Coalition unlikely to lift unemployment benefits when jobkeeper scrapped in March
They will lift it but only marginally so, might not even reach my prediction of $50 per week. Frydenburg argues against an increase because a lift will be an ongoing structural increase in the deficit. Yet for the sake of protecting a coalition seat in South Australia there is the 50-60-70 ??? billion fiasco submarine build, the proposed 270 billion defense spend for missiles etc, and tax cuts that will decrease revenue by hundreds of billions of dollars over the next decade. All those are structural increases in the deficit and all those do not have a significant multiplier effect by promoting greater economic activity through infrastructure improvement.
It is just politics. GDP growth alone will gradually erode the extra 6-7 billion required for a rise of $100 per week. After all what's 6-7 billion in a 1 trillion budget?
Their analyses, using tax and welfare models similar to Treasury's, found that, over a decade, taxpayers earning more than $180,000 a year would receive between $88 billion and $89 billion under the Coalition's tax plan.
Those figures are not adjusted for inflation and wages growth so are an under estimate. The justification for these tax cuts is that it will increase aggregate demand. To some extent true but it is important to remember for many on higher wages the goal now is to pay down debt and bank in their money in rolled gold investments. The pandemic has reinforced a rainy day attitude.
Trickle Up
The amounts of $88 billion roughly equate to the spending cost of increasing the jobseeker payment by $100 per week. Jobseekers will spend all that extra money on consumption and thus have a far greater impact on aggregate demand.
The coalition government seeks to deny those on welfare sufficient support in order to provide tax cuts to those who will invest the tax cuts in shares and property. It wants to keep the poor downtrodden so it can make life easier for those on comfortable incomes. It is as George Carlin stated:
“Conservatives say if you don't give the rich more money, they will lose their incentive to invest. As for the poor, they tell us they've lost all incentive because we've given them too much money.”
It is trickle up economics.
Beliefs and motivations
The coalition very much embraces a Christian ethos. That's to be expected because ScoMo goes to a purportedly strictly biblical evangelical church in Australia (Hillsong), Frydenburg is a practicing Jew, and the coalition espouses a Christian ethos. For churches like Hillsong, which preaches a prosperity gospel, being poor is being bad, not in God's favour. So it is not surprising that ScoMo designed the robodebt scheme and continues to adopt policies towards those on welfare that reveal a supercilious disposition towards them.
Another motivation, a universal in human behavior, is self interest. Politicians are in the income range to substantially benefit from the tax cuts both during their term and latter careers.
True to their conservative heritage the coalition is still tied to neoliberal economics and a Christian anthropology. That is not surprising because conservatives are slow to adopt new ways of thinking, the very nature of their cognition inhibits readily acquiring new ideas. That's not a criticism, it is important to remember many new ideas are wrong and it is wise to be cautious. We only have to look at the fads in fashions in popular culture to realise how facile and asinine new things can be. While that problem is less pronounced in the world of ideas it nonetheless still exists.
What is Economics?
The problem for conservatives though is that economics is not a science. I'm not sure what it is but I enjoy the comment that economics is useful for employing economists(Galbraith). He also noted that economics exists to give astrology a good name. Perhaps he was riffing of the anarchic philosopher Feyeraband:
"Prayer may not be very efficient when compared to celestial mechanics, but it surely holds its own vis-a-vis some parts of economics."
P J O'Rourke notes that there are two branches of economics. Micro economics shows us what they get wrong about small things and Macro economics shows what they get wrong about big things.
I'm currently reading Piketty's "Capital". It is not an easy read, the amount of detail can be tedious to plough through, and the new ideas require some re-arrangements of conventional understanding about wealth accumulation. He presents an interesting way to think about long term trends in economics but offers absolutely nothing in relation to addressing economic emergencies and policies. I like the ideas he is presenting, Piketty offers us a fresh new way to think about the linkages between economic activity, politics, and culture, but I can't see his views have any substantial influence in the world because there are no catch phrases, no three word slogans, no easy images or ideas for Joe and Jane public to embrace. Quite the opposite, the majority people will never finish reading it. I have a hundreds pages left and I'm continuing out of commitment not enjoyment.
