What are we aiming for?

I originally wrote a much longer blog post but it was just too ranty, so I’ve kept it shorter and more for thoughts and questions. On my drive home the other evening I saw a dead koala by the side of the road next to an area of previous native bush, freshly cleared for a housing estate. So I’m angry and depressed.

There’s been a lot of publicity about coal seam gas (CSG), global warming and other environmental issues, but it seems ultimately that both major political parties support ongoing population/economic growth to the explicit detriment of the environment. I’ve been following the excellent series of articles in The Conversation on species under threat of extinction in Australia. It makes for quite depressing reading, but there’s one article that really drove home the almost sheer hopelessness of what humanity is doing to the planet: this article on the Leadbeater’s Possum. Here in Queensland, we have Campbell Newman reportedly advocating a position that the protection of koalas should not come at the expense of economic development through mining.

It seems to be, given the fact that we can’t (don’t want to) stop ‘iconic’ species like koalas and Leadbeater’s from being pushed to extinction, let alone the countless other animals, plants and insects that you’ve probably never heard of, that ‘sustainable development’ is the biggest load of bullshit ever shovelled. Even the environmentally useless Greens espouse the concept.

So is there a point where we’ve lost too much? Or are you happy for economic growth (which is completely predicated on population growth and environmental destruction) to simply push all but a handful of non-domesticated plants and animals to extinction? What goal is the human race currently aiming for? And why the hell aren’t we discussing this publicly?

Novices in Queensland

The relatively newly installed LNP government in Queensland has not been short on controversies since its election. I understand that different governments have different ideological underpinnings, but when ideology becomes motivation without any reference to empiricism, it does a disservice to the ideal of good government.

Whilst there have been numerous decisions by the new LNP government that have a questionable policy basis, the latest offering is a prime example of policy that is either based on blind optimism, guesswork or even cronyism.

The idea is appealing enough. Remove the ‘red tape’ on building new dwellings and make them cheaper. Making them cheaper will increase sales, thereby rescuing the building industry and possible stimulating the economy.

But as noted in the article, it’s likely a false economy in exchanging short term cost savings for longer term additional costs. Take the water tank as an example. Not having a water tank might be cheaper, but it also means that you lose out in having to buy all of your water, rather than being able to supplement your usage with ‘free water’. The cynic in me suspects that the government is hoping to drive up revenue for state-owned water supplies.

Further, not having a tank installed during the building process deprives the purchaser of the cost savings that are gained through the builder’s wholesale bulk purchasing power – the cost of the tank when included in the construction is cheaper than having to buy and install it as a retail consumer at a later date.

Finally, what guarantee is there that those cost savings will be passed onto the purchaser? We know from previous cuts in costs and taxes that these are generally absorbed into the profit margins on business and don’t make their way to the end consumer. Just look at the effect of the First Home Owners Grant to see what governmental intrusion does to market pricing. Either the LNP is naïve in relation to this or they’re window dressing a policy to help out their mates in business at the expense of the average punter.

Populism rarely creates good policy, nor does policy borne of lobbying by rent-seekers in industry. I predict that this will not only fail to achieve its objective but will in reality cause more harm than good to the consumer. The fact that I can see this when the government either can’t or won’t is disturbing.

Entitlement mentality – parenthood

I had an interaction a couple of weeks ago with Kate Ashmor, President of Australian Women Lawyers in relation to the tax deductibility of child care. The interaction wasn’t terribly productive as Ms Ashmor’s responses were confined to pat responses arguing unempirical and mostly irrelevant points, but it did point to the entitlement mentality that Joe Hockey talked about recently (although in Joe’s world, the entitlement mentality exists within the ranks of the poor and disadvantaged, not the middle class or well off).

As Twitter doesn’t provide the best avenues for prolonged, intelligent debate, there are many things that irk me about the tax deductibility of child care (well actually tax deductions for a range of things, but child care was the topic du jour). So Ms Ashmor and her ideological confreres have a better understanding of making child care tax deductible, I’ll extrapolate on the exchange we had on Twitter and explain why tax deductible child care is champagne socialism.

For the purposes of this blog, I’ll assume that there’s no means-testing involved as I tried to draw her out on this issue but she failed to respond, accordingly I’ll assume she doesn’t support means testing (and most of the lobbying I’ve seen on this topic has been by well paid professional women).

