hardship.

One side argues that the rich are deliberately creating the poor and uneducated and unemployed so they can become richer. The other argues there’s plenty of work and opportunity and free education out there and the poor are poor because they’re lazy and beneficiaries.

To me, there’s a little bit of truth in both those statements but it’s not one or other.

I disagree that “the rich are deliberately creating the poor and uneducated and unemployed so they can become richer”,  I think that’s nonsense. Most rich or well off people are decent people. And from a purely financial angle the less poor that people are the more money can be made off them.

O’Sullivan acknowledges this later:

I don’t mind the rich getting richer if along the way the poor get richer too. That’s the simple answer as long as you realise the questions are complex.

The loopy left and rabid right probably won’t agree but they are a small minority simple but unrealistic answers to complex questions.

“Inequality is a choice”

Anthony Robins writes at The Standard that Inequality is a choice.

Inequality is a choice. It isn’t a choice made by individuals, it is a choice made by governments.

‘Inequality’ far more complex than that. For a start it depends on how you define inequality.

I choose to make working for a living more of a priority than some, and I choose to put other priorities ahead of accumulating possessions and monetary wealth.

Having kids is costly on money terms but my children and step children and grand children are worth far more to me than a better bank balance.

There is no way a Government can impose and enforce equality. There will always be arguments over what is equal and what is not.

Even the Chinese Government has given up on trying to force equality of single child families, and they could never force women to have that one child anyway.

Robins doesn’t help his argument when he chooses to misrepresent facts.

The last Labour government chose to implement a higher top tax rate and Working For Families, these policies (though arguably too little too late) did reduce inequality. The current National government chose to cut the top tax rate, attack labour laws, and increase GST, these policies are increasing inequality.

Yes the current National Government chose to cut the top tax rate. And Robins chose to omit other pertinent facts, like the Government also cutting other tax rates and increasing benefits to compensate for the increase in GST.

This dishonesty is common from the left.

For facts see Budget 2010: Tax reductions in detail which includes:

Key tax changes
All personal income tax rates will be cut from October 1, 2010.
Income up to $14,000 will be taxed at 10.5%, down from 12.5%.
Income from $14,001 to $48,000 drops to 17.5% from 21%
Income from $48,001-$70,000 down to 30% from 33%
Income over $70,000 will be cut to 33% from 38%.

GST
GST will increase from 12.5% to 15%. Income support and other payments will rise by 2.02% to compensate for the increase. This includes student allowances and supplementary benefits, superannauation, veterans pension and the Working for Families tax credit.

Company tax
The company tax rate will fall from 30% to 28% from the 2011/12 income year.

The sting
While higher income earners will benefit from the government slashing the top tax rate, there is a sting in the tail of the budget that will hit wealthy in the hip pocket beyond just an increase in GST, which is widely considered to adversely affect the less wealthy the most.

Building depreciation tax deductions will no longer be allowed from next year, providing the building has a useful life of 50 years or more. This would include most rental houses and offices.

Robins also doesn’t discuss what effect these tax changes had on employment and the economy that were severely stressed by the Global Financial Crisis.

Honesty is a choice.

There are some choices related to inequalities, both personal and by Government. And there are many aspects of inequality that none of us can do much if anything about.

Inequality is a vague ideal that as far as I’m aware has never be achieved. Perhaps Robins or someone else can point to examples of sustainable equality in any human society.

I think that equality is the wrong goal.

Cunliffe versus truth

From David Cunliffe Speech to 2013 Labour Party Conference – Building a future for all:

One for the rich and powerful, who don’t pay their fair share of tax because they have smart accountants to ensure they avoid it.

Families who pay tax on every dollar they earn, pick up the slack for the mega-rich and the foreign corporations who don’t.

Five years ago, John Key told New Zealanders, “wave goodbye to higher taxes, not your loved ones’’.

But he only meant it for the privileged few.

He gave massive tax cuts to the rich that they did not need while he put up GST on everyone.

Cunliffe is supposed to be intelligent and financially literate – if so this means he is telling deliberate distortions and lies.

The tax cuts “to the rich” were not massive. Damien Grant writes in NZ Herald:  Poverty isn’t fault of rich

Key to the inequality fantasy is that New Zealand is a neo-liberal rich-man’s paradise but the facts do not support this.

Bill English said the top 12 per cent of households, those earning over $150,000, pay over three-quarters of all tax. To balance this, half of all households take home less than $60,000 and pay $2.7 billion in tax; yet they receive $8.1 billion in transfer payments. Half the population are net beneficiaries.

The tax increases were partly balanced by the increase in GST which costs them more as the biggest spenders.

And GST increases were balanced for lower income earners with income tax cuts, and beneficiaries had compensating benefit increases.

Cunliffe is speaking to an audience which is receptive to his dishonesty. Time will tell whether enough voters buy his bull.

“Tax The Rich!”

There’s a lot of talk about the rich getting “unfair” tax cuts, that they should be taxed more to fund deficits and anything else that the critic might want. It’s illustrated in this picture:

Could this be paraphrased?  “I want to take other people’s money to make things easier for myself”.

From the same ones who criticise people for taking money off the poor so they can get rich.

  • Tax the rich, fund education
  • Tax the rich, fund poverty
  • Tax the rich, fund multi (non-contributing) father beneficiary families
  • Tax the rich, fund education…while I’m a student
  • Tax the rich, fund education while I’m poor
  • Tax the rich, fund me?

Greens play rich versus poor

Russell Norman is promoting a Capital Gains Tax in part by playing the rich versus poor card.

Capital gains tax would hit rich, not poor  (ODT)
Rich people benefit from not having to pay a capital gains tax, Green co-leader Russel Norman says.

Class politics like rich versus poor is dirty politics, and it often ignores complexities.

I think we should have a good look at the merits and drawbacks of a Capital Gains Tax, but rationally and not emotionally.

Dr Norman said the research highlighted those on lower incomes earned money from wages which were fully taxed while the largest proportion of capital gains was earned by those at the upper end of the income spectrum and this income was untaxed.

This ignores a number of things, including:

  • People on relatively low incomes also benefit from untaxed capital gains
  • Most people on high incomes pay much more tax than those on lower incomes already
  • Capital gains are often used to finance retirement, including health care and care of the elderly, which reduces costs to the state
  • “Rich” people benefiting from capital gains often use that money for a wider circle of people who aren’t “rich”, for example for children’s education, parent’s care

It’s far from being a simple rich versus poor argument. Argue for CGT on it’s merits, not by promoting rich envy.

Ironically Green voters tend to be reasonably well off people rather than poor people.