It it ironic that the central intellectual discipline governing modern societies is regarded as a joke by academia and social commentators. Yes, it is very funny. It is also very disturbing because our political leaders take economics very seriously. That gives us pause to think about Mark Twain's view of politicians:
Reader, suppose you were an idiot. And suppose you were a member of Congress. But I repeat myself.
The comment is sarcastic but the sad truth is even though there are some clever politicians the field does not generally attract the best and brightest. Politics is more about rhetoric than logic, the goal of political debate is not to find the truth but to defend the party, to never admit error, and to stay in power. That politicians often speak about economics makes me wonder if they realise how conceptually bankrupt the discipline is or if they are just plain lying every time they speak about it.
A Rhetorical Example of Modern Australian Politics:
Year after year the coalition castigated the Rudd Labour government stimulus spending. The public was relentlessly warned about a debt and deficit disaster. Apparently it was the ruin of the Australian economy.
We no longer hear about that.
Why the change of attitude? Because the coalition knew that without a huge stimulus the unemployment rate will skyrocket, the recession may well become a depression that will take years to resolve, hence a huge risk of losing the next election.
That is, power triumphs truth. In the very least Morrison and Frydenburg could admit that their criticisms of the Rudd stimulus package were wrong and apologise. Ha! Yeah, like that's going to happen.
The Christian Ethos
Conservatives like to claim that their values arise from a Christian ethos. I'm not sure what that means. The rule of law is not unique to Christianity, an early reference is the Code of Hammurabi and it has been argued that the Ten Commandments is to some extent simply a reiteration of that Code; a claim which is consistent with the archeological data indicating the Jews migrated from Mesopotamia.
Charity is certainly not unique to Christianity, there are paleoanthropology findings suggesting it may have even existed during the ice ages among both humans and Neandertals.
The Ten Commandments are not that closely followed. Modern society certainly doesn't keep the holy day demand, adultery(sex outside or marriage) is the norm, and conservative political commentators frequently bear false witness against their political opponents.
Conservatives argue that modern civilisations are built on the bedrock of a Christian ethos. There is something to that but equally one can argue that modern civilisations arose from a complex set of historical contingencies that synergised into political, cultural, and ethical frameworks which have proved remarkably efficacious is maximising personal freedom, individual freedom and rights, the rule of law, and a steady march towards a better life for everyone.
However the Christian understanding of human behavior and how to modify it is so antiquated and ridiculous that it should be abandoned we can avail themselves of a multitude of discrete empirical findings which will cast our understanding of human behavior in an entirely different frame of reference thus facilitating the emergence of an understanding that is not only something new under the sun but also offers a comprehensive set of concepts and strategies for behavior modification through which individual freedom will be enhanced and problematic behaviors reduced thus allowing further progress in the enhancement of human happiness because the millstone of a Christian understanding of human behavior has been cast into the fires of history and long forgotten.
Finally
It's not like I have any faith that a Labour government will be an improvement but at least their policies on negative gearing and capital gains tax were consistent with Piketty's well argued position that increasing returns on capital in modern societies if continued into the following decades is a harbinger of interesting times ahead. They have abandoned those policy positions. The Labour Party is pathetic and ensnared by identity politics and political correctness.
No-one in the ALP has even had he courage to commit to a specific increase in the jobseeker allowance. The best they can now is vague indications of increasing the rate.
There are no studies indicating that increasing benefits creates a disincentive to find a job. Government politicians like the Michaela Cash invoke anecdotal data to demonise the unemployed. That's just plain dishonest and she knows that but being a good little follower she plays her part and does what she is told to do.
So many politicians come from accounting, economics, the party machine, unions, and small business. So few politicians come from fields where human behavior is front and center in their professions. The most prominent indicator of the state of modern Australian politics is reflected in the former role of the prime minister Scott Morrison: Advertising. We are doomed.
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