1.              It’s fundamentally inequitable

The problem with any tax deduction is that is favours high income earners, especially in a progressive tax system like ours (i.e. one that levies higher rates of taxation on higher levels of income), both directly and indirectly.

For the purposes of illustration, I won’t go into spousal income and base the example solely on the mother’s income. Let’s take a lawyer similar to Ms Ashmor. Let’s say that she’s a senior lawyer earning an average annual salary of $220,000 per annum. Now we’ll assume that the law provides for a maximum of $10,000 in child care fees to be deducted.

As $250,000 is above the threshold for the top marginal rate of income tax of $180,000, the deduction will be offset against income that would be levied at 45 cents in the dollar. Accordingly, a $10,000 tax deduction would reduce her taxable income to $210,000, saving her $4,500.

Now let’s take Ms Ashmor’s example of a nurse. According to www.payscale.com, a registered nurse with between 10 to 19 years experience (and in the demographic most likely to have children in child care) earns between $29,995 to $77,261. For illustration purposes I’ll use the higher figure. The income tax applicable for income between $37,001 and $80,000 is 32.5 cents in the dollar. So assuming our nurse has spent $10,000 on child care, her taxable income is reduced to $67,261, saving tax of $3,250.

So the high earning lawyer gets $4,500 back from her fellow tax payers, and the nurse gets $3,250, a difference of $1,250 more to the lawyer. I’d love for someone like Ms Ashmor to tell me how it’s equitable for a wealthy lawyer to get more tax payer support than a nurse on a lower income.

But remember how I said that there is both direct and indirect inequity? That’s because it’s not just about a bigger rebate from one’s fellow tax payers, but also related to the capacity to obtain the maximum rebate in the first place. Can our nurse actually afford to pay $10,000 in child care fees, or does she juggle it so she only spends $7,500.  That means an even smaller rebate, whereas the higher earning lawyer is able to ensure that she gets every cent from the tax payer that is available. It’s even more stark for women on lower incomes where the capacity to pay is further reduced.

There’s also another form of indirect equity. The sole criterion for obtaining this tax payer largesse is having a child who uses child care. That means that people with no children can’t avail themselves of this benefit, and people with large numbers of children are entitled to a much larger share of it than those with few or no children. The effect that this has is that people with few or no children are subsidising those with larger numbers of children.

Going back to our lawyer friend, let’s say she has 3 young children in child care and avails herself of the full rebate per child, being $30,000. Her taxable income is now reduced to $190,000, giving her a tax rebate of $13,500. This is funded by other tax payers, over 90% of whom earn less than her (Matt Cowgill has an excellent blog post on income distribution here), most by a significant amount. This is a reverse Robin Hood where you rob the poor to give to the rich.

2.                   Child care increases productivity and the tax base

This next argument proffered by Ms Ashmor has a certain economic rationalist appeal to it, so gets initial sympathy from me. But is it backed up by empirical evidence? It would have a chance of surviving in reality if it could be proven that tax deductible child care actually created employment, as otherwise a mother returning to work is simply taking back work done by someone else in her absence, displacing them from employment and the ranks of tax payers. I suspect, but am happy to be shown otherwise, that the availability of tax deductible child care doesn’t materially increase the ranks of gainfully employed but merely shuffles deck chairs.

3.                   Child care as an employment expense

The next argument Ms Ashmor trotted out was that child care was an employment-related expense like uniforms or transport. I have to argue that this is a pretty feeble link. Firstly, having a child isn’t a prerequisite for having a job, like your uniform is. Secondly, those deductions are available to all employees in that class. Thirdly, if wearing a uniform is part of your job, it’s not optional – having a child is.

4.              But there is empirical evidence!

When challenged on empiricism, Ms Ashmor linked this article from the Australian Financial Review referring to the Grattan Institute Report on changes to the tax system available here. The report is pretty well attack in this article in the Sydney Morning Herald for some of the reasons I’ve already raised, plus others. I’d also have to point out to Ms Ashmor that a report from a think tank (with obvious political and ideological biases) does not constitute empirical evidence.

