What now?

Maybe it is because I am at that stage of life often termed (politely) as being of “advanced years”, I tend to look at what is going on around me with a different outlook.

There seems to be a great deal of “hot air” being expended on what to do about the economy, as if the “Economy” was the beginning and end of life. I know that I have mentioned this before in other posts but it is necessary for all to acknowledge that the “Economy” is not some esoteric, alien “thing” somewhere out there. The economy IS the people - the citizens of this Country create the Economy with their labour.  

Money is not self-emergent, it doesn’t arise by itself.

Without PEOPLE there would be no money and no economy. There is an old Roger Whittaker song– one called “From the people to the people”, and the lyrics certainly apply today:

“You take it from the people, you give it to the people. 

Its people who reap and people who sow.

You work with the people or you gotta go.”

These words express very well my philosophy. It is PEOPLE who are of paramount importance. Not MONEY. Not the ECONOMY.  Not the BUDGET. It is people – without people there would be no money and therefor no economy, and by default no need for a budget (in surplus or otherwise) or for a treasurer.

So it’s PEOPLE, stupid! People. Look after people!

The problem, in my opinion, is that what is termed the “middle class” is being hollowed out. The divide between the rich and poor is getting wider. The rich are getting richer with the top 1% owning the wealth of the bottom 70%. These are Australian figures but are typical of a world-wide trend. 

The best solution (in my humble opinion) is not to reduce the rate of income tax to the wealthy but to increase it and so provide a better income distribution via a Negative Income Tax- For people who do not earn enough to pay tax (or earn below the minimum wage or some other agreed amount) their income would be supplemented to arrive at the agreed amount or the minimum wage. Everyone, working or not, would be obliged to lodge a tax return and any supplement would be “refunded” via the ATO, similar to the process for a normal tax refund.

More money in the pockets of those with a low-income means they will spend more. This gives rise to what is termed the “multiplier effect”. In Australia this is about 5. This means that for every additional dollar spent the “economy” benefits by 5 dollars. Retail trade in particular would get a boost – more money spent, more employment, more taxation revenue … etc.

To me it’s a no brainer. Increase the “dole” and everyone will benefit. 

What we can learn from the past.

I just happened to open a book of Aesop’s Fables that I have not read for many a long year. Some are very apt – even after some 2500 years since they were first collected. 

For those that may have forgotten or didn’t know, Aesop is thought to have been a freed slave and lived for a while in Athens, round about 600BC.

Here are two of his fables that some may feel are apposite today:-

The two bags. 

According to ancient lore every man is born into the world with two bags suspended from his neck – one in front and one behind, and both are full of faults. But the one in front is full of his neighbour’s faults; the one behind, full of his own. Consequently, men are blind to their own faults but never lose sight of their neighbour’s.

Sound familiar?

The trees and the axe.

A woodsman went into the forest and petitioned the trees to provide him with a handle for his axe. It seemed so modest a request that the principle trees granted it right away, and they declared that the plain homely Ash should furnish what was needed. No sooner had the woodsman fitted the staff for his purpose, however, than he began chopping down the noblest trees in the woods. By the time the Oak grasped the entire matter it was too late, and he whispered to a neighbouring Cedar, “With our first concession we lost everything. If we had not sacrificed our humble neighbour, we might still be able to stand for ages”.

Moral: When the rich surrender the rights of the poor, they provide a handle to be used against their own privileges.

Again, sound familiar?