5.              But our population rate is falling, we need more babies, they’re tax payers of the future

I had to laugh when Ms Ashmor trotted out the Peter Costello line used in support of his baby bonus (another non-means tested cash splurge). As I pointed out to her, turning fiscal policy into natalist policy is not only hilarious, but an extraordinarily ineffective tool.  If Australian women were making decisions not to have children purely on the basis of the tax deductibility of child care, then it might have some hope of working. But they don’t. Women have children for a variety of reasons, sometimes for absolutely no reason and the decisions that drive women not to have children are similarly diverse and unrelated to tax policy, take for example the Swedish longitudinal study showing wealth leads to less children in the New Scientist. Babies are still going to be born. The rate at which they’re born has basically nothing to do with the tax system.

The other point on this issue that I pointed out to Ms Ashmor, but which she probably wisely chose not to respond to, was that Australia has a high migration intake that more than makes up for a relatively low birth rates (but still not below replacement rates).  Unless Ms Ashmor is arguing for a complete abolition of all immigration, our birth rate isn’t even on the radar as an issue.

Besides, arguing economic growth purely based on population increase is the demographic equivalent of a Ponzi scheme.

I have general issues with government child support as a whole but that’s a topic for another blog.

My view on this issue and on fiscal policy in general is in accord with the Right – ideally tax should be as low as possible, leaving more money in people’s pockets to make their own decisions on what to do with it. However, in Australia, both the Left and Right use tax policy a means of furthering their particular agenda. When the Left does it, it doesn’t bother me as much because it’s consistent with their ideology. But when the Right does it, it makes my head explode as it’s completely hypocritical.

Ms Ashmor and those of her ilk arguing for tax deductibility of child care should be honest about their motives and stop trying to cover them up with flimsy socioeconomic platitudes. They object to paying higher levels of tax and want some of it back. Child care is a fantastic lever because child rearing is a sacred cow in our society. But if they have an objection to a progressive tax system, they should come out and argue against it openly. Accusing people like me of inciting class warfare is facile and in fact disingenuous – wanting the less well off to subsidise those who are wealthier sounds pretty much like class warfare to me.

Playing ‘Progressives and Conservatives’

Conservatism is generally understood in a political context to be the fight to maintain the status quo. Progressives on the other hand struggle for change. It may seem a paradoxical thesis but I’d argue that both progressives and conservatives lose out in politics. Conservatives will always lose to inevitable change and progressives end up losing their raison d’être. It’s a conundrum that I think is plaguing western democracies, including current Australian politics.

I often wonder what goes through the minds of conservatives in seeking to justify the status quo when the status quo wasn’t always thus even in their lifetimes, as nothing has ever been static. Do they look on past battles and dream longingly of turning back the tide, or is it just a defence against any further change in the ‘natural order of things’? The list of defeats for conservatives is significant: the abolition of slavery, the granting of property rights to women, female suffrage, granting minorities the vote, the end of prohibition on miscegenation, the advent of no-fault divorce, the decriminalisation of homosexuality, equal pay for women and so on. You rarely hear conservatives arguing to unwind these changes, so accepted have they become by the mainstream, but occasionally you get whispers of it, such as the LNP’s recent roll-back in Queensland of same-sex relationship legislation and a few other mooted changes, and Abbott’s raising the flag on reintroducing at-fault divorce a few years ago. Would conservatives, if in power for a significant amount of time with sufficient majority seek to go further and roll-back other societal changes? And how convincing a conservative can you be as you accept this accumulation of societal change, or does the old line in the sand magically erase itself and a new one get drawn?

Progressives on the other hand have won so many victories they’re starting to come to a loose end. Once heretical ideas such as equality of the sexes, racial equality, universal suffrage and divorce are now orthodoxy. Even Labor’s founding area of workers’ rights doesn’t have much to improve on, children not only don’t work in appalling conditions, they don’t work at all, a fair day’s pay for a fair day’s work is part of the IR fabric. The Liberal party likes to see the demise of unions as just desert for a scourge on the workplace, but actually the unions are the victims of their own success: having grown up, the child no longer needs a parent.

So it begs the question, where to from here? What do you fight for when the battles have been fought? And indeed have the battles been won or are conservatives poised for a big unwriting of history?

I think this is at the heart of the ideological malaise besetting the Labor party in particular but also the Liberal party in Australia. The fires that stoked the Labor battle cry have died down to embers and the Liberals’ horrors of the future have become the normality of today. Like two old dogs, their bones of contention have been eaten away and now they’re just gnawing away at their own teeth.

 

Postscript: On a related note, Peter Hartcher on gay marriage in the Sydney Morning Herald http://www.smh.com.au/opinion/politics/they-cant-stonewall-forever-20120713-221zq.html

The Compact of Deceit.

Watching the speeches by politicians from both sides of politics in relation to Rob Oakeshott’s asylum seeker legislation (and being swallowed whole by their disingenuousness) and a subsequent Twitter conversation with @Drag0nista as to why people react so viscerally to the Greens more so than politicians from Labor and the Liberal Party, got me thinking back to my take on democracy (and civil society more broadly) and what makes it work. I’ve named my theory on this the ‘Compact of Deceit’.

Like the joke goes: ‘How can you tell when a politician is lying?’ Answer: ‘Their lips are moving’. It gives rise to an interesting paradox – we expect politicians to lie, but we are sometimes shocked when they are caught out lying. The key word is sometimes. Julia Gillard gets labelled with the name ‘Juliar’ based on the view by her political opponents that she lied. But, if she has indeed lied, why is it so remarkable? Why do some commentators react as if she’s the first politician to have lied? As others have pointed out, John Howard lied with alacrity and we greedily lapped it up: core and non-core promises were treated with a nudge and a wink, not with scorn by most.

I think part of the answer is simply partisanship. The supporters of a political party will view their politicians as truthful and the other parties’ politicians as liars, and they won’t see deceit in those of their own political persuasion. If they do ever admit to deceit in their own political party, they will see it as a necessary untruth.

But what else other than partisanship? Well I think it has to do with the functioning of democracy and basic human behaviour. We all lie and we all justify our dishonesty. We talk of ‘white’ lies, those which are somehow excusable because they are done to avoid causing hurt or discomfort in other people. Every day when we are greeted by someone with ‘how are you?’, regardless of how you are you will nearly always respond with ‘good, thanks’. It’s part of the social compact – I’ll pretend to care and you’ll pretend to share. Psychologists have shown that being honest in these encounters is generally not a good thing, people switch off when confronted with honesty. Dishonesty is used as a lubricant to smooth social interactions.

I often make the analogy of governance being just like parenthood. A good parent doesn’t aim for popularity, they constantly act in the best interests of their children: children’s liberties are curtailed, they have to abide by rules they don’t agree with, they have to do chores they don’t want to. It’s easier for a parent to act in the best interests of their children and family as a whole because families aren’t democracies, they’re parental dictatorships. If family life were a true democracy, kids would vote on what they wanted for breakfast, whether they went to school, whether they should clean their teeth and whether they should refrain from beating the crap out of their little brother. And self-interest would dictate a breakfast of chocolate, no school, no cleaning of teeth and a good thumping of the obnoxious little brother.

Being a good government is just like being a parent. Government is about looking after society as a whole and minimising conflict. But societies aren’t homogenous. To maintain the balance of the whole, governments often need to impost burdens, obligations, liberties and responsibilities differentially: many individuals will benefit, some won’t. And unlike the inherent authority in the parental dictatorship, democracies require consent.

So how do you gain the cooperation of those who won’t readily consent? In an ideal world, government would calmly explain the rationale, why it’s fair and reasonable and those who don’t win out would accept it for the sake of the greater good. And indeed that does happen. But it’s far easier to appeal to self-interest than to appeal to reason, to convince everyone that they’ll be a winner and that nobody will lose out. But to do that, you have to lie. Politicians lie just like parents lie. “The needle won’t hurt”; “the medicine won’t taste bad”; “going to the dentist is fun”: these are all lies that parents tell children to agree to something that isn’t pleasant but is in their best interests. Parents are in a position of trust, so kids are prepared to set aside a certain amount of disbelief. It facilitates the rationalisation that ultimately what they’re about to endure is good for them. It’s the Compact of Deceit: I’ll lie to you for your own good and you’ll go along with it because, deep down, you trust me enough to know it’s in your best interests.

So politicians lie to makes us all think we’re won’t be worse off. So too we accept their lies because we know, deep down, that it’s in our or society’s best interests. Because, like our parents, we trust them.

And that’s the key ingredient to the Compact of Deceit: trust. This is why we accept the lies of our own political party, because we trust them. This is why we won’t accept the lies of the other party, because we don’t trust them. And as an aside I think it’s why Julia Gillard is copping such a hiding for her dishonesty – not because she’s dishonest as that’s ultimately unremarkable in a politician, we actually expect it. But it’s because we don’t trust her. She can’t even engage in the Compact of Deceit.

So what does this have to do with the Greens and the scorn they arouse? Because they don’t play by the rules at all, they refuse to sign up to the Compact of Deceit. The Greens tells us what they think, not what we want to hear. They generally won’t lie to us. They’re like the person who, when asked how they are, tells you that they’re crap because they’ve just lost her job. We don’t want to know the truth, we want the comforting lie. They broke the Compact of Deceit by not proffering the soothing lie.

In the context of the current debate on immigration, the Greens are not playing by the rules. And the rules were put out in the open by Leigh Sales on the ABC’s 7.30 programme on 27th June. Whilst the leader of the Greens, Christine Milne, came across as shrill, she did so partly because she wasn’t playing into the dominant paradigm.

The debate has been crafted by both Labor and the Liberals as stopping the boats. The ostensible reason is that we don’t want to see refugees drowning on their risky trips to Australia. But I would strongly argue that that’s not the real reason, that reason is one of the lies in the Compact of Deceit. I don’t think that most Australians give a toss about foreigners, particularly those that are dark and mostly Muslim, drowning at sea. Sure, there are a small group of ‘bleeding hearts’ who do, but I really don’t think the apathetic masses do.

The real driver to stopping the boats is to stop the trickle from becoming a flood, the stop Australia sliding down the slippery slope of compassion that would lead to us being invaded by hundreds and thousands of Afghans and Iraqis and all the fears that arouses about our ‘way of life’. Admitting that truth is particularly unpleasant however, we don’t want to admit that fear and a lack of compassion are significant drivers in this debate. So our politicians reassure us that we’re a kind, compassionate nation by lying to us that, we’re not doing this out of fear or selfishness, we’re doing it out of love for these poorly refugees. And we gratefully lap this up because it makes us feel good about what we’re doing and who we are.

So Leigh Sales maintained the normative discourse by asking Ms Milne repeatedly how she’s going to help us stop the boats (because the lie dictates that this is about saving lives, not stopping hordes of foreigners invading our shores). And Ms Milne breaks the Compact by sayings she’s not interested in stopping the boats, the Greens are only interested in helping these people in need. And Ms Sales’ questions kept coming back to stopping the boats to stop the drowning, and the answers kept coming back that the Greens aren’t working in that paradigm. The Greens want these people to come and they want them to come safely. How does this break the Compact of Deceit? Because to discuss the Greens options would force people to admit that they actually don’t want the boats to come because they don’t want these people here. Or discuss that stopping the boats requires a policy unpleasant enough to be worse than whatever they’re fleeing.

The truth is for most of us, we don’t care what happens to them and where they go provided it’s not here. We can’t maintain the lie otherwise. The Greens, were they allowed to shift the public debate to their paradigm, would force people to adopt honest but unpalatable positions in attacking the Greens’ position. So we accuse them of being airy fairy, of being impractical, but we don’t say why or address their arguments because it forces the lie into the open.

The Greens aren’t the only ones who break the Compact, but they’re amongst the few in Australian politics who do. When you refuse to proffer up the lies that make the whole system work, you’re forcing people to work with the truth. I know from personal experience given my work having to deliver or uncover truths that the truth is often unpopular. The truth can be confronting, distasteful and shameful. It can cause conflict. It can hurt people’s feelings. That’s part of why I think the Greens are hated so much, their idealism prods at the dark truths that our Compact of Deceit allows us to deny (there are other reasons like their inherent ideological contradiction but that’s the subject of another post). We all engage in the most common formula of lie: the ‘but’ lie: ‘I care about these refugees, but…’, ‘I don’t want to see Koalas become extinct, but…’, ‘I respect your views on this matter, but…’. We all know that the ‘but’ renders all before it a lie, but it’s offered and accepted at face value as a truth. What is really being said is: ‘I don’t really care about refugees, so…’; ‘I don’t care if koalas become extinct, so…’; ‘I couldn’t care less what you think, so…’.

We’re not as nice as we tell each other we are. Tell me it’s